China has set a goal of becoming carbon neutral by 2060, but it is unclear how it will accomplish this.
According to a recent report by oil and gas multinational Royal Dutch Shell, focusing on hydrogen, biofuels, and carbon-removal technologies while phasing out fossil fuels is one way China could build a carbon-neutral energy system before 2060.
According to the report, the share of electricity in China’s energy consumption is expected to rise to nearly 60% in 2060, up from 23% today, with buildings, light industry, and road transport all relying heavily on electricity.
The forecast is similar to one made by PetroChina. The oil and gas producer predicted that electricity would account for 62% of total energy consumption in a report released last month. It, too, stated that hydrogen, green fuels, and carbon-removal technologies like carbon capture, utilization, and storage (CCUS) were crucial in reducing emissions.
However, the projected 60% share is lower than previous estimates, which suggested that electricity would account for about 80%. Tsinghua University estimated 70% in a 2020 report.
China is the world’s largest emitter of greenhouse gases, accounting for more than 27% of total global emissions, more than twice that of the US and more than three times that of the European Union. Chinese climate actions could make or break the world’s ability to meet its climate goals.
Coal accounts for roughly 70% of China’s electricity. According to the Shell report, decarbonizing the power system would necessitate a significant increase in solar and wind power from 10% of total power generation to 80% by 2060.
Meanwhile, it said that if electricity accounted for 60% of China’s energy consumption, the remaining 40% in hard-to-electrify sectors would require low-carbon fuels and carbon-removal technology.
Heavy-duty road transport, shipping, aviation, and heavy industries such as steel and chemicals, all of which rely on fossil fuels, would have to transition to new, lower-carbon energy sources like hydrogen.
According to the Shell report, hydrogen will account for 16 percent of total energy consumption by 2060, up from zero today, and more than 85 percent of that will be “green hydrogen,” produced using renewable electricity and electrolysis.
Because of a spike in natural gas prices in Europe this winter, green hydrogen production was already cheaper than grey hydrogen (produced from fossil fuels) in the United Kingdom.
Green hydrogen is expected to be cost competitive with grey hydrogen by 2030 in regions with abundant renewable resources, according to energy institutions.
China, the world’s largest hydrogen producer, has designated hydrogen as an emerging industry in its five-year plan for the years 2021 to 2025.
According to the China Hydrogen Alliance, a government-backed industry group, hydrogen will account for at least 5% of China’s energy system by 2030.
Biofuels, including hydrogen, will be critical in industries that require higher-density liquid fuels, such as long-haul aviation and chemicals. In the near and medium term, they are seen as one of the few low-carbon alternatives to liquid fuels.
However, switching to cleaner energy sources and improving energy efficiency will not be enough for China to achieve net-zero emissions in less than 40 years. According to the Shell report, it would also need to actively reduce emissions.
As a result, CCUS will be an important part of the solution for China, which has significant geological potential for carbon storage, second only to the United States.
China currently has over 40 CCUS pilot projects with a total capacity of 3 million tonnes, but it will need to increase its capacity by more than 400 times in the next four decades to meet the carbon-neutral goal.
Although the Shell report focused on hydrogen, biofuels, and CCUS, Jiang Liping, deputy head of the State Grid Energy Research Institute, said there were significant uncertainties about the development of these hot technologies.