More than $5 trillion worth of investment and 5 terawatts of renewables and storage are needed for China to achieve carbon neutrality by 2060, according to consultancy Wood Mackenzie.

The massive investment figure is needed to meet a rise in electrification that will see total power output expand by almost 2.5 times to 18,835TWh, said the research group.

In order to meet its recently-announced carbon-neutral goal and the accompanying electrification needs, Wood Mackenzie claims China will need to increase solar, wind and storage capacities 11 times from current levels to 5,040GW by 2050.

Coal-fired power capacity will also need to decline to half of its current level, while gas will need to match 2019 levels.

“It is definitely a colossal task for a country using 90% hydrocarbons in its energy mix and annually producing more than 10 billion tonnes of CO2, and in addition, accounting for 28% of global total emissions,” Wood Mackenzie Asia Pacific head of markets and transitions, Prakash Sharma, said.

“In our Accelerated Energy Transition (AET-2) scenario, China’s emissions peak immediately and enter a period of rapid decline, reaching net-zero slightly after 2050. This is achieved by widescale electrification of transport, heating and industry as well as deployment of carbon capture use and storage (CCS).”

The use of CCS will also be vital in navigating the social transition that will come with the increase in renewables, with the halving of coal capacity anticipated to result in loss of coal mining jobs, affecting provinces that depend on revenues and employment generation derived from the industry.

“We expect the government to retrofit coal-fired power plants with CCS to retain coal mining activity in key provinces,” Sharma said.

“This approach aligns with China’s strategy to optimise domestic coal resources to improve energy security.”

Transport and industrial hurdles

A major hurdle Wood Mackenzie identifies in China meeting its carbon neutral goal is the lack of scalable low-carbon alternatives in the transport and industrial sectors.

The consultancy firm noted that emissions from those two sectors in China alone totalled 5.7 billion tonnes in 2019, roughly matching the total emissions from the US and UK combined.

As a result, it believes the Chinese transport and industrial sectors will need government subsidies and/or carbon pricing to decarbonise, with Wood Mackenzie anticipating China’s carbon price support to reach US$109 per tonne by 2030, under its AE-2 scenario.

The scenario also anticipates China’s road transport being fully electrified, which would see new stock of electric vehicles reach 325 million by 2050, up from just 4 million units currently.

The electrification of transport is also forecast to result in a collapse in oil prices, with China’s demand under Wood Mackenzie’s AE-2 scenario to fall below 7 million barrels per day by 2050, with that demand to largely come from petrochemicals or the export of refined products.

Industries such as steel, cement, refining and chemicals will also require hydrogen and CCS as mainstream fuel and feedstock supply options to tackle emissions, which could see hydrogen production grow five times, to about 150 million tonnes, by 2050.

Wood Mackenzie forecasts China’s increased hydrogen demand will be met by an equal mix of green hydrogen and blue hydrogen.

Sharma added: “Given China’s large heavy industry and machinery sector, it is crucial that China masters the use of CCS and forest sinks to offset the remaining emissions. Without it, China’s pledge to become carbon-neutral is nearly impossible."

This article first appeared in Upstream