In September 2020, China announced that it would aim to reach a peak in its carbon dioxide (CO2) emissions before 2030 and achieve carbon neutrality by 2060. Over the past decade, China has remained the world’s biggest producer and consumer of energy, while its energy-related CO2 emissions had grown to account for 28% of the global total preceding the COVID-19 pandemic.
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To achieve its ambitious carbon peak and carbon neutrality goals, China needs to close an annual funding gap of about RMB1.1 trillion ($170 billion). It can only do so if it manages to develop far more sophisticated green financing schemes. In China, bank lending is the backbone of corporate finance. Due to their risk-averse nature, banks tend to target large state-owned and private enterprises, meaning SMEs (small, medium enterprises) miss out on the funding — despite accounting for 65% of the country’s CO2 emissions.
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The cost declines seen in 2021 may not be repeated for solar PV and wind power in 2022, as supply chain constraints have been having an impact since late 2020, while commodity price rises accelerated in late 2021. These two factors saw equipment prices increase after experiencing lows in the first half of 2020, when the pandemic first took hold. Yet, the impact of these factors on projects commissioned in 2021 was not enough to raise the full year weighted average LCOE in many individual markets, nor at a global level.
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Nothing, it seems, can hold back the advance of renewable energy. A record amount of renewable capacity was installed in 2021, despite post-pandemic delays and rising raw material costs. Now the International Energy Agency (IEA) expects that record to be beaten again in 2022, at least in part as nations that have relied on fossil fuels from Russia, push ahead with new renewable capacity in response to the war in Ukraine.
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China’s wind market has witnessed a greater policy push in the recent times, encouraging greater innovation and investment in the sector. Certain advantages with regards to manufacturing of wind turbines have also contributed to China’s leading position in the segment. Given adequate policy and regulatory support, repowering activities can play a significant role in China’s wind market. Given the current trajectory, the country is likely to continue dominating the global wind energy market.
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On the surface, such competition between the regional powers may seem to have provided Indonesia with a golden opportunity to extract favourable terms to advance key projects. The theory, it would seem, is that this allows Indonesia to pit one side against the other, bringing about a competition that offers options such as generous financing terms and advanced engineering know-how, which would otherwise be unavailable under normal circumstances.
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According to the study, if China implements all its stated policies, road transport’s GHG emissions in 2060 would decline by 50 percent from the 2020 level. Further, if radical structural changes and vehicle electrification occur, road transport’s GHG emissions in 2060 would reduce by 95 percent from 2020’s level, fulfilling China’s 2060 carbon neutrality commitment.
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We have recently revised up our hydro-electric pumped storage generation and capacity forecasts for Mainland China, following positive developments in the sector. Mainland China is the top-performing market in Asia for pumped storage, with a total of 36.4GW of capacity as of end-2021. Over the coming years, we expect Mainland China’s hydro-electric pumped storage capacity to expand rapidly. In September 2021, the National Energy Administration (NEA) announced that it aims for hydro-electric pumped storage capacity to reach 62.0GW in 2025 and 120.0GW in 2030.
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The Shandong Provincial Energy Administration has issued a request for proposals for the development of ten offshore solar photovoltaic (PV) projects with a total capacity of 11.25 GW. Binzhou, Dongying, Weifang, Yantai, Weihai, Qingdao, and other areas around Shandong’s coast will be developed for the projects. The pile-based fixed offshore solar projects in Shandong will be allocated through market competition. The bid submission deadline is June 1, 2022.
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China’s transition to a subsidy-free market in 2021 resulted in 34% less capacity installed in the country YoY (-24 GW), which heavily impacted the global total. However, the nearly 48 GW installed in China in 2021 indicates that strong market fundamentals remain despite the shift in policy. If we exclude China, the rest of the world added more than 47 GW of new capacity, a 14% increase YoY, driven primarily by significant growth in Asia Pacific (+134%), Northern Europe (+100%), and Latin America (+82%).
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By shedding more light on reporting practices, the aim is to understand the availability and attributes of disclosure on the use of proceeds (UoP) and environmental impacts/benefits of the projects, assets and activities financed by green bonds. This can identify avenues for improvement and spur more informed discussions among various market participants.
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Based on the review and analysis of the market in 2021, this report then lays out five procurement options that are currently available for corporations to choose from, and tracks the updates and addresses the challenges of each option. Finally, the report proposes four steps that can be used as a guideline for making procurement decisions.
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Conducted with 42 investment institutions among largest domestic and international green bond investors, the survey reveals that satisfactory green credentials and credit fundamentals are top priorities for furthering the appeal of green bonds coming from China. The purpose of the series is to determine investor attitudes to green bonds and establish what is needed for the market to develop further.
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Cutting emissions from high-carbon industries, such as steel and cement making, is crucial to China’s efforts to meet its dual carbon targets, of peaking by 2030 and neutrality before 2060. But low-carbon restructuring, and adopting and commercialising greener technologies, will be tough to do at scale. A recent report from the CBI found China needs to spend between 2.2 trillion and 12.5 trillion yuan change.
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China has been the world’s largest wind market by installed capacity since 2010. The continued growth of wind in China over the past decade is mainly due to ambitious policies from the central government. 2020 was a record year, with more than 54 GW of installations primarily driven by the expiration of the onshore wind FiT. Although onshore wind growth slowed down last year, China retained strong momentum in 2021.
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Many economists, politicians, and central bankers have been studying, theorizing, and debating the potential role central banking could play in the global effort to promote decarbonization and address climate change. There is little consensus, if any. However, the People’s Bank of China (PBOC) has eschewed debate and quietly made efforts to green China’s financial system for some time.
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The decarbonization of road transport is an essential component of realizing broader climate targets, and globally, approximately 21% of anthropogenic CO2 emissions come from road transport. Over the past decade, China continuously rolled out regulations and policies to reduce fuel consumption from new cars and trucks and to shift to electric vehicles. During this time, the country experienced a spectacular flourishing of its electric vehicle market.
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Risen Energy Co., Ltd., a Chinese solar module manufacturer, has secured the contract to provide TITAN 650 W PV modules to Sinopec’s green hydrogen demonstration project in Kuqa County, Xinjiang, China. Once completed, the 361 MW project will be the world’s largest PV-based hydrogen manufacturing facility, and it is being hailed as a breakthrough in China’s efforts to transform its huge traditional energy producers.
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The Chinese government plans to construct 450 GW of renewable energy generating projects in the Gobi Arid and other desert areas to accomplish its sustainability goals. The government intends to establish solar and wind energy installations in the area as part of this initiative. According to the reports, ultra-high voltage electricity transmission lines and coal-fired power plants would be required to secure the power grid’s stability in order to accommodate large-scale renewable energy installations in the country.
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Climate change and net-zero commitments are accelerating the shift from fossil fuels to alternatives such as clean hydrogen. The race is on to adopt hydrogen technologies, with some countries positioning to become tomorrow’s hydrogen superpowers. But who are the frontrunners in the race to adopt and scale up clean hydrogen and other low-carbon fuels.
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