CHINA'S CLEAN ENERGY

BLOOMBERG - June 18, 2024 - China has reduced power generation from fossil fuels as output from sunlight and water surges, feeding hopes that the world’s biggest polluter may have peaked emissions years before its own deadline.

Thermal power, which accounts for the bulk of China’s carbon footprint, fell 4.3% in May from the previous year, the biggest drop since 2022, the statistics bureau reported on Monday. Hydroelectric jumped 39% after heavy rains fed a recovery in the world’s most powerful dams. Output from large solar farms rose by 29% following a record increase in new panels last year.

Thermal’s decline has since accelerated, according to the China Coal Transportation and Distribution Association, dropping 13% year-on-year in the first half of June.

The data reinforces estimates that China’s emissions will fall this year as clean energy starts to meet all of the nation’s consumption growth. China has vowed to peak carbon before 2030, a key milestone on its road to zeroing out emissions by 2060.

Still, a lot of other things have to fall into line for that rosy outcome to hold true. And delivering a rapid decline in emissions is in any case more important than marking their peak.

Much depends on the trajectory of China’s economy, and whether Beijing is forced to reprioritize carbon-heavy investment to revive growth. Other significant emitters, like metals production, manufacturing and infrastructure spending, could offset the gains made in power generation. Grid constraints are hampering the adoption of renewables, the solar industry is facing a crisis, and not all of China’s carbon-free energy sources are firing on all cylinders.

Nuclear’s Contribution

Less fossil fuel burning in May came despite a reduced contribution from nuclear and wind. Atomic generation will likely begin rising later this decade. Only one reactor connected to the grid last year, compared to the expected average of five a year through 2027, according to the World Nuclear Association.

Weaker output from turbines was likely down to a combination of less wind and increased curtailments due to excess capacity, according to Dennis Ip, an analyst with Daiwa Capital Markets.

Peaking and then delivering the rapid decline in emissions will require wind and solar installations to continue their breakneck pace of deployment, but that means more grid infrastructure to prevent wasted energy, as well as keeping those industries profitable.

In the meantime, the impact of climate change is presenting its own problems. Even with the surge in renewables, China’s power network will face increased pressure as scorching summer temperatures boost demand for cooling.

Last week, Hebei province reported its electricity needs from air conditioning more than doubled from the previous year. And more extreme weather in the winter is also raising peak demand for heating.

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