China has pledged to be carbon neutral by 2060. Here’s what it will take to make it happen.

By Leo Liang, Tera Strategy and Business Development Director

Last month, China’s President Xi Jinping went in front of the UN and pledged that the country will be carbon neutral by 2060. This has many shaking their heads. After all, how could a country that is still building coal power plants today possibly reach carbon neutrality over the next 40 years? However, the world should take this pledge seriously. When these types of policies are announced, especially by the president, they aren’t done so lightly. This wouldn’t be the first time China has made ambitious environmental promises and kept them. So what exactly would it take to transform China from the world’s largest emitter of greenhouse gas to carbon neutrality?

There’s no miracle or overnight solution for achieving carbon neutrality. Every sector, business and individual contributes to emissions in one way or another, and any serious attempt at reaching net-zero carbon will require a solution that takes all of these factors into consideration. Breaking down emissions into three primary areas—transportation, commercial/residential and industrial—is a useful way to envision a holistic action. Furthermore, it will require efforts at every level of society to make it work. Not just the government, but people and companies as well. In all areas and for all actors, the solutions will need to be the same: use fewer fossil fuels and opt for renewables, encourage the development of new technologies to increase energy efficiency and streamline the regulatory barriers to implementing them.

Building on a clean energy foundation

Although China has already made major strides in adopting renewable energy—the most installed renewable power assets in the world—it is still only a tiny fraction of energy production in comparison to fossil fuel use. As of 2018, coal accounted for 59% of China’s energy use, and petroleum another 18.9%. Even with impressive growth in renewable energy production, it has not been enough to offset the rising energy demands from year to year. One of the biggest challenges is that not every locale is abundant in the wind or sunlight necessary to maintain reliable energy. Although recent advancements such as carbon capture are promising for power plants that continue to use fossil fuels, solving the problem of clean energy distribution is necessary to cut emissions. Luckily, newer technologies are being developed that can store large amounts of zero-carbon power and send it long distances.

Currently, lithium-ion batteries are being used to store renewable power at power plants serving regional grids or at industrial and commercial sites. Capturing the maximum amount of zero-carbon electricity is key to its use as a reliable and consistent replacement for fossil fuels, but distribution is often limited to smaller locales. On a national scale, China needs the ability not only to store massive amounts of clean energy but also to transfer it great distances to supply areas that aren’t suitable for renewable generation. That’s where developing technologies such as ultra-high voltage (UHV) power lines and hydrogen cell storage could come in as they mature. Hydrogen cells charge more quickly and can hold up to 200x the amount of electricity of lithium-ion batteries, they are cleaner to dispose of, and, if connected to UHV power lines, can send electricity thousands of kilometers—such as the ones that are supplying billions of kWh of clean energy to Hunan right now. In the meantime, energy decentralization will play a large part in reaching that goal.

Energy decentralization would allow commercial and industrial properties to generate clean power and heat onsite and replace the coal-powered grid energy on which they still rely. Existing urban commercial and residential properties can easily install solar panels on their roofs, while newer buildings can be designed with clean power in mind and integrate solutions such as geothermal heat and cold storage. Industrial sites, provided they are located in an area suitable for it, can install wind turbines on as little as 400m2. Any serious effort to reach carbon neutrality will need to view energy decentralization as a cornerstone of its approach. It should also provide the right environment through various forms of incentives and support for the development of new technologies.

Paving the way for innovation

AI and IoT are two innovations in particular that are already showing their value in terms of energy efficiency management. In places like office towers, where large amounts of energy are wasted on heating and cooling, installing IoT sensors to capture and run data through an AI platform to automate HVAC systems can reduce energy use by around 15%. At factories, AI software can be used to identify compressed air leakage or optimize heat production and use. And pairing AI with technologies like geothermal inter-seasonal heat and cold storage has been proven capable of cutting up to 70% of CO2 emissions. Ensuring that the energy we use is used efficiently is as imperative to reach the 2060 target as cutting the use of fossil fuels. But even with all of this new technology and potential, promising a carbon-neutral future requires a full-on mobilization of resources into research and development of new technologies, as well the removal of barriers and a system of incentives to implement them.

It’s up to the government to break down the existing barriers to allow for the quicker and cheaper installation of renewable energy equipment, whether that’s wind turbines, solar panels or biomass kilns. There are many hurdles to implementing a clean-energy plan once a business has one. The next five-year plan will necessarily address these obstacles to streamline and incentivize efforts to cut emissions. Based on how this has worked in the past, we can probably assume that this will begin with pilot zones—such as how Hainan Island is transitioning to have 100% of new vehicle sales be electric by 2030. From these pilot zones, then the government can analyze what worked, what didn’t work, and how to make it even better for the rest of the country.

Once these doors are open, all businesses and individuals will be expected to play a role. Even if this initiative begins with incentives, you can be sure that there will be punishments in the future. Businesses can, and should, get a head start. Looking at operations and making plans to a) optimize existing equipment and cut back on wasted energy and b) consider the feasibility of integrating renewable power onsite is extremely valuable right now but will be necessary for the future. All businesses in China should be acting now to get ahead so that you can reap the full benefits of whatever incentives come and taking steps to reduce your emissions for when penalties inevitably begin.

In the long term, the collaboration between public and private sectors and between domestic and international markets will be essential. China will need to facilitate talent not only within its borders but also outside of them. It will require a multi-lateral effort leveraging supply chains, connecting markets and encouraging mutual benefits across Asia and the rest of the globe. It’s a major task, as ambitious, if not more so than the Belt and Road Initiative we saw in 2013. The level of cooperation required, and indeed the level of interest the international community should have, in assisting China in achieving this goal could come to be known as the “Energy Silk Road.”

Taking drastic action is the only choice

Even though this is an initiative coming from the highest level of government, there will be resistance. Conflicts of interest will spring up, as all energy companies in China are State-Owned Enterprises. It will be a radical upheaval of the status quo and a complete remodeling of energy in ways that we have never seen done before. Nevertheless, through a concerted and persistent effort and a plan that emphasizes collaboration, breaks down barriers and incentivizes the implementation of new technologies, we may see that such a goal is reachable even for a country that’s currently the world’s largest emitter of CO2. Even if China comes close to being carbon neutral by 2060, it will be an impressive and important step to stemming the coming crisis of climate change.

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