China』s BYD overtaking Tesla as the world』s best-selling brand of electric vehicles is one of the most eye-catching headlines of the first week of 2024. But it is just one of the green milestones that China has recently achieved. More important for the world』s environment was the news late last month that China』s share of renewable energy capacity — mostly solar, wind and hydro — reached about 50 per cent of its total generation capacity in 2023. Renewables』 installed capacity surpassed that of coal power for the first time, according to Xinhua, China』s official news agency.
China』s advances in deploying clean tech should be applauded, even if it is continuing to expand its use of fossil fuels such as coal. The country remains the world』s biggest emitter of carbon dioxide, a greenhouse gas implicated in global warming, accounting for 31 per cent of global emissions in 2022 — more than double America』s 13.6 per cent. Its progress towards a green transformation is therefore of vital importance.
Key insights lurk among the detail. One is that new renewable energy was more profitable than relying on coal and gas for 14 Chinese electricity generators researched by Rystad Energy, a consultancy. While China』s renewables installation in its early days was pushed by state policy, it now seems increasingly to be driven by the profit motive.
Another revelation is that China』s state-owned enterprises, often seen as lumbering giants, are helping to accelerate the adoption of clean tech. Such SOEs, which contribute the lion』s share of China』s gross domestic product, have the resources and backing to develop at scale some of the biggest solar and wind plants, even in remote areas.
These dynamics, coupled with a clear political imperative, provide some reason for optimism. China is on track to shatter its target of installing 1,200GW of solar and wind energy capacity by 2030 five years ahead of schedule, says Global Energy Monitor, an industry publication.
Several international experts also forecast that Beijing』s target of reaching peak CO₂ emissions by 2030 will probably be achieved ahead of schedule. If this happens, it may embolden China』s voice in climate negotiations. Already, 「environmental responsibility」 is part of a Global Civilisation Initiative unveiled by Xi Jinping, China』s leader, last year as part of Beijing』s vision for an alternative world order to challenge that of the US-led west.
Indeed, as leaders in solar, wind and EV technologies, Chinese companies harbour considerable ambitions to capture overseas markets in the developing world as well as in the west. The European Commission said last year that China』s share of EVs sold in Europe had risen to 8 per cent and could reach 15 per cent in 2025, noting that its vehicles undercut EU-made rivals on price.
Partly as a consequence, western resistance is rising. Brussels launched an investigation last year into whether to impose punitive tariffs on Chinese EV imports. Ursula von der Leyen, European Commission president, complained that prices were 「kept artificially low by huge state subsidies」. Similar concerns surround Chinese solar and wind technology exports.
For the west, China』s growing prowess in clean tech represents a dilemma. The US and European countries risk becoming overly reliant on a strategic rival for some key renewable technologies. To avoid this, rather than engaging in knee-jerk protectionism, they need to do more to nurture their own green sectors through incentives, faster planning procedures and investment in infrastructure. But when it comes to climate change, Beijing』s green advances should be seen as positive for China, and for the world.
Climate Capital
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