A faster transition to clean energy is the economically competitive path forward
Updated 14:52, 02-Mar-2022
Jules Kortenhorst
Employees work at the Tesla Gigafactory in Shanghai, east China, November 20, 2020. /Xinhua

Employees work at the Tesla Gigafactory in Shanghai, east China, November 20, 2020. /Xinhua

Editor's note: The Two Sessions, a major event on the Chinese political calendar, is scheduled to take place in the next few days. We've invited experts from various fields to write articles about hot issues that help us better understand today's China. This is the second piece of our "China's Road to Development" series. Jules Kortenhorst is the CEO of Rocky Mountain Institute and a recognized leader on global energy issues and climate change. The article reflects the author's opinions and not necessarily those of CGTN.  

One of the most notable outcomes from the UN's Conference of the Parties (COP26) late last year in Glasgow was the signal it sent about the end of the fossil fuel era. For the first time, the text of the global climate pact calls for phasing down unabated coal power and fossil fuel subsidies – the beginning of the end. All countries in the United Nations Framework Convention on Climate Change agreed to this goal. Given the shifts which we already see in energy economics, technology, and market momentum globally, countries that accelerate their transition toward a zero-carbon energy future will be advancing their economic growth and global competitiveness.

China is poised to be an essential leader and beneficiary in this transition. Those of us cheering for the clean energy transition applaud China's large-scale deployment of renewable energy, including offshore wind, for which China surpassed global records in 2021. China has also become a leader in the manufacturing and sales of electric vehicles (EVs), with more than 3 million new EVs sold in 2021 and about 800,000 charging stations available for public use at the end of 2020. And this is greatly to China's advantage, considering the huge well of investment opportunities in the EV market.

Despite false and misleading claims that the clean energy transition is causing volatility in the gas and electricity sectors and driving inflation, it is the costs of fossil fuels that are responsible for increasing electricity bills for consumers around the world.

The economics of renewables are instead sending positive market signals. Solar and wind are already the cheapest form of new electricity generation in 90 percent of the world, including China. Not in question is that renewables are the most cost-effective path forward. The only constraint, as we come out of the pandemic and this period of economic growth, is our ability to scale and deploy renewables quickly enough. The faster every country deploys renewables, the more money we will save on energy and other costs.

Wind turbines amid blooming sunflowers in Sitan Town of Jingtai County in Baiyin, northwest China's Gansu Province, August 13, 2019. /Xinhua

Wind turbines amid blooming sunflowers in Sitan Town of Jingtai County in Baiyin, northwest China's Gansu Province, August 13, 2019. /Xinhua

Because both solar photovoltaic (PV) and onshore wind are cheaper than building new coal and gas-fired power plants, no country should build new coal or gas plants. Renewable energy is the most economical option to meet China's increasing electricity demand.

In the future, coal and gas fuel prices are expected to stay relatively high and the increasing cost of carbon will make fossil fuels even more expensive. Additionally, the financing costs for fossil fuel power plants will increase due to investors' concerns about carbon emissions and environmental risks, as financial institutions increasingly take climate risks into consideration in their portfolios. Therefore, investing in renewables and phasing out coal will become not only a pathway toward decarbonization but also a cost-saving and money-making solution.

China is moving in the right direction by pledging to end investment in overseas coal-fired power plants. In the long term, China aims for 80 percent of its energy consumption to be from non-fossil fuels by 2060. Goals like these demonstrate China's interest in being a leader in the energy transition. But in order to phase down coal, as China agreed to at COP26 in Glasgow, the country's power supply must be increasingly provided by zero-carbon sources, including hydro power, battery storage, thermal with carbon capture and storage, and demand response, and it must do so as quickly as possible to build and strengthen its economic competitiveness internationally.

Adopting renewables and clean energy is not only a path toward saving our planet, but a cost-saving opportunity that will secure China's role as a global leader in the clean energy transition while bolstering its economic growth and competitiveness.

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