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Chinese target for carbon neutrality by 2060 can complement energy security and economic goals

March 22/2021

MOSCOW (MRC) -- China’s march towards carbon neutrality by 2060 can complement both energy security and economic goals, according to Hydrocarbonprocessing with reference to Wood Mackenzie’s latest report.

Faced with a fractured global trading system, China’s leadership has responded with ‘dual circulation’, an economic manifesto focusing on more secure supply chains, growing the domestic market, and improving export competitiveness.

At the same time, pressured by global climate change movement and escalating domestic pollution woes, the country announced its carbon neutrality goal by 2060 in September last year.

Wood Mackenzie research director Miaoru Huang said: “When President Xi Jinping announced the country’s carbon neutrality goal, he was not simply saying that China would adjust its energy mix to reduce emissions. He was giving notice of the complete transformation of its economy and how it produces, transports, and consumes energy.

Wood Mackenzie senior economist Yanting Zhou said: “Carbon neutrality aligns closely with the ‘dual circulation’ goals of increased capital efficiency and greater self-reliance through dominance of clean-energy resources and the technologies that will also drive large-scale domestic manufacturing. It aims to ensure that the energy transition is stamped ‘Made in China’.”

On its current trajectory (not accounting for carbon neutrality), China’s oil-import dependency would exceed 80% by 2030, while half of its natural gas supply would be imported. However, the pursuit of carbon neutrality halves China’s oil demand by 2040 compared with Wood Mackenzie’s base case, with demand almost eliminated by 2050.  

China will need a 75% increase in electricity demand to meet its carbon-neutral goal, compared to Wood Mackenzie’s base case, to replace fossil fuels. That equates to a staggering USD6.4 trillion investment in new power generation capacity. Nuclear power will have a role to play but growth will primarily come from solar, wind and storage.

Building the production capacity is the easy partvfor China. The country is already the world’s largest producer of wind turbines and dominates global solar module production, with around two-thirds of photovoltaic panels produced domestically. In addition, Chinese manufacturers own significant capacity overseas.

China also leads the supply and processing of most of the raw materials needed for batteries and other zero-carbon technologies. Three-quarters of global lithium-ion battery production, half of the world’s electric vehicles and almost 70% of all solar panels are made in China. Zhou said: “The difficult part is ensuring a secure and competitive supply of raw materials for this growth. This includes the five essential metals - copper, aluminium, nickel, cobalt and lithium. Most notably, China’s dependence on foreign miners for its copper supply is a major concern. This has fuelled the country’s determination to seek greater control of other raw materials.”

Zhou added: “If China can replicate its current global market share in battery and solar-panel production across the entire future value chain of clean energy, it would transform global energy supply, trade and industry. 

As MRC informed earlier, China's daily refinery throughput rose 15% in the first two months of the year, from a low base a year earlier, as fuel demand remains solid and refineries rush to hike production ahead of maintenance season. Refinery processing reached 114.24 million tonnes in the January-February period, data from the National Bureau of Statistics showed on Monday, equivalent to about 14.13 million barrels per day (bpd). The agency didn't disclose numbers for January and February separately.

We remind that in early December 2020, Sinopec’s board  approved plans to build a 1.2-million metric tons per annum ethylene plant and downstream units in the Nangang area of the port of Tianjin, China. Sinopec estimates the cost of the project at 28.8 billion renminbi (USD4.4 billion).

Ethylene and propylene are feedstocks for producing polyethylene (PE) and polypropylene (PP).

According to MRC's ScanPlast report, Russia's estimated PE consumption totalled 241,030 tonnes in January 2021 versus 217,890 tonnes a year earlier. Only shipments of low density polyethylene (LDPE) and high density polyethylene (HDPE) increased. At the same time, PP shipments to the Russian market reached 141,870 tonnes in January 2021 versus 123,520 tonnes a year earlier. Supply of homopolymer PP and PP block copolymers increased.
Author:Margaret Volkova
Tags:PP, PE, crude and gaz condensate, PP block copolymer, homopolymer PP, propylene, LDPE, HDPE, ethylene, petrochemistry, panels, Sinopec, China, Russia.
Category:General News
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