China: Climate leader and villain

Abstract

China’s emergence as a global economic power and energy consumer has shaped global energy production and trade flows. In the fossil fuel world, though, China was a price taker. In the energy transition, China is likely to play a vastly different role. Government-supported efforts to spur innovation have coincided with growing environmental awareness at home. As such, Chinese companies have become global leaders in the technologies underpinning the energy transition. Beijing has also been able to capitalise on these gains to become a global leader on climate. Yet, China’s track record is extremely mixed. It remains the largest consumer of coal globally and is also the fastest growing renewables market globally. Similarly, in its overseas investments, China is fuel-agnostic and technology-agnostic, willing to finance and sell both coal-fired power plants and clean energy equipment and solutions. The scope and speed with which China chooses to pursue its own energy transition will remain a key variable in the global energy shift. Indeed, China is unique in its efforts to decarbonise before it has fully industrialised. As such, China could electrify its energy use before it decarbonises power. As the gulf between the US and China deepens, these contradictions will become increasingly visible. China may look to slow its shift away from coal while also accelerating its efforts to become a global leader in clean technologies. Indeed, China already controls some of the infrastructure and commodity supply chains critical to the energy transition.