“China has transformed the energy world, and now China is transforming,” the International Energy Agency (IEA) reported in its flagship World Energy Outlook 2023. The world’s second-largest economy has saturated its own market. After years of building roads, buildings, and other infrastructure as quickly as possible, China’s vast domestic market has finally been all but exhausted.
But China’s economic growth has plateaued while its energy demand continues to grow. After decades of torrid growth, China’s economy is slowing, the nation’s real estate bubble has burst, the job market is stagnating even as record numbers of students graduate, and unemployment is skyrocketing. But instead of pivoting, Beijing is emphasizing manufacturing and relying on exports to keep the wheels of the country’s impressive economy turning.
As a result, China’s per capita energy consumption has surpassed Europe’s for the first time in history. This overtake is long overdue, as China’s energy consumption has grown rapidly over the past few decades. According to IEA figures, China’s per capita energy consumption grew by a staggering 489% in the 20 years between 2001 and 2021.
China’s greenhouse gas emissions have also increased over the same period, but thanks to China’s unparalleled investment in renewable energy, they have not kept up with energy demand. Since 2000, China’s carbon dioxide emissions have increased by 244%. While that’s still a lot of carbon, it’s a pretty impressive figure in that it’s only half the growth in energy consumption.
In fact, China added more renewable energy capacity last year than the rest of the world combined, and renewables now account for half of China’s installed generating capacity. However, due to the sheer size of the country’s economy and industrial sector, China alone is responsible for 31.72% of global emissions, according to IEA statistics.
Any action by China therefore has a major impact on the global energy and climate agenda. Indeed, China’s manufacturing-oriented policies have led to overproduction of many products, threatening global climate goals. But placing all the blame on Beijing is at best an oversimplification of a complex situation and at worst outright scapegoating. As always, the truth is likely to lie somewhere in between.
While it’s true that China overproduces many goods to inflate its export supply rather than to meet existing export demand, that represents only a small fraction of the country’s overall manufacturing. Most of the manufacturing done in China is to meet very real overseas demand that is central to keeping the global economy running smoothly. And it’s energy-intensive and carbon-intensive.
“We shouldn’t ignore the energy and emissions that European countries are effectively exporting to Chinese manufacturers,” Nick Weiss, CEO of the Energy Institute, recently told Bloomberg. “If reducing energy consumption and emissions in Europe simply leads to higher carbon emissions elsewhere, then policies to tackle global climate change aren’t working,” the Bloomberg article concluded.
This highlights the importance of looking at climate goals and paths from a global perspective, rather than focusing on the “successes” or “failures” of individual countries or economies. Achieving the commitments set out in the Paris Agreement will require unprecedented cooperation and coordination from both developing and developed countries, and countries will need to overcome the political temptation to outsource emissions to poorer countries in order to meet their own isolated emissions targets. Ultimately, this is a zero-sum game. Without a global approach, everyone loses.
Article by Haley Zaremba of Oilprice.com
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