Efficiency improvements across electricity-intensive sectors could help set China on a path to meeting recently announcement climate targets.
Adapted from the full version in China’s Energy Magazine.
Fast growing electricity demand could add additional difficulty to achieving these goals. One way to meet this challenge could be policy focused on improving electricity efficiency.
We find potential for gains in efficiency across these sectors:
China – the world’s largest producer and consumer of coal power – has recently promised to ‘strictly limit’ the growth of coal consumption in the next five years (2021-2025) and to phase it down thereafter, as part of its efforts to attain carbon neutrality before 2060. In this context, the future trajectory of coal power in China has become clear: coal generation will peak before 2025 and all unabated coal generation will fall to zero before 2060. Now, the question is how to turn this trajectory into reality.
Electricity efficiency could be a crucial aspect of the answer to this question. With enormous opportunities for efficiency improvements, it should be put at the forefront for policy making in China, because this would help redress excessive growth of electricity demand, and hence make the phase-out of coal generation easier.
Between 2010 and 2020, China’s electricity demand grew by an average of 8.1% or about 340 TWh per annum – equivalent to the electricity demand across the United Kingdom in 2020. Although renewable generation also experienced exceptional growth over the same time period, it has not been able to, on its own, satisfy the incremental electricity demand. As a consequence, more electricity has also been produced from coal and other fossil fuels in order to maintain the overall sufficiency of electricity supply.
The industry sector is the largest electricity consumer in China, accounting for almost 70% of electricity consumed in 2018. The electricity intensities of various industries in the sector are in general higher than those of the major industrialised countries, though to varying degrees. The difference is likely due to the use of less efficient production technologies, suggesting large potential for electricity savings if more advanced technologies can be adopted.
Electricity intensity refers to the quantity of electricity required for producing per unit of economic output (in terms of, for example, national GDP or sectoral value-added). It is a widely used indicator for measuring the efficiency of electricity consumption for an economy or an economic sector. In this commentary, electricity intensity is estimated for China’s industry and services sectors by using their electricity consumption divided by sectoral value-added.
Per capita electricity consumption refers to the average consumption of electricity per person, in a particular country or region. It is often used for measuring the efficiency of electricity consumption in the household sector, because electricity consumption in the sector cannot be directly translated into economic output. In this commentary, per capita electricity consumption is estimated by using household electricity consumption divided by total population.
The services sector is another major electricity consumer in China, responsible for about 15% of electricity consumption in 2018. It is also one of China’s fastest growing electricity consumers, with annual consumption rising at an average of 16% over the period 2010-2018, from 448 TWh in 2010, to 1,023 TWh in 2018. This compares to 7.4% for the industry sector, 10.5% for the construction sector, and 12.0% for the household sector. The electricity intensity of the services sector in China has exhibited an upwards trend over the past few years, reaching 0.20 kWh per dollar of sectoral value added in 2018 – more than twice the world average. China’s high electricity intensity of the services sector suggests large potential for improvement.
There also exists significant scope for efficiency improvement in China’s household sector. Consider domestic air conditioners – the main electrical appliance in the household sector – for example. The average annual performance factor of variable speed mini-split air conditioners sold in China over the period 2015-2017 was 7-20% lower than the most efficient units available in the market and 50-60% lower than the best practice units. This means that large amounts of electricity can be saved if more stringent standards could be introduced on the efficiency of air conditioners.
China’s huge potential for electricity efficiency improvements, if realised, could help redress its excessive growth of electricity demand as the economy continues to grow. This, together with an inexorable march of renewable energy, is very likely to expedite the process of squeezing coal out of the generation-mix. Policymakers should therefore put more emphasis on tapping into the country’s potential for electricity efficiency improvement as they draft the 14th energy five-year plan – the first comprehensive policy guidance for steering China’s journey to carbon neutrality.
Grab bucket cranes along a quay load ships with coal to be used for generating electricity at Lianyungang Port in Lianyungang City, east China’s Jiang
Credits: Cynthia Lee / Alamy Stock Photo
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