Li Xinlei
The world today is undergoing profound changes unseen in a century. A raft of crises， including climate change， soaring energy price and sluggish economic growth， are dragging behind the achievement of the UN 2030 Sustainable Development Goals. Clean energy represented by wind， solar， biomass and green hydrogen， as the mainstay of next generation energy economic system， provides an overall response to these crises. As fossil energy consumption accounts for more than 70 percent of global greenhouse gas emissions， the core of energy transition is to replace fossil energy with clean one and decouple carbon emissions from economic development. As major countries are ramping up competition in todays world， the global clean energy transition presents new development trends and is confronted with multiple challenges. In such process China is playing an essential role and is increasingly becoming a leading force.
New Trends in Global Clean Energy Transition
Recent years have seen rapid technological innovation， fallen costs and increased application scenarios for clean energy. It has gained greater potential in addressing climate crisis， guaranteeing energy security， ensuring energy accessibility， and spurring green recovery.
I. Clean energy transition becomes the core solution to climate crisis in the context of global carbon neutrality
According to the Sixth IPCC Assessment Report in 2022， the global climate is changing faster than previously expected， many ecological areas are approaching their critical points， and the average temperature increase of global surface will reach or exceed 1.5℃ in the next 20 years. Against this backdrop 139 countries， 116 regions， 241 cities and 804 companies in the world， which account for 90 percent of global GDP and 88 percent of total greenhouse gas emissions， have set carbon-neutral targets by the end of 2022. All countries give top priority to decarbonization in energy sector in their medium and long-term road maps to achieve carbon neutrality. Moreover， through increased investments they aim to develop clean energy such as wind， solar， green hydrogen， nuclear and biomass， as well as related green industries such as green transportation， digital energy storage technology， industrial decarbonization technology and sustainable infrastructure.
The International Energy Agency noted that despite supply chain disruptions， transport delays and component price spikes due to COVID-19 and regional conflicts， newly added renewable capacity increased by 17% in 2021 to a record high of 314GW， in particular， renewables share of net new power reached a record 84%. As of October 2022， 183 of the 193 Parties to the Paris Agreement on climate change had included renewable energy in their Intended Nationally Determined Contributions; 143 of them made it known their quantified clean energy development targets. In November 2022， the COP27 meeting in Sharm el Sheikh of Egypt put loss and damage on its agenda for the first time and highlighted the need to enhance climate adaptability and governance resilience of vulnerable countries through the development of clean energy.
II. Clean energy is seen as an important green engine for post COVID-19 economic recovery
Many countries are taking green recovery as an opportunity to nurture new competitive advantages in the post COVID-19 era. They are keen to develop key green and low-carbon technologies and foster green industries. The EU， US， Japan and others have all put forward a package plan for green recovery by devoting more investment to clean energy research and development and market expansion. In particular， as the green and digital transition becomes ever more prominent， investments and R&D in new digital technologies such as smart grids， smart energy storage， the Internet of Things， big data and artificial intelligence have increased the share of clean energy used in emerging smart power generation and distribution systems.
According to the IEAs Global Energy Investment 2022 report， clean energy investment in 2022 exceeded US$1.4 trillion， accounting for nearly three quarters of total energy investment growth in 2022. Renewables， grids， energy efficiency improvements and storage accounted for more than 80% of total investment in power sector. Meanwhile， the booming clean energy industry has brought more jobs and investment opportunities. The International Renewable Energy Agency （IRENA） stressed that people employed in clean energy sector worldwide continue to grow from 12 million in 2020 to 12.7 million in 2021， despite a sluggish global economy. The Agency predicted that if the energy transition measures are in line with the 1.5℃ cap on global warming， 85 million new jobs will be created by 2030 （compared with 2019）， far more than the jobs lost in fossil energy.
III. The energy crisis caused by geopolitical conflict has accelerated the pace of global clean energy transition
The Ukraine crisis has caused acute fluctuation in energy market， with high fossil fuel and electricity prices triggering an energy crisis centered in the EU and gradually rippled across the world. Energy security concerns have prompted countries to turn to solar， wind and other clean energy for the purpose of supply diversification， in order to reduce dependence on imported fossil fuels whose price has soared. Adding to that， competitive advantages of clean energy have emerged thanks to technological innovation， manifested by the power generation costs falling by 85%， 68%， 54% and 45% for photovoltaic， solar thermal， onshore wind and offshore wind respectively from 2010 to 2020. Clean energy is becoming more economically attractive and showing stronger momentum for development than ever before due to its economic attractiveness. According to the IEA， the global installed renewable energy capacity is expected to nearly double to 2，400GW between 2022 and 2027， and renewables are expected to take up more than 90% of global power expansion， overtaking coal as the worlds largest source of electricity by early 2025.
With the rising market competitiveness of clean energy， countries aim to tap into the potential of clean energy transition in protecting energy security interests. The EU issued the Joint European Action for More Affordable， Secure and Sustainable Energy in March 2022， according to which it will take measures to accelerate the diversification of energy supply， increase the proportion of clean energy and improve energy efficiency in order to reduce energy dependence on Russia. In particular， it will increase the proportion of renewable energy from the previously planned 40% to 45% by 2030. In the face of the high inflation caused by the energy crisis， the Biden administration issued in emergency Inflation Reduction Act in August 2022， which includes about US $369 billion in subsidies and tax credits to address climate change and promote clean energy transition， bringing unprecedented development opportunities for renewable energy， green hydrogen， energy storage batteries and carbon capture technology.
Multiple Challenges Confronting Global Clean Energy Transition
Despite the growing consensus at the global level around clean energy transition， the pains it induces and challenges it faces are piling up.
I. There is still a huge gap between clean energy growth and carbon neutrality goal
While the energy crisis has accelerated the transition to clean energy， countries are also spending a large sum to invest in and subsidizing fossil fuels in order to secure short-term energy supplies and control total energy costs. This has led to the rise in carbon emissions in the wake of the pandemic. Germany is a typical case. While once it promised to phase out coal power by 2030， it has to resort to coal for power generation as the replacement of natural gas due to the energy crisis. In addition， clean energy is used far less in industrial manufacturing， heating and cooling， transportation， engineering construction and other fields than in electric power sector. The dependence by traditional industrial sector on fossil energy and high carbon lock-in make the path to green recovery full of obstacles.
According to the UN 2022 Emissions Gap Report， global emissions need to be reduced by 30% and 45% respectively in order to achieve the goal of holding the increase in the global average temperature to below 2℃ and 1.5℃ set by the Paris Agreement. Yet the current INDCs proposed by various countries can only reduce global emissions by 5% to 10%. If things play out as the current policy dictates， the world is expected to have a gap of 25 billion， 23 billion and 17 billion equivalent tons of CO2 by 2030 in order to achieve the 1.5℃， 1.8℃ and 2℃ targets by the middle of this century. To close such a large emissions gap in just eight years is a severe challenge for all countries， as it requires urgent and large-scale transformation and upgrading in such key sectors as power supply， energy-intensive industries， transportation and construction.
II. The “North-South gap” and “transition gap” in clean energy development is ever widening
The rapid growth in renewable energy， power grids and storage since 2020 has occurred almost entirely in the economically advantaged regions. South countries often suffer clean energy transition vulnerabilities due to their lack of climate resilience. They may fall back into energy poverty in the absence of technical assistance and financial support. African countries， for example， have very little to gain from the energy transition despite the continents abundant clean energy resources. According to Bloomberg New Energy Finance， of the US$434 billion invested globally in wind， solar and other clean energy projects in 2021， only 0.6% （US$2.6 billion） went to Africa， and three-quarters of it was concentrated in a handful of countries， including South Africa， Egypt， Morocco and Kenya. In addition， there is a growing divergence between North and South countries on how to further advance the clean energy transition， which is reflected in transition priorities （mitigation or adaptation first）， national development paths and transitional options， emission reduction responsibilities and technology transfer. The Adaptation Gap Report 2022 by the UN Environment Programme estimates that US$160 billion to US$340 billion will be needed annually for adaptation actions by 2030 and US$315 billion to US$565 billion by 2050. However， the current adaptation spending accounts for less than a tenth of the total， and developed countries often just pay lip service to their aid pledges. The global commodity price shock triggered by the Ukraine crisis and the subsequent inflation have added to the pressure on vulnerable countries， signifying that clean transition should strike a balance with other imperatives such as healthy life， poverty reduction and economic growth. By the end of 2021， 2.6 billion people still lack access to clean cooking， and 732 million cant use modern electricity. For this reason， developing countries need to adopt a step-by-step and equitable manner in their clean energy transition， rather than taking a one-size-fits-all approach to hydrocarbon use. But when it comes to energy finance， western banks and multilateral financial institutions have ceased to finance pipelines， ports and other infrastructure related to hydrocarbon development.
III. The geopolitical rivalry on the global clean energy transition is intensifying
The development of clean energy industry has made clean energy technologies and critical minerals ever more valuable. For example， rare metals such as lithium， cobalt， nickel， gallium， indium， rare earth and platinum play a key role in solar panels， wind turbines， electrolytic hydrogen storage， power batteries and other low-carbon technology products. They are considered indispensable to clean energy transition. As clean energy industry has become a new economic growth point and constitute the core competitiveness of a country， the governance of critical clean energy mineral supply chain has become a strategic security issue related to energy geopolitical rivalry and industrial competitiveness.
As China enjoys rapid development in clean energy in recent years， the US and European countries has begun to see China as a key competitor and attempt to contain Chinas green development by formulating new clean energy standards tied to the so-called human rights and democracy and establishing exclusive small multilateral alliances. The Biden administration， for example， stressed right when it took office to ensure the USs leading role in clean energy manufacturing and low-carbon technology innovation in the face of the climate crisis. In June 2022， the US announced a Mineral Security Partnership with major partners including Canada， Australia， Finland， France， Germany， Japan， and South Korea， aiming to control the production， processing， and recycling of critical minerals and to decouple China from the global supply chain of clean energy critical minerals. In September 2022， the EU enacted the Critical Raw Materials Act to examine the interdependence and vulnerability of clean energy supply chains from a geopolitical perspective， and to ensure supply chain security for critical minerals such as lithium and rare earth through strategic autonomy.
Chinas Important Role in Global Clean Energy Transition
China is the worlds largest country in clean energy installation and green investment. Its structural advantages in global clean energy transition are becoming ever more prominent. With the target of carbon peaking by 2030 and carbon neutrality by 2060 put forward， China is expected to become a leader in the international green energy system and a defender of sustainable energy security.
I. China is increasingly becoming a leading force in clean energy transition
As the worlds largest energy consumer， Chinas commitment to carbon neutrality has inspired other big carbon emitters to pace up their green transition. In 2021， China became the first country in the world with installed renewable energy capacity of over 1 terawatt. During that year the total installed renewable energy capacity increased by 136 gigawatts， accounting for 43% of the new total globally. China ranks first in wind， solar thermal， photovoltaic power， installed hydropower， and total production and sales of new energy vehicles. The 14th Five-Year Plan for Renewable Energy Development released in June 2022 charted the course that the annual increase of renewable energy generation should account for more than 50% of the total increase in social electricity consumption， the power generation of wind and solar energy should be doubled， and renewable energy storage and consumption should be promoted to ensure its high usage during the 14th Five-Year Plan period， in order to fulfill the task that the proportion of non-fossil energy consumption shall reach 20% by 2025. With its green structural advantages， China is increasingly becoming a mainstay in clean energy transition， playing a leading role in clean energy technology innovation， equipment manufacturing and value chain optimization. China enjoys outstanding advantages in the production of wind turbines， solar panels and electric vehicle batteries. Seven Chinese wind turbine manufacturers rank among the worlds top 10. Chinas photovoltaic industry contributes to more than 70% of global production capacity， raising the worlds expectations for energy transition through driving down photovoltaic costs. China owns 70% of the worlds battery production capacity for electric vehicles， with Ningde Times and BYD already taking half of the global power battery market. Within the framework of the Five-Year Plan， China will forge ahead with energy transition and build a clean， low-carbon， safe and efficient energy system， pursue ecological and sustainable development in the process of achieving carbon peaking and carbon neutrality goal， and actively participate in the development of a global green and low-carbon energy system.
II. The green Belt and Road drives clean energy transition in partner countries
By jointly developing a green Belt and Road with partner countries， China is giving full play to the green spillover effect of clean energy transition. In September 2021， China announced that it would vigorously support the green and low-carbon energy development of developing countries and stop in full the construction of new coal power projects overseas. Moreover， China has shifted its focus of overseas energy investment from coal to clean energy， injecting new momentum into the global drive to net zero. This not only demonstrates Chinas commitment as a responsible major country， but also its adherence to multilateralism in real sense. By pooling consensus on green development， it has attracted partner countries of the Belt and Road Initiative in joining in the endeavor to promote global green transition.
At present， Chinas clean energy project investments in Belt and Road countries stand above US$2 billion annually， and it keeps growing in general. Coinciding with the global pace of Chinas clean energy businesses and green investment projects， the international cooperation on clean energy， highlighted by the China-Pakistan Economic Corridor， the Bangladesh-China-India-Myanmar Economic Corridor， the China-Indo Peninsula Economic Corridor， the China-Central Asia-West Asia Economic Corridor， the New Eurasian Continental Bridge， the China-Russia-Mongolia Economic Corridor， and China-Africa cooperation， has been consolidated. Building on that， China has formed an all-dimensional and multi-level international cooperation pattern on clean energy， with hydropower， photovoltaic， wind power and electric vehicle projects taking the lead and thermal solar， hydrogen and biomass energy projects advancing side by side. At the same time， China initiates the new aid model of integrating overseas clean energy development with the elimination of energy poverty by including the green Belt and Road Initiative into South-South climate cooperation. For example， since 2020， China signed memorandum of understanding on the Development of Low-carbon Demonstration Zones with Laos， Cambodia and Seychelles respectively. According to the Memorandum China not only offers clean energy materials such as photovoltaic and wind power equipment and electric vehicles， but also formulates low-carbon development plans together with recipient countries to better assess the potential of clean energy development and train low-carbon professional.
III. Improve global clean energy governance through building a global clean energy partnership
As a contrast to Europe and the USs practice of playing up geopolitical and security issues in clean energy governance， China advocates sharing development opportunities with the world through multilateral cooperation featuring openness and win-win， and shaping a new order in climate and energy governance. In recent years， China and relevant countries and regional organizations have set up a number of regional clean energy cooperation platforms， including the China-ASEAN Clean Energy Capacity Building Program， the China-Arab League Clean Energy Training Center， the China-African Union Energy Partnership， the Center for Dialogue and Cooperation on Energy Project between China and Central and Eastern European Countries， and the APEC Sustainable Energy Center. Through these platforms China carries out clean energy assistance， cooperation development， technology exchange and capacity training in different regions. In September 2022， the National Energy Administration issued the Concept Paper on the Global Clean Energy Partnership under the framework of the Global Development Initiative， which aims to build a new global partnership that is green and inclusive， in order to accelerate clean energy deployments in developing countries and achieve universal accessibility of sustainable energy worldwide.
The Global Clean Energy Partnership is an important platform for China to take part in global climate and energy governance. It provides a feasible path for shaping global clean energy governance mechanism. First， establish a communication network. China will co-host the International Energy Reform Forum with IRENA， explore the establishment of an international energy reform alliance， promote the interaction of various energy mechanism elements， and jointly create a conducive environment for clean energy development. Second， establish an industrial integration network. China will deepen the integration of global energy industry chain， supply chain and value chain， and combat the tendency to put clean energy industry into geopolitical security perspective and the attempts of vicious decoupling. Third， shape the network for project development. China will tap the potential of clean energy market in developing countries， encourage investment in clean energy infrastructure， and launch a green project bank under the framework of the Global Development Initiative. Fourth， strengthen the network for technology sharing. China will provide technical support and capacity training for clean energy development to countries in need while engaging in international cooperation on key green technology breakthroughs. By building a flexible and pragmatic network of clean energy partnerships， China is increasingly playing a leading role in shaping a new global clean energy governance order that is fair， just， reasonable and inclusive.
Li Xinlei is Professor at School of Political Science and Public Administration， Shandong University， China