Ameer Randolph
China, the world's most populous country, has been the largest consumer and producer of coal and the second-largest consumer and producer of oil products. In recent years, China has been taking steps to reduce its consumption of fossil fuels and shift to a low-carbon economy. In 2016, China committed to making non-fossil fuel energy 20% of its energy supply by 2030 and to peak CO2 emissions by 2030. China has also pledged to phase out inefficient fossil fuel subsidies and is turning to nuclear power and renewable energy sources to decrease its reliance on fossil fuels.
| Characteristics | Values |
|---|---|
| Name of the bank | JPMorgan Chase |
| Fossil fuel funding since 2015 | $2.7 trillion |
| Fossil fuel funding from 2016 to 2020 | $316 billion |
| Fossil fuel funding in the last four years | $268 billion |
| Fossil fuel funding, 43% higher than Citi | $102 billion |
| Global rank in fossil fuel funding | #1 |
| American rank in coal mining and tar-sands oil funding | #1 |
| Global rank in Arctic oil-and-gas funding | #1 |
| Global rank in ultra-deepwater oil-and-gas drilling funding | #1 |
| Global rank in fracked oil and gas funding | #2 |
| Action taken in February 2020 | Cut back funding of coal, dumped financing of Arctic oil and gas projects, demoted Lee Raymond |
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What You'll Learn
China's transition to low-carbon energy sources
China is the world's largest energy consumer and carbon emitter, accounting for one-third of global CO2 emissions and 27% of global carbon dioxide emissions. As such, its transition to low-carbon energy sources is critical to the success of global efforts to prevent global warming from exceeding 1.5 °C.
China has already made significant progress in reducing its coal consumption, which dropped from 67% of primary energy consumption in 2013 to 55.3% in 2023. This reduction has been driven mainly by the increased use of wind, solar, and natural gas. To achieve its "dual carbon" goals, China must continue to advance the clean and efficient use of coal, develop carbon capture, utilization, and storage (CCUS) technologies, and explore the "coal power+CCUS" model.
China's energy sector is the source of almost 90% of its greenhouse gas emissions, so energy policies must drive the transition to carbon neutrality. The country has the technical capabilities, economic means, and policy experience to accomplish a faster clean energy transition by 2030. Its recently launched emissions trading scheme and power market reforms are positive steps in this direction.
To achieve its long-term goals, China will need to make massive shifts in resources, innovation, and new technologies to enhance energy efficiency and resource productivity. This includes expanding the current Emissions Trading System in the power sector to other high-carbon sectors such as steel, iron, and cement and gradually transitioning to absolute emissions caps. China's transition to a low-carbon economy will also require addressing the social impacts, such as job losses in emission-intensive sectors like the coal industry, and providing support to affected communities.
In conclusion, China's transition to low-carbon energy sources is crucial for global efforts to address climate change. The country has already made significant progress in reducing its coal consumption and increasing the use of renewable energy sources. However, further efforts and policy changes are needed to achieve its "dual carbon" goals and ensure a successful transition to a low-carbon economy by 2060.
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Fossil fuel subsidies
There are two types of fossil fuel subsidies: explicit and implicit. Explicit subsidies occur when the retail price is below a fuel's supply cost. For example, the cost of gasoline for car drivers in Iran is lowered due to consumption subsidies. In 2022, explicit subsidies in the United States totalled $3 billion. Implicit subsidies refer to undercharging for environmental costs and forgone consumption taxes, such as air pollution or climate change costs due to burning fossil fuels. These implicit subsidies totalled $754 billion in the United States in 2022.
The consensus among economists is that fossil fuel subsidies disproportionately benefit the rich, as the poorest people are less likely to own cars or consume large amounts of energy. However, removing the subsidies may negatively impact poorer people through indirect price increases in other areas, such as food. Additionally, some governments argue that subsidies are necessary to protect citizens from variations in international energy prices.
There have been recent attempts to reduce or reform fossil fuel subsidies. For example, the Biden-Harris Administration's FY 2024 budget request includes eliminating 13 fossil fuel tax preferences and credits, which is estimated to reduce the federal deficit by $31 billion over ten years. Additionally, the End Oil and Gas Tax Subsidies Act of 2023 aims to repeal fossil fuel tax breaks.
Despite these efforts, fossil fuel subsidies continue due to voter demand and energy security concerns. The G20 countries pledged to phase out inefficient fossil fuel subsidies, but they have not yet been successful. Removing fossil fuel subsidies would reduce air pollution, lower global carbon emissions, and help limit climate change.
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China's energy consumption and production
China's energy consumption is driven by various factors, including industrial activities, transportation, and the increasing demand for electricity. The country has experienced rapid industrialization and urbanization, which have contributed to its rising energy needs. China's energy consumption mix includes a variety of sources, with a significant reliance on fossil fuels, particularly coal. In 2021, coal accounted for 62% of electricity generation in China, and the country burned one-quarter of the coal used globally to produce electricity. However, China has also been transitioning towards cleaner energy sources and increasing the use of renewables in its energy mix.
China is the world's largest market for photovoltaics and solar thermal energy. By the end of 2021, China had 306 GW of solar power, providing 377,000 gigawatt-hours (GWh) of solar power electricity to the grid. Additionally, China is making significant strides in wind energy. Between 2019 and 2024, China is expected to account for 40% of global renewable capacity expansion, with a particular focus on solar PV and onshore wind. The country is also set to lead global growth in biofuel production due to the increasing adoption of ethanol blending.
China's energy production landscape is diverse, with a mix of renewable and non-renewable sources. While coal continues to play a significant role in electricity generation, China is also a major producer of natural gas and is the world's largest importer of liquefied natural gas (LNG). In 2023, China's natural gas production is projected to reach approximately 229.7 billion cubic meters, reflecting its contribution to the global natural gas market. China's government has introduced policies to promote the development of demand response, encouraging electricity users to adjust their consumption patterns to reduce demand during peak hours.
In summary, China's energy consumption and production are characterized by a transition from traditional fossil fuels towards renewable energy sources. While coal continues to be a significant component of China's energy mix, the country is increasingly meeting its growing energy needs with renewables, natural gas, and electricity. China's efforts to expand its renewable energy capacity and promote energy efficiency are expected to have a positive impact on reducing greenhouse gas emissions and improving energy security.
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China's energy policies
As the world's largest consumer of energy and the largest producer and consumer of coal, China's energy policies have focused on addressing its high carbon emissions and reducing its dependence on fossil fuels. In 2024, China issued its first Energy Law, aiming to promote renewable energy and increase the share of non-fossil energy consumption. This law established a comprehensive framework for guiding the country's energy policy towards renewable sources while still endorsing the "rational development and clean, efficient use" of fossil energy.
China's 12th Five-Year Plan, published in 2012, included targets for reducing carbon intensity and raising energy consumption intensity. The plan also aimed to meet 11.4% of its primary energy requirements from non-fossil sources by 2015. To achieve these goals, China has invested heavily in renewable energy sources such as solar and wind power. China has become the world's largest consumer of solar energy and the largest producer of solar water heaters, with rapid developments in solar photovoltaic (PV) production.
However, China's energy policies have also been influenced by its dependence on foreign petroleum imports and the need for electrification. China's growing energy needs have led to a shift towards natural gas and electricity, with natural gas making up 8.1% of its total energy consumption in 2019, an increase from 3.5% a decade earlier. China has also explored nuclear power as a way to decrease its reliance on fossil fuels, with 53 nuclear power reactors in operation as of 2022.
China's suite of sectoral 14th Five-Year Plans outlines a range of mitigation measures to prepare the country for a post-coal transition. Despite these efforts, fossil fuels continue to dominate China's energy mix, with coal covering close to 70% of the country's primary energy needs. China's coal demand and production capacity remain high, and it is the world's largest importer of oil due to its high demand.
China has made international commitments to address its energy policies and emissions, such as the 2016 Paris Agreement, where it pledged to make non-fossil fuel energy 20% of its energy supply by 2030. China has also cooperated with the United States on climate-related issues, including reducing methane gas emissions and tripling renewable energy globally by 2030.
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China's energy imports
China is the world's largest importer of crude oil, with imports of 11.3 million barrels per day in 2023, a 10% increase from 2022. The country's main sources of crude oil imports in 2023 were Russia, Saudi Arabia, and Iraq. China's crude oil imports from Russia increased significantly in 2023, making Russia the top source of crude oil imports for China that year. China's crude oil imports from Iran, Brazil, and the United States also increased during this period.
In addition to crude oil, China's energy imports include natural gas, which has become the country's fastest-growing primary fuel. China is the world's largest importer of natural gas and liquefied natural gas (LNG). In 2021, LNG imports from the United States reached 1.2 billion cubic feet per day, with the United States being China's largest spot LNG supplier. However, following the Russian invasion of Ukraine, Chinese buyers substituted Russian-produced gas with imports from the United States and other countries due to price sensitivity.
China has been diversifying its energy supplies and transitioning towards cleaner burning fuels. In 2021, petroleum and other liquids accounted for 19% of the country's total energy consumption, while natural gas accounted for 9%, nuclear power for 2%, and non-hydro renewables for 7%. China anticipates boosting the share of natural gas as part of its total energy consumption to 15% by 2030.
The country's energy sector is undergoing a significant transformation following the president's call for an "energy revolution" and a transition towards a service-based economic model. This shift in energy policy emphasizes electricity and addresses the fight against pollution. China's efforts to reduce its reliance on coal and increase the use of natural gas and renewable energy sources are critical steps in this direction.
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Frequently asked questions
Yes, China uses fossil fuels. In 2016, China was the world's largest consumer and producer of coal, the second-largest consumer and producer of oil, and the third-largest consumer of natural gas.
Yes, China is trying to reduce its use of fossil fuels. China has committed to peak its GHG emissions by 2030 and phase out inefficient fossil fuel subsidies. China is also investing in renewable energy sources such as wind and solar power and exploring nuclear power to reduce its reliance on fossil fuels.
One key challenge is finding new jobs for former coal miners and restructuring the economy away from coal. The Chinese government estimates that coal industry reform will lead to the loss of more than a million jobs in the coming years.
China has made some progress in reducing its use of fossil fuels. In 2021, China invested $266 billion in energy transition measures, accounting for more than one-third of the global total. China has also pledged to strictly limit the increase in domestic coal consumption and increase the share of non-fossil fuels in primary energy consumption.
