The People’s Republic of China’s (PRC) commitment to achieve carbon neutrality by 2060 has been acclaimed as one of the most important climate actions in the world. Scholars at Cambridge Econometrics estimate that the PRC’s commitment alone could cut global warming by 0.25°C—which would be a very significant contribution to the Paris Agreement’s goal of limiting global warming to well below 2°C, and preferably to 1.5 °C above pre-industrial levels.
To translate the carbon neutrality vision into reality, the world needs to deploy clean energy technologies on a massive scale, starting with solar photovoltaic (PV). Between 2010 and 2020, global capacity of solar PV increased about 18-fold from 40 gigawatts (GW) to 707 GW. During the same period, in the PRC, the capacity of solar PV increased from 1 GW to 254 GW—growing at a phenomenal rate of 74% per annum. By the end of 2020, solar PV in the PRC accounted for 36% of the world total, followed by the United States (10%), Japan (9%), Germany (7%), and India (6%). The PRC is also the major exporter of solar panels, having supplied more than 70% of demand in international markets.
The “open recipe” of such a great success for solar PV includes three main ingredients: international cooperation, enabling policies by governments, and economies of scale.
In 2000, solar PV was still very costly at about $5 per watt. However, that year, Germany adopted its Renewable Energy Act and began providing attractive feed-in tariffs—essentially subsidies—to the developers of solar PV, which quickly helped Germany become the world’s largest solar market. As many countries followed suit by introducing similar incentive policies for solar energy, Chinese companies, mostly private entrepreneurs, developed full supply chains for solar PV to meet growing demand in Europe, North America, and Asia, including the PRC’s own market.
The PRC’s solar PV capacity overtook that of Germany in 2015, and since then the PRC maintained its position as the world’s leading solar nation. As solar PV has been deployed at such scale worldwide, the average cost of solar power declined by more than 80% in the last decade. Solar has become the cheapest form of energy in modern history and is now being deployed all over the world including in the least developed countries in Asia, Africa, and South America.
Beyond solar energy, the PRC is also the world leader in wind power (38% of the world total), hydropower (28%), bioenergy (15%) in 2020, and sales of electric vehicles (EV) in the PRC reached 1.3 million, representing 41% of the global EV market in 2020.
While all these clean technologies are an indispensable part of the low-carbon transition, alone they will not be sufficient to achieve carbon neutrality. The modeling work of Tsinghua University shows that by 2060, when the PRC is supposed to achieve carbon neutrality, the primary energy consumption mix would still contain about 19% from fossil fuels. This means that some advanced engineering must be developed to capture the carbon dioxide (CO2) molecules produced from the burning of fossil fuels, use the captured CO2 if possible, and then store this permanently underground.
Such technology, known as “carbon capture, utilization, and storage” (CCUS), is an important option for reducing CO2 emissions in the energy sector and will be essential to achieving carbon neutrality. According to the International Energy Agency (IEA), for the whole world to achieve carbon neutrality by 2070, CCUS technologies alone will need to make up approximately 19% of global CO2 reductions, with other clean energy technologies making up the rest.
Despite the indispensable role of CCUS in achieving carbon neutrality, its deployment worldwide has been slow—so far there are only around 20 CCUS facilities in operation around the world. One of the main reasons for this is the high cost of CCUS technology, currently around $100 per ton of CO2. The situation of CCUS today is similar to solar PV 20 years ago, so the world needs to apply the same successful recipe for solar PV of cooperation, policies, and scale to the development of CCUS.
The good news is that momentum is building behind CCUS. Plans for more than 30 new CCUS facilities have been announced in recent years, and despite the coronavirus disease (COVID‑19) pandemic, governments and industry committed more than $4.5 billion to CCUS in 2020. In particular, the global energy industry is counting on the PRC to once again play a crucial role in the development of CCUS as it did for solar PV. They have good reasons to trust the PRC in this endeavor as it has solid research and development capacity, a complete industry supply chain, very active entrepreneurship, and strong policy commitments from the government to develop CCUS.
The PRC also has a huge domestic market for the deployment of CCUS that will help bring down the cost to a more affordable level in the next decade. In terms of incentive schemes, unlike solar PV that benefitted from public subsidies in the beginning of its development, CCUS deployment will be primarily driven by market forces such as carbon pricing. In January 2021, the PRC launched its national carbon trading market, covering 2,225 thermal power plants which account for about 30% of the PRC’s CO2 emissions. The carbon price will be a strong market signal for investors in low-carbon technologies, as every single dollar increase in carbon price would mean a dollar cost reduction in favor of the competitiveness of CCUS technologies.
Carbon neutrality is a global mission and so far more than 110 countries and regions have announced their intentions to pursue carbon neutrality. In this long journey to a more sustainable future, the PRC will cooperate with the international community and lead the way by making clean technologies affordable for the benefit of the whole world. And just as the PRC helped to drive global take-up of solar PV, it now has a golden opportunity to do the same for CCUS and play a leading role in achieving global climate neutrality.