Energy Research Institute: Outlook for China's Energy Transformation to 2024 - Executive Summary

With tremendous efforts, energy transformation can make a decisive contribution to China's realization of carbon neutrality in its economic and social systems by 2060. By 2060, China's economic scale will grow to 3.3 to 3.6 times the level in 2020. Calculated by equivalent calorific value, the total primary energy consumption will first increase and then decrease. By 2060, the total primary energy consumption will be about one-third lower than the peak. Under the BCNS and ICNS scenarios, with the accelerated development of energy transformation technologies (including negative carbon technologies such as carbon capture) and related industries, China's energy system can achieve net zero carbon emissions by 2060, helping to achieve carbon neutrality in the economic and social system by 2060.

(I) Energy conservation and energy efficiency are the premise of energy transformation, and continuous electrification is an effective way to achieve carbon neutrality. If energy cannot be effectively saved, the energy transformation will have a greater demand for green energy, and it will be more difficult and slower to achieve energy transformation. Therefore, energy conservation and energy efficiency are the premise and foundation of energy transformation. In terms of energy conservation and energy efficiency, energy conservation and energy efficiency in a narrow sense refer to improving energy technical efficiency; energy conservation and energy efficiency in a broad sense refer to improving energy economic efficiency (i.e. reducing the degree of dependence of economic development on energy consumption). China's primary energy consumption (calculated by the electric heat equivalent method, the same below) will first increase and then decrease. In 2060, primary energy consumption will be about one-third lower than the peak. In terms of electrification, electrification in a narrow sense refers to the direct use of electricity by the end-use energy sector, and electrification in a broad sense refers to the use of electricity, synthetic fuels prepared from electricity, and commercial heat generated by electricity by the end-use energy sector. In 2023, China's narrow electrification rate and broad electrification rate are about 28%. It is expected that in 2060, China's narrow electrification rate will increase to 59%-62%, and the broad electrification rate will increase to 79%-84%. The electrification rate of the transportation sector has increased the fastest, and the proportion of electrification in the building sector is the highest. In 2060, the end-use energy fields such as industry, freight, and aviation still need some fossil energy to support them, which are the most difficult areas to reduce emissions. Model analysis shows that strengthening international cooperation in energy transformation will help promote the latest high-efficiency energy-saving technologies and electrification technologies in China and around the world, and accelerate the pace of low-carbon transformation in the industrial, building, and transportation sectors.

(II) Building a new power system dominated by wind and solar power is an inevitable choice for energy transformation. Low-carbonization of energy supply is the main way to transform the energy supply side, and replacing fossil energy power with non-fossil energy power is a core task. In 2023, non-fossil energy power generation accounted for 53.9% of China's installed power generation capacity, and fossil energy power generation accounted for 46.1%. By 2060, China's total installed power generation capacity needs to reach 10.53~11.82 billion kilowatts, which is about four times that of 2023. Among them, the proportion of renewable energy power generation capacity will reach about 96%: the proportion of renewable energy power generation will reach 93%~94%. By 2060, nuclear power and pumped storage installed capacity will reach 180 million kilowatts and 380 million kilowatts respectively, and the installed capacity of biomass power generation with carbon capture and storage equipment will exceed 130 million kilowatts. Energy transformation must always adhere to the principle of "building before breaking". On the basis of the growth of new energy and renewable energy generation capacity and the gradual enhancement of power system control capabilities, coal-fired power will gradually transform from base load power to regulating power and backup power while naturally retiring. Model analysis shows that strengthening international cooperation in energy transformation will help China further improve its non-fossil energy supply capacity and power grid security.

(III) Building a highly intelligent new form of power grid is the core of the establishment of a new power system. Building a new power system is the core measure of China's energy transformation. We must adhere to the principle of "one country, one chessboard", coordinate the development of various resources of "source-grid-load-storage-hydrogen", and form a "large interconnection, small balance" power grid. First, optimize the power grid structure. By 2035, a power grid structure of "west-to-east power transmission, north-to-south power transmission, and regional mutual assistance" will be basically formed. By using digital and intelligent technologies, the power grid will be flexible like a "sponge" to respond to changes in power supply and demand: by 2060, the total scale of power transmission in Northwest, Northeast, and North China will increase by 140% to 150% compared with 2022. Second, continue to strengthen the construction of distribution networks, adapt to the development of large-scale distributed new energy, and promote the transformation of distribution networks from "passive" one-way radiation networks to "active" two-way interactive systems; focus on the self-generation and self-use of renewable energy in industry, agriculture, commerce, and residents, and form a massive zero-carbon distribution network fulcrum to provide strong support for the development of more than 5 billion kilowatts of distributed photovoltaic and decentralized wind power. The third is to promote the integration of multiple networks, learn from international cooperation experience, and build a new form of energy network with electric hydrogen as the hub and comprehensive integration of electricity, heat and transportation. By 2060, the scale of green hydrogen needs to reach 340 million to 420 million tons of standard coal, and electric hydrogen and electric synthetic fuels will become important supplementary means to support the load balance of the power grid and promote the cross-seasonal regulation of the power grid. The electrochemical energy storage capacity reaches 240 million to 280 million kilowatts, the number of electric vehicles reaches 480 million to 540 million, and the related vehicle-grid interaction capacity reaches 810 million to 900 million kilowatts, providing instant response capabilities for the power system.

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