Energy independence will cost China 6.4 trillion dollars

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The IAP «Green Start» constantly tells you about innovations in the transport and energy sectors. This process of development of various directions of the «green» industry is customary to be called an «energy transition». The transition from the fossil fuel era to the new, where renewable energy sources and electrified transport in all segments are undertaken. But why is this done and what is the essence of this «transition»? For all, it is described in different ways, and everyone who participates in this movement has its own subjective grounds. For an ordinary person, this desire to live in cities with clean air, and the ability to pay for the possibility of movement is many times less than when using a gasoline car. At the level of states, this is a matter of preserving the health of the nation, as about it directly speak, for example, in the leadership of India. But this is not all. One of the most important reasons for the development of renewable energy and electric directions, in particular for countries that have been many years of hydrocarbon importers, is the achievement of strategic energy independence.

China, developing its economy, many decades have been almost completely dependent on deliveries from abroad coal, gas and oil. They effectively used these energy carriers, becoming the reform of the previous 30 years of the world’s largest economy with the developed industry. And this is no longer a poor country, where a person is ready to work for a rice bowl a day, and where the limit of dreams was its own bike. The entire modern Chinese industry is based on the standard «Industry 4.0», the largest transnational companies, energy and automotive, I consider it an honor to put our production in China, as this will provide them with guaranteed profits by at least one and a half million market market. But all this is just even stronger the question of the need to achieve the country of energy independence. After all, without it is impossible for sustainable development and planning for decades, or even a century forward. By the way, China is this and differs from most other countries. They, relying on their many thousands of history, operate precisely such milestones. For them, «our» plans for several years seem even funny and frivolous. And when we tell you about new electromotive plants in China, about the development of solar, wind, and hydrogen energy, then it is necessary to understand that this is all the general elements of achieving precisely energy independence, where of course the ecology and health of the population is the most important of the aspects.

Large research and consulting group

China is determined to declarball in order to avoid fuel dependence on the main exporters. And who is one of the main exporters of energy resources to China?

The transition from the economy, dependent on fossil fuels, to the economy, depending on the electricity, will not be without any problems. The main one will provide a sufficient amount of raw materials to expand the national power network to provide 6,870 GW of new capacities that will be required to meet the growing energy needs over the next forty years.

According to Wood, Maca, one of the leaders of Wood Mackenzie, it is likely to lead to the emergence of a new dependence. As oil and coal and coal decreases, the need for example, copper and lithium will increase. China imports about 75% of the oil required by it, 80% of iron ore and 85% copper. That is why today Chinese companies are actively buying and enter into businesses for the extraction and enrichment of the initial raw materials. Copper one of the main components for electrification. It is necessary for electric motors, generators, power lines. To date, China produces only 16% of copper, which he uses inside the country, and the rest of the import. So the leadership of China will also parallel the issue of commodity independence.

And today it can be stated that China has achieved tangible success, for example, on the lithium front. Here, China dominates the supply and processing of most of the raw materials necessary for batteries and other carbon technologies. 3/4 world production of lithium-ion batteries, half of electric cars in the world of Chinese. The same in the solar panel sector, where Chinese companies control almost 70% of the global solar panel market.

Future innovations in the field of energy efficiency and the economy of the closed cycle can change the global demand for natural resources. Meanwhile, new technologies, such as polymer energy accumulators and non-cobalt-containing batteries with high energy density, can radically change the landscape of environmentally friendly energy. Here you should remember our materials on the systematic implementation of recycling technology. This also applies to batteries and solar panels. It is a closed cycle that will significantly solve the issues of dependence on new raw materials.

In the race for leadership in pure energy, China has the advantage of pioneer. They are not afraid to introduce the latest technology, bringing them along the way to perfection and commercial justification.

In its document with guidelines in June 2020, China’s Main Economic Agency — the National Development and Reform Commission — publicly associated the goals of cutting carbon emissions and energy independence. The upcoming 14th five-year plan will secure these ambitions of China.

Without exaggeration, it can be said that this is the most important document on the energy resources market as the basis of the carbon-neutral future of China. This will change the global balance of power.

Support for local hydrocarbon production will not disappear, but the plan will undoubtedly offer reinforced policies regarding renewable energy sources. And this policy is not innovation of China. Norway behaves in the same way. Having extracted and selling oil, they develop all types of electric vehicles, ranging from personal electric cars, and ending with electric ferries and airplanes, develop charging infrastructure, and offshore power plants. That is, using technologies and resources that are still in demand in the market, due to the receipt of finances from this industry, they create new — carbon black. This is not a cunning, it is pragmatic.

Electric vehicles and energy efficiency. The 14th-five-year plan plan also implies the beginning of China’s injection process from dependence on carbon industries in favor of services and technologies, combined with an emphasis on more efficient accommodation of capital and innovation. The plan should not only lay the foundation for huge amounts of investment required for decarbonization, but also to outline a radically different course of the development of China, more independent, efficient and cyclic.

Safety in numbers: How carbon neutrality increases China’s energy independence

With the current trajectory by 2030, China’s dependence on oil imports will exceed 80%, and half of its natural gas supplies will be imported. Despite the fact that Chinese companies invest considerable funds abroad, their own production is 2.2 million barrels of oil per day and 58 billion cubic meters of gas per year, which is less than 16% and 18% of domestic demand, respectively. In the basic forecast of Wood Mackenzie, the current dependence of China from hydrocarbons proves that the desire for carbon neutrality makes it possible to implement the tasks set.

According to the Wood Mackenzie scenario, created on the basis of the voiced plans of China’s leadership, the demand for oil in China will be reduced by half to 2040 compared to the scenario, if everything remained today, and by 2050, demand will almost disappear.

Faced with a fragmented global trading system, the leadership of China responded with «double appeal» — an economic manifesto focused on safer supply chains, expanding the domestic market and improving the competitiveness of exports.

Carbon neutrality is closely related to the objectives of the «double circulation» of increasing capital use efficiency and greater self-sufficiency due to the dominance of environmentally friendly energy sources and technologies, which will also stimulate large-scale internal production. It aims to ensure that the energy transmission is marked by the «Made in China» sign.

China wants to be considered the responsible world leader, but the achievement of this is incompatible with its current position as the world’s largest source of carbon emissions. It is aware of this contradiction and directly connects the struggle with its own emissions with the support of decarbonization throughout the world. China’s desire for carbon neutrality, both at home and abroad will help change geopolitics.

From the point of view of generation capacity, China in order to practically refuse fossil fuel consumption. Additional

For China, the creation of production facilities to achieve this goal is the simplest part. The country is already the world’s largest producer of wind turbines and dominates the global production of solar modules, and about 2/3 photoelectric panels are made in continental China. In addition, Chinese manufacturers own significant capacities abroad.

The most difficult to ensure reliable and competitive supply of raw materials for this growth. Electrification means obtaining energy by wires, and for this it requires metals, especially copper and aluminum. And China needs not only to expand the production of renewable energy sources, but also increase the production of all infrastructure components within the country.

Copper is Achilles of China. Own production of copper inside the country and abroad is only 16% of the need, as a result of which the net deficit is 7.5 million tons per year at current levels of demand.

Despite the decade of Chinese investment in foreign copper assets, leading Western mining companies continue to dominate. An alternative may be an increase in the use of aluminum, despite its less efficient electrical conductivity. China has rich internal bauxite resources, although lower quality than Western alternatives. The company actively develops projects in countries such as Guinea, but a decrease in dependence on import copper remains a serious problem.

For many years, China has supported the production of electric vehicles and their acquisition. They even changed their legislation regarding the arrival of a foreign manufacturer, if only in China, the Tesla plant appeared. Currently, China produces about half of all electric vehicles in the world. It turned out to be a tricky step, since the electrification of mobility will be crucial for decarbonization.

Five main metals for the production of electric vehicles — copper, aluminum, nickel, cobalt and lithium. But in, while the car body is largely created from aluminum, to minimize weight, and copper, which is used in the wiring and electric motors, it is the key metals of cathode batteries — lithium, nickel and cobalt — are crucial for the production of batteries.

In the basic scenario of Wood Mackenzie, world production of nickel will grow by almost 80% over the next two decades, while the demand for cobalt and lithium will increase by 180% and 510%, respectively. And if China — and the rest of the world — decarbonizes faster, then the demand will grow much faster.

China’s dependence on foreign mining companies in the supply of copper feeds its determination to achieve greater control over raw materials for batteries. Over the past decade, the country has made tremendous efforts to increase their possession and access to them, from cobalt resources in the Democratic Republic of the Congo to the reserves of lithium in Chile (and in the entire large South American lithium triangle), and to Indonesian Nickel Rudnikov.

Chinese miners are less burdened than their Western colleagues. Having access to competitive state capital and lower returns, they also face much less attention to environmental, social and managerial issues (ESG).

Heated appetite to work in high risk areas. Cobalt is a bright example. Almost three quarters (and growth) of the world production of cobalt falls on the Democratic Republic of the Congo. There, Western mining companies are faced with exorbitantly high ESG risks that make this Central African country of «uninvascular» — restrictions that are not felt by Chinese companies.

Access to raw materials is not the only story. European and US government want to see investments in plants for the production of batteries to replace traditional plants for the production of engines, reduce supply chains and maintain the internal production of cars for many years. But try making an electric vehicle without Chinese components.

China throws a long shadow on the supply chain of electric vehicles — from access to rare earth metals to almost absolute control over the production facilities for cobalt processing.

For any product, buyers see the risk when the proposal is controlled by a small number of countries or companies. Western governments have long been issued on the influence of the organization of oil-exporting countries (OPEC) for oil markets, while China declares its discontent because it considers the excessive concentration of the offer of iron ore (and price control) among a limited number of miners. But the share of OPEC in world oil supplies is limited about 30%, and mining companies are open to negotiation.

Concerns about the potential domination of China are enhanced as more and more countries undertake commitments until 2050 becomes carbonetral. If the achievement of costly climate objectives can only be achieved by buying materials and technologies in China, as the governments of the whole world can agree on this with the promise of economic rebirth, which comes with «green» transactions and a revolution in environmentally friendly energy?

As the actions accelerate to combat climate change, other countries should learn from China and compete with it. This will require a multifaceted approach to clean energy: to invest, introduce innovations and cooperate. If China can reproduce its current share in the global market for the production of batteries and solar panels across the future chain of creating a clean energy value, this will change the world energy supply, trade and industry.

State support for new technologies: Scientific breakthroughs, for which years previously left, are achieved today for months. Just look at the example of financing the development of vaccines. Technology with zero carbon emissions requires an equally high level of state support, but without waiting for rapid returns. Metal-catalysts of green hydrogen: with the current predicted growth rates of the hydrogen economy, critical metals of the platinum group will rapidly end. This means that catalytic technology should develop to use cheaper and widespread metals.

Transitional metals: It is expected that the production of electric vehicles will grow on average by 15% per year over the next 20 years, which will later create large problems for lithium supplies, cobalt and nickel. International mining companies can be aimed at lithium and nickel, but Cobalt and the Democratic Republic of the Congo, of course, are a problem. However, it is expected to enter the market of raw materials from Australia and Indonesia.

In a world-oriented climatic indicators, according to Wood Mackenzie analysts, a large recovery and processing will be required. This is also called

Here are certainly listed by all aspects of China’s transformation on the way to decarbonization, and energy independence. I have no doubt that China’s leadership has multi-volume foliants of tasks and strategies for their solution.

In an effort to energy independence, China changes the world. The decade of public investment has already set China into the leaders of the power system when it comes to critical resources and technologies necessary for the production of electricity with zero carbon and mobility emissions.

The country now looks on this, radically rethinking his future economy and society, ready to lead a new generation of technological achievements necessary for decarbonization of industry, communal sphere, energy, and transport in all its spheres.

The rest of the world should not just need, but it will come in the same way. It will inevitably mean both competition, and, of course, cooperation with China. I have no doubt that China will solve the tasks. But what will be the role of Russia? The role of an energy appendage that will supply hydrocarbons to stop? Or the ruling circles are finally realized and articulate the reality and irreversibility of decarbonization processes, with appropriate conclusions that will help start creating new directions in production, infrastructure and service.

For the upcoming 3-4 decades of China, China will spend trillions of dollars on the country’s transformation, the result of which will be stability, both from the point of view of ecology and security, economics, production, infrastructure … and we will also have to change, but for a start it is necessary to realize this and accept. And then develop your own new strategy for Russia’s development.


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