Glimpses of China’s energy future
China’s largest oil and gas major, China National Petroleum Corporation (CNPC), released its 2050 outlook in late August. This coincides with preliminary work currently being undertaken by domestic think tanks, state-owned enterprises, and ministries ahead of the 14th Five-Year Plan (FYP, which will run from 2021 to 2025). While the CNPC report is by no means a binding document, it is informative as it reflects how the fossil fuel industry in China is thinking about the country’s energy future. Importantly, the baseline scenario remains one of ongoing energy demand growth through to 2040, with even the most environmentally-progressive scenarios pegging 2050 energy demand at 2035 levels. CNPC expects the country’s oil demand to peak in 2030, but for gas demand to continue to rise through the forecast period, suggesting a 300 billion cubic metre (bcm) increase in demand over the next 20 years, roughly on a par with the growth rates seen over the past two decades. But combined, oil and gas are still expected to account for a third, at most, of China’s primary energy mix. So the biggest question for China, therefore, remains the share of coal in the energy mix. According to the CNPC forecast, even though coal’s share will continue to fall, it will still account for a third of primary energy use in 2050. Indeed, while in many developed countries decarbonisation is synonymous with electrification, in China it is the crux of the challenge given the predominance of coal in power generation. To be sure, CNPC, much like the Chinese government, explores in their report a progressive environmental scenario, dubbed the ‘Beautiful China’ scenario, in which the share of coal in the energy mix falls more sharply by 2050. But coal is by no means unanimously viewed as the climate villain in China. Not only is it an important source of government tax revenue, but the coal industry is also a powerful stakeholder that contributes to employment and secure energy supplies. There are certainly advocates of more assertive efforts to phase out coal within China. How they fare in the national debate about the country’s energy priorities over the next 12–18 months will be critical to China’s energy pathways in the 14th FYP and beyond.