The geopolitics of China’s energy transition
China’s emergence as a global economic power and energy consumer has shaped global energy production and trade flows. In the fossil fuel world, though, China was a technology follower and a price taker. In the energy transition, China is likely to play a vastly different role. Government-supported efforts to spur innovation have coincided with growing environmental awareness at home. As such, Chinese companies are becoming global leaders in the technologies underpinning the energy transition. Beijing has also been able to capitalise diplomatically on these gains to become a global leader on climate. Yet China’s track record is extremely mixed. It remains the largest consumer of coal and is also the fastest growing renewables market globally. Similarly, in its overseas investments, China is fuel-agnostic and technology-agnostic, willing to finance and sell both coal-fired power plants and clean energy equipment and solutions. The scope and speed with which China choses to pursue its own energy transition will remain a key variable in the global energy shift. Indeed, China is unique in its efforts to decarbonise before it has fully industrialised but in the near term, the country is still likely to electrify its energy use before it decarbonises power. As the gulf between the US and China deepens, technological decoupling could become a hindrance to China’s energy transition and China may look to slow its shift away from coal, even as it accelerates its efforts to become a global leader in clean technologies. At the same time, competition for control over the infrastructure and commodity supply chains critical to the energy transition could also get caught up in US-China tensions.