Following its rapid economic expansion in the past decades, China has now become the world’s largest power market, the world’s largest carbon dioxide emitter and it consumes half the world’s coal. By 2030 its power market will have more than doubled in size and coal’s dominance will be challenged by competitive renewables, increased awareness of environmental pollution, the prospects of shale gas and a potential price on carbon emissions.
In this report, Bloomberg New Energy Finance examined the following questions:
● What are realistic scenarios for China’s power sector development until 2030 given fast declining renewable costs, the potential for shale gas and increased energy efficiency?
● Besides the much needed top-level political will to realise its ‘Beautiful China’ dream, how are economic and technological drivers pushing China’s transition towards a cleaner future?
● How should businesses position themselves in anticipation of the next wave of power market reform and benefit from China’s evolving power sector over the next 20 years?
The new Chinese leadership is responding to calls for more equitable and sustainable economic growth, a faster pace of reform, and to concerns over environmental degradation. Expected structural reforms will gradually reduce the government’s interference in the economy, allow more private capital to enter state-dominated sectors such as energy, and impose further environmental controls. It is against this background that we have modelled the outlook for China’s power sector according to four scenarios until 2030 – Traditional Territory, New Normal (our base case), Barrier Busting, and Barrier Busting scenario including a carbon price. All modelling was done with the China module of our proprietary Global Energy & Emissions Model (GE2M), which leverages data and knowledge from our China-based team of experts.
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