Recent energy shocks have further accelerated the global energy transition, not slowed it down

Energy prices have been on a rollercoaster ride in recent years. In the spring of 2020, at the height of the COVID-19 pandemic, demand for fossil fuels plummeted and some delivery contracts of crude oil briefly fell below zero, for the first time in history. Two years later, soon after the start of the Russia-Ukraine conflict, gas prices shot up to historic highs. In the midst of all this, the impacts of climate change are becoming more and more obvious around the world, with devastating heat waves hitting all continents. In 2022, China experienced its most severe heat wave ever, and Pakistan experienced catastrophic floods.

Fortunately, the global transition toward green energy continues and has even gained pace in this period. Ambitious policy support has become available and is already bearing fruit in key regions including the United States, the European Union and China.

In the EU for example, the response to the energy shocks has been to accelerate the green transition, supported by dedicated packages of policy support. There is a widespread impression that the EU is "going back to coal", but the opposite is true — coal consumption dropped during the COVID-19 pandemic, and, despite a small rebound, has remained well below 2019 levels throughout the last years.

Of course, the energy transition must be managed in such a way that it doesn't compromise energy security and stability. No country will risk their citizens and economy suffering from power outages, but this can clearly be avoided. Again taking the EU as an example, while the share of renewable energy in electricity generation grew from 25 percent in 2012 to 37 percent in 2022, the bloc didn't experience any major power outages even when supplies of Russian oil and gas were unexpectedly reduced to a small fraction (about 15 percent) over the two years from January 2021 to December 2022. The EU has benefited from its broad energy mix, flexible power grids and adaptive power markets. This shows that the energy transition can actually enhance energy security, rather than reduce it. That is an important lesson for countries around the world where energy prices have caused havoc in the supply of power and heating in recent years.

The United States' recent Inflation Reduction Act includes subsidies for green sectors, including the production of solar panels, wind turbines and electric vehicles.

Measured both in expenditure and expected impact on carbon emissions and reductions in fossil fuel use, it can be considered the most consequential piece of climate legislation ever passed by the US Congress.

China has experienced serious economic challenges in 2022, but also remains firmly committed to its green transition. China is building renewable energy capacity at the fastest pace in the history of humanity, with 87 gigawatts of new solar power and 38 GW of new wind power coming online in 2022 alone (an annual increase of around 29 percent and 15 percent respectively), and a further 160 GW of wind and solar is expected to be added in 2023. These investments are far more strategic than economic support measures in high carbon emitting sectors, and contribute to more climate-friendly economic recovery.

The key to achieving China's climate goals will be to put this renewable energy infrastructure to optimal use, and thereby reduce the amount of coal power generation. Coal power utilization rates are already low, at about 50 percent of capacity, so in the coming years the main thrust should be investments which support the effective transmission of power across the country and reforms that allow the shifting of existing coal power from base loads to managing peak loads.

A key next stage of the global energy transition will be supporting developing countries in developing modern and low-carbon energy systems. In his speech to the United Nations General Assembly in September 2021, President Xi Jinping pledged that "China will step up support for other developing countries in developing green and low-carbon energy".

This support will be most welcome. Take Indonesia for example — with a population of 270 million, the country is rapidly developing and to achieve its targets for a low-carbon energy system, it will require an estimated $20-25 billion of investment per year from now through 2030. China's support to rapidly developing countries such as Indonesia could be a critical piece in the global energy transition jigsaw.

The global transition to green power is great news for economies and people, as it reduces greenhouse gas emissions, provides more jobs, reduces reliance on imports, and reduces air pollution, among many other benefits.

The recent energy shocks have further raised the awareness of the importance to accelerate the global energy transition, not slowed it down. China will play a key role in the coming decades, through its own low-carbon energy transition, through its renewable energy industries, its advances in technology and lowering costs, and through its cooperation with other countries in terms of investment, trade and development cooperation. China's advances in renewable energy stand to make major contributions to the attaining of the UN Sustainable Development Goals.

Dimitri de Boer is regional director for Asia at environmental law organization ClientEarth and special adviser of the China Council for International Cooperation on Environment and Development. Lauri Myllyvirta is chief analyst at the Center for Research on Energy and Clean Air. The authors contributed this article to China Watch, a think tank powered by China Daily. The views do not necessarily reflect those of China Daily.

Contact the editor at editor@chinawatch.cn.