The Solution Is to Diversify Energy Resources and Accelerate the Transition

published Jun 16, 2022
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The Russia-Ukraine war has exerted a significant negative impact on China’s energy security. As the world’s largest importer of oil and gas, China has paid a huge price for the high energy prices triggered by the war. Customs data show that China’s oil and gas imports fell significantly in March and April. The decline is, due in part to China’s economic slowdown, but its volume is less seen in recent memories: in the first four months of 2022, China imported 171 million tonnes of crude oil, down 4.8 percent as compared with the same period of last year, while liquefied natural gas (LNG) imports totaled 36 million tonnes, with a year-on-year drop of 8.9 percent. Specifically, LNG imports fell by more than 20 percent in April. According to Sia Partners, China is unlikely to maintain significant growth in LNG consumption, and it will witness a drastic decline in LNG imports.

The ongoing energy transition in China becomes rather complicated. On the one hand, due to energy security concerns, China has laid more emphasis on coal to prevent price spikes and power shortages. On the other hand, China’s pace of energy decarbonization is not slowing down. A preliminary estimate of the total energy consumption for the first four months shows a zero or negligible increase on a year-on-year basis, while China’s electricity consumption totaled 2.68 trillion kWh, up 3.4 percent. In April, thermal power experienced a year-on-year decrease of 11.8 percent, 6.1 percentage points more than the decline of last month; while wind power increased by 14.5 percent and solar power by 24.9 percent. In the first quarter, 492,000 new charging piles were installed nationwide, 4.6 times that of the same period in 2021.

The ultimate energy security solution is to diversify energy resources and accelerate the decarbonization transition. Energy security affects the development of the national economy and the daily life of families. The Ukraine war reminds us once again of the vulnerability of energy security. No country can detach itself from our interconnected world when it comes to energy issues. The lessons in Europe and its recent RePowerEU plan highlight the urgency of the energy transition. As a country with the largest installed capacities of photovoltaic and wind power, and as the largest manufacturer of clean energy equipment, China should and is well positioned to make more contributions to the global energy transition. In the meantime, countries in the world should remove trade barriers to clean energy, cooperate more for smooth and secure green supply chains, and create favorable conditions for the investment in clean energy and the development of green manufacturing. 

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