Start steering around an oil tanker, and you will find it slow, almost imperceptible work. However, when such a vast vessel begins to shift, the momentum is almost unstoppable.
It is the same situation with the most important destination for the liquefied natural gas carriers, coal ships and oil tankers over the past few decades: China. The biggest consumer of carbon and the source of one-third of annual greenhouse emissions is finally turning a corner to a cleaner future. China’s size is so overwhelming that when its fossil fuel consumption peaks, as it is doing now, it would shift the direction of the whole planet.
Take oil demand. The country’s usage might have already hit a ceiling in 2023 before falling 1.2 percent last year, the Energy Institute wrote late last month in its Statistical Review of World Energy, a huge annual compendium of data on power markets. That is earlier than some other analysts have estimated, but not by much. The internal think tank of state-owned China National Petroleum Co reckons the top would be this year.
Illustration: Yusha
The International Energy Agency sees decline setting in only after 2027, but adds that almost all the incremental growth since 2019 has been for petrochemicals — largely a matter of onshoring processing rather than adding fresh demand to the global market.
Coal is facing a similar moment. Production of pig iron and cement, which used to consume about one-quarter of China’s total, is down about 18 percent since 2020. Demand for solid fuel has only grown because of an immense increase in electricity consumption over the past five years. From 2019 to last year, power from China’s grid rose by nearly one-third, equivalent to adding the generation of India, or Russia plus Japan. The country now consumes more electricity, per capita, than the EU.
The headlong rollout of renewables is finally catching up with that. In December, the capacity of China’s wind and solar plants overtook that of its fossil fuel generators for the first time. Peak power from the 1.08 terawatts of solar installed at the end of May would be equivalent to that provided by 1,000 nuclear reactors.
Coal production is still rising, but instead of getting consumed, it is all being added to a vast stockpile as cheaper clean power is used instead. January to May sales by the biggest miner, China Shenhua Energy Co fell 12.3 percent relative to the same period a year earlier, while generation by its own plants was down 10 percent. The electricity produced by all fossil fuels in the first five months of this year was 3.1 percent lower than the same period last year.
Much of this is the result of specific policies that have favored electric vehicles, high-speed rail and electricity-intensive manufacturing, causing oil consumption to slow more rapidly than expected while coal remained persistently high.
However, it is also a sign that the long story of the nation’s development is reaching its endgame. China is now, to all intents and purposes, a high-income country, on the brink of overtaking the likes of EU member Bulgaria in terms of economic output per person. That means the most energy-intensive phase of its growth is ending. So long as it keeps up the recent pace of renewables deployment there would be no more drivers left to keep emissions rising.
One pessimistic response to this is that China’s emissions would not so much peak as hit an endless plateau. That is certainly possible — but it goes against what we have seen in other industrialized countries on the same path in recent decades. US pollution fell by 10 percent within five years of topping out in 2007 and is now about 22 percent below that level. Japan is down by about the same amount since peaking in 2008. South Korea has fallen 13 percent after hitting its maximum level in 2018.
Look at the pace of the clean energy rollout in China, and a rapid decline like we are seeing in its oil use seems more plausible. Nearly 53 percent of car sales in China this year came with a plug, and the electric-vehicle industry has only just begun yet another brutal price war that is bringing the cost of electric vehicles well below that of their gasoline-powered competition. On a recent trip to Guangzhou, more than 80 percent of cars I saw on the streets had the green number plate and lack of a tailpipe that marked them out as plug-in vehicles.
At a time when the US Congress is trying to pass a law to subsidize fossil fuels and penalize clean energy, there is reason to be downbeat about the prospects of the world hitting net zero. However, about two-thirds of the increase in global emissions since the year 2000 has come from China alone. The endless rise in its carbon footprint has been a major rhetorical justification for richer countries trying to slow down their own energy transitions.
The tide is finally going out on that vast wave of pollution. The world would remember this year as the moment it turned a corner.
David Fickling is a Bloomberg Opinion columnist covering climate change and energy. Previously, he worked for Bloomberg News, the Wall Street Journal and the Financial Times. This column reflects the personal views of the author and does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.
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