Energy Transition Hinges on China: Economic Survey

New Delhi, Jan 31 (PTI) Energy transition in the world runs through China, stated the Economic Survey 2024-25 noting that the neighbouring nation has huge manufacturing capacity of renewable energy equipment to drive that in the world.

The dominance of China in the environmental goods sector deserves serious consideration, noted the document tabled in the Parliament on Friday.

According to the document, the world navigates the challenges of climate change, the road to energy transition runs through China.

Over the last decade, global solar photovoltaic cell (PV) manufacturing capacity has increasingly moved from Europe, Japan and the United States to China, which has invested more than USD 50 billion in new PV supply capacity – ten times more than Europe, it noted.

China's share of solar panels (polysilicon, ingots, wafers, cells, and modules) exceeds 80 per cent in all the manufacturing stages. Interestingly, this is more than double the China's share of global PV demand.

In addition, it stated that the country is home to the world's top 10 suppliers of solar PV manufacturing equipment.

While this has been a major contributing factor in bringing down the costs of solar PV equipment worldwide, the level of geographical concentration in global supply chains also creates supply disruption risks that must be kept in mind.

About 60 per cent of the world's wind installed capacity is sourced from China. China also houses nearly 80 per cent of the world's battery manufacturing capacity, pivotal to the energy transition.

In 2022 alone, China allocated USD 546 billion towards various investments in solar and wind energy, electric vehicles, and battery technologies vis-à-vis US and EU investments in these sectors, which amounted to USD 321 billion in the same year.

A projection of the installed capacity in 2030 (as compared to 2020) shows that the share of renewable energy, especially solar and wind, in the installed capacity is likely to increase substantially.

In contrast, the share of coal and lignite is likely to fall sharply, it stated.

China, the United States, the EU, and other G7 economies produce more than 50 per cent of global greenhouse gas emissions. All have target dates of 2050 to reach net-zero emissions.

These economies depend heavily on each other in the trade of environmental goods and technologies central to developing renewable energy and reducing emissions.

Hence, it stated that trade conflicts between these economies will pose significant risks to the green energy transition, imposing huge costs on the global economy.