Shell published report to set out a possible pathway for China to achieve a carbon-neutral energy system by 2060
Jan 17, 2022
Beijing, China - Shell China, in collaboration with Shell’s global scenarios team, today published a scenario Sketch ‘Achieving a carbon-neutral energy system in China by 2060’ in Beijing. The report sets out a potential pathway for China to achieve net-zero CO₂ emission from the production and use of energy by 2060.
As the world’s largest energy consumer and carbon emitter, the top producer of renewable energy as well as the leader in electric vehicle manufacturing and adoption, China is an important part of the global climate challenge and solution. China’s pledge in 2020 to achieve peak emissions before 2030 and carbon neutrality by 2060 (the 3060 targets) is a defining moment in the global decarbonisation journey towards a more sustainable future.
Building a net-zero energy system in China by 2060 is hugely challenging, not least because China’s economy – and energy demand – continues to grow, even as the country seeks to decarbonise. However, Shell believes it is economically and technically possible for China to achieve its ambitions — if it acts swiftly with a goal-oriented approach. But the window for success is quickly closing. Key actions to be taken to make progress this decade to put China on the pathway to carbon-neutrality by 2060 are:
1. Invest in reliable, renewables-based electricity networks.
2. Position China as the market leader in low-carbon manufacturing.
3. Demonstrate technologies that transform heavy industry through hydrogen, bioenergy and CCUS.
4. Begin an orderly transition out of coal.
5. Accelerate action through integrated policies, sectoral coalitions and cities as incubators of change.
The scenario Sketch sets out a deep and rapid decarbonisation pathway which relies on electrifying as much of the economy as possible with low-carbon and no-carbon sources of power generation. Low-carbon hydrogen and biofuels will be needed for hard-to-electrify sectors. To realize its full potential for energy efficiency, China will also need to drive consumer and business choices towards low-carbon alternatives, while massively scaling up its carbon capture, utilisation and storage (CCUS) capacity.
To be more specific, in order to achieve the 2060 goal, China needs to:
Accelerate clean technologies
1. Triple electricity generation for end use.
2. Quadruple the size of the electricity system for end use and hydrogen production.
3. Increase wind and solar’s share of the energy mix to 80%.
4. Raise hydrogen’s share of final energy consumption from negligible today to 16%.
5. Increase the use of bio-resources for energy eightfold and significantly raise the use of biomass commercially.
Support energy-efficient and low-carbon choices
6. Invest in energy efficiency improvements to halve the energy intensity of the economy over the next four decades.
7. Ramp up the government-led carbon price by at least fourfold between 2030 and 2060.
Remove carbon emissions
8. Scale up CCUS capacity by more than 400-fold in the next four decades.
Mallika Ishwaran, Chief Economist, Shell International said: “China is critical to the world achieving the goals of the 2015 Paris Climate Agreement. The 2060 carbon-neutrality target is challenging, but it also creates opportunities – to position China as the global leader in low carbon manufacturing. With early and systematic action, China can deliver better environmental and social outcomes for its citizens while being a force for good in the global fight against climate change.”
Jason Wong, Executive Chairman of Shell Companies in China said: “Our view, that it is economically and technically possible for China to achieve its goal, is informed by deep analysis, as well as our experience and long history of serving China’s energy needs. Shell’s Powering Progress strategy – to be a net-zero emissions energy business by 2050, in step with society – positions us well to provide the clean, sustainable energy solutions that China needs to fulfil its net-zero emissions pledge and vision of an ecological civilization.”
Notes to editors:
About Shell in China:
All of Shell Group's core businesses have grown considerably in China. Shell works with PetroChina and CNOOC to develop onshore and offshore oil and gas resources at home and abroad, including the Changbei Onshore Gas Project, developed in collaboration with PetroChina, to provide the energy needed for China's rapid economic development. Shell is also a leading supplier of LNG in China.
Shell operates a retail network of more than 1,700 gas stations in China through joint ventures and sole proprietorships, with more than 2,000 EV charging points. As one of the leading international lubricant and bitumen suppliers in China, Shell has 5 lubricant blending plants and 1 grease production plant in China. Shell is also operating a world-class petrochemical plant in the Daya Bay Area of Huizhou City, Guangdong Province, in a joint venture with CNOOC.
Shell Energy (China) Co., Ltd. is an important part of Shell's global trading network, providing Chinese clients with a competitive and diversified LNG portfolio, CO2 emissions management and strategic solutions. Shell Ventures has a dedicated team in China to accelerate innovation in the energy and mobility sector by investing in disruptive technologies and business models outside the Shell system.
About Powering Progress:
In early 2021, Shell set out its Power Progress strategy with goals of generating shareholder value, achieving net-zero emissions, powering lives and respecting nature. Powering Progress supports the most ambitious goal of the Paris Agreement on climate change to limit the global temperature rise to 1.5° Celsius. Shell set out details of how it will achieve its target to be a net-zero emissions energy business by 2050, in step with society’s progress towards achieving net zero. Powered by growth in its customer-facing businesses Shell will accelerate transformation into a provider of net-zero emissions energy products and services. Learn more: https://www.shell.com/media/news-and-media-releases/2021/shell-accelerates-drive-for-net-zero-emissions-with-customer-first-strategy.html
Media China: SCHINA-Spokesperson@shell.com
This scenario starts with data from Shell’s Sky scenario. In developing this scenario, we have assumed that China’s energy system reaches net-zero CO₂ by 2060, consistent with President Xi Jinping’s statement to the United Nations General Assembly in September 2020. We then work back to see how this could occur. Of course, there are many possible paths for China to travel to a net-zero CO₂ energy system, but this is what we believe to be a technically possible path while maintaining a growing Chinese economy. While this scenario is more aggressive in its goal and assumptions than our Sky scenario, we believe, while extremely challenging it is still today technically possible. However, we believe the window for success is quickly closing and without significant action it may take longer for China to achieve a net-zero CO₂ energy system.
Shell scenarios, including this scenario, should not be confused with Shell strategy or business plan. When developing Shell’s strategy, our scenarios are only one variable among many that we consider. Ultimately, whether society meets its goals to decarbonise, is not within Shell’s control. While we intend to travel this journey in step with society, only governments can create the framework for success.
Shell’s operating plan, outlook and budgets are forecasted for a ten-year period and are updated every year. They reflect the current economic environment and what we can reasonably expect to see over the next ten years. Accordingly, Shell’s operating plans, outlooks, budgets and pricing assumptions do not reflect our net-zero emissions target. In the future, as society moves towards net-zero emissions, we expect Shell’s operating plans, outlooks, budgets and pricing assumptions to reflect this movement.
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