CETO 2022 – pathways to a carbon-neutral energy system

China has set up clear ambitions to implement a profound energy transformation. With the statement from President Xi Jinping on 22 September 2020, China has significantly stepped up the commitment to strive to peak CO₂ emissions before 2030 and achieve carbon neutrality before 2060.

To showcase the sustainable pathways to fulfilling these ambitious goals, The Energy Research Institute, Chinese Academy of Macroeconomic Research (ERI of AMR) has concluded a comprehensive analysis of the Chinese energy system. The China Energy Transformation Outlook 2022 (CETO 2022) is prepared by ERI in close cooperation with the Danish Energy Agency (DEA), the Center for Global Energy Policy (CGEP) and the Norwegian Norad.

CETO 2022, focuses on two different energy system scenarios for energy transformation. The first is the baseline scenario, where China contributes to the global 2-degree goal and achieves carbon neutrality around 2070. The other scenario shows a path to meet the climate targets to peak CO₂ emissions before 2030 and reach carbon neutrality before 2060. Also, the report includes several thematic analyses, including end-use sector transformation, power sector transformation, power market reforming, power-to-X, carbon pricing, and status and prospects of CCUS in China.

Key results for the two scenarios:

Continued economic growth can be supported while achieving carbon neutrality

• The scenarios show the pathway for the transition of the energy system to a clean, low-carbon, secure and efficient energy system. The energy needed to support continued economic growth can be secured by promoting energy efficiency, electrification, and massive renewable energy deployment.

Energy efficiency improvement is a key pillar to driving down the overall energy demand

• Despite a more than 4.2-fold increase in real GDP between 2020-2060, the final energy consumption can return to current levels by 2060. In both scenarios, the economy’s energy intensity decreases to less than 23% of the 2020 level by 2060.

Electrification transforms the demand side

• Direct fossil fuel consumption decreases in favour of electrification. Most significantly, the direct use of fossil fuels is switching to electricity in industry, transport and buildings sectors.

Renewable energy satisfies the bulk of the energy demand

• The cost reduction of renewable electricity, the practical completion of market reforms, and the ability to scale up manufacturing allow wind and solar power to become the backbone of the energy system.

Power-to-X, carbon sequestration and carbon sinks are necessary to achieve the final steps toward carbon neutrality

• China can reach a low-carbon energy system with a solid effort to improve energy efficiency, electrify the end-use sectors, and deploy renewable energy on the supply side. However, to reach carbon neutrality, it is necessary to develop and deploy the power-to-X technologies, especially the production of green hydrogen, and remove CO₂ by sequestration and carbon sinks. These technologies play an increasing role in the energy system after 2035.

Please download the English full report and key findings below: