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Mr. Dai Yande.
President of Energy Research Institute National Development and Reform Commission

The Paris Agreement passed by the COP21 in December 2015, set the target of limiting temperature rise to below 2° and aimingforbelow1.5° rise compared with pre-industrial levels. The IPCC AR5 indicates that the 2° target requires 70% GHG emission reduction by 2050 compared with 2010 levels and (net) zero emissions by 2100.

The ideal pathway to achieve the necessary emission reductions is to change most of the energy supply to non-fossil energy sources, including renewable and nuclear by 2050. This should at the same time be complemented by a small share of fossil fuels, whose GHG emissions would be captured, utilized or stored through CCS and CCUS technologies. However, based on current trends, this ideal pathway is out of reach. Even with the rapid progress achieved in recent years in the renewable energy sector, the share of non-fossil energy including hydro and nuclear has only grown to 15%of the primary energy mix, while the share of renewable energy excluding hydro is only 3.2%. In comparison, 80% of the energy growth in the past 45 years (1970-2016) has been supplied by fossil fuel sources. Still, even though renewable energy capacity (excluding hydro) has almost doubled in the last five years (2011-2016) with year-on-year growth rate of 15.6%, it only totals 2200 million to eof newly added capacity. Looking at these numbers, it becomes apparent that the radical substitution of fossil fuels with renewable energy cannot be achieved in the short and medium term.

What’s more, global energy consumption has not peaked yet and will rise significantly. We can observe unbalanced development patterns across the world economy: per capita GDP and vehicle ownership of non-OECD countries is only 15%, which is half that of OECD countries and world average. This holds true even for emerging economies such as Brazil and India that have seen rapid development in the last decade.

It is therefore safe to say that the world economy will see development and economic growth as drivers of energy consumption as emerging economies continue to industrialize and with poverty eradication in least developed countries.
World primary energy consumption totaled13.28 billion toe (tonne of oil equivalent) in 2016. If the world population grows to 10 billion in year 2050, total energy consumption may increase to 26 billion toe assuming a year-on-year growth rate of 2%in the next 35 years. Even if the year-on-year growth rate were reduced by half, energy consumption would still total 19 billion toe. There is thus a high possibility that energy consumption could surpass 20 billion toe.
To achieve the goal for the share of non-fossil energy sources to grow to 70% in the energy mix by 2050, energy use needs to be held in check
– ideally at a level of around 10 billion toe. Energy use under this scenario has to be cut by half compared with the reference scenario, which is 20 billion toe, and also 3 billion toe less than the base year level (year 2016). Therefore, improving energy efficiency and reducing energy consumption is
essential to achieving the below 2° scenario.

Is it feasible to constrain the energy consumption under 10 billion toe through energy efficiency improvements? This target is doable tremendous improvement in the past three decades through strong regulatory, legislative and economic measures. Energy consumption per unit GDP was reduced by 74.3% in year 2016 compared to 1980. Without efficiency improvements, energy consumption would have grown to 16.9 billion tce in year 2016, which is 3.9 times that of the actual amount recorded. Efficiency in production has also increased and has led to significant energy savings in coal fired power plants, as well as iron, steel, and cement sectors, which totaled 1.2 billion tce ( tonne of coal equivalent) in year 2016. GDP has increased nearly 27 times in the period between 1980 and 2016, whereas the energy consumption only grew by 6.2 times.

China will continue to improve energy efficiency to sustain the rapid social and economic development. China targeted to build a prosperous, democratic, civilized and harmonious socialist modern country in year 2050. To achieve this ambitious goal, China has to continue its economic growth. If China follows the traditional pathway of developed countries, the energy consumption will double and redouble based on current level. The joint research group by China Energy Research Institute, U.S. Lawrence Berkley National Lab, U.S. Rocky Mountain Institute carried out a relating program. The results show that energy use can be greatly reduced based on energy efficiency improvement: GDP will grow by 6 times with only 16% more energy consumption that of today, among which 40% can be supplied by energy efficiency improvement which equals to 3.4 billion tce.

All in all, to constrain the temperature rise under 2°, the fundamental is to raise the share of renewable energy, and the key is to improve energy efficiency greatly and reduce energy consumption.

By Mr. Dai Yande. President of Energy Research Institute National Development and Reform Commission