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    China: not in a hurry to say goodbye to gas [GasTransitions]


If you read the media headlines, you may get the impression that China intends to become the world’s clean energy and hydrogen superpower. China is even said to be in a race with Europe to become the global green hydrogen leader. In reality, China is only gradually and cautiously adapting its fossil-fuel based energy system. It is not in a hurry to say goodbye to oil, coal and natural gas. [Gas Transitions Volume 2, Issue 2]

by: Karel Beckman

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China: not in a hurry to say goodbye to gas [GasTransitions]

There is a lot of discussion in western media about whether China is a genuine “climate leader” or is engaged in a gigantic act of greenwashing. Critics of China’s climate efforts have pointed out that China is continuing to invest heavily in coal-fired power. It currently has 250 GW of new (“clean”) coal-fired capacity in the pipeline, writes Henrik Bork of Asia Waypoint in a recent analysis. That’s more than the entire capacity in the US.

Nevertheless, plenty of news stories are trumpeting China’s renewable energy achievements – and in particular its ambitions in hydrogen. “Fossil fuel giant Sinopec teams up with solar firms on green hydrogen projects to help China on path towards carbon neutrality.” “Will China do for hydrogen what it did for solar power?” “Sinopec aims to become world’s largest hydrogen supplier.” Those are just a few examples.

The truth is that China is moving only very gradually towards a cleaner energy system, while trying to reconcile various economic and environmental goals, writes Bork, a long-time China correspondent for several German newspapers. He cites the latest White Paper, “Energy in China’s New Era”, from the State Council, the highest body of the Chinese government, released on 21 December 2020.

This paper states that China “prioritizes non-fossil energy in its development and vigorously promotes the replacement of high-carbon energy with low-carbon energy, as well as the replacement of fossil energy with renewable energy." Energy generation from sun, wind, water, biomass and other renewable energy sources is to be further expanded, as is the use of hydrogen as an energy carrier.

At the same time, the paper boasts about the country’s achievements in gas and oil market development: “China has intensified efforts for the exploration and exploitation of oil and gas resources, to increase reserve and production volumes. China has been building the production, supply, storage and sales systems for coal, electricity, oil and gas, while improving energy transportation networks, storage facilities, the emergency response system for energy storage, transportation and peak load management, and enhancing its supply capacity for safer and higher-quality energy.”

Lyrical about gas value chain

Indeed, reading the White Paper, one is struck by the proud summing up of the country’s achievements in expanding its fossil fuel sectors. It is difficult to imagine such a statement coming from any western government, with the exception of the previous US administration.

With regard to natural gas, the White Paper is lyrical about all the progress that has been made in building a healthy gas value chain. It notes that production of natural gas has increased notably, from 110.6bn m3 in 2012 to 176.2bn m3 in 2019. The country has built “natural gas trunk lines measuring over 87,000 km.”

“The technology and equipment for shale oil and gas exploration and development have greatly improved, and successful natural gas hydrate production tests have been completed…. [China] is making breakthroughs in unconventional natural gas exploration and development, such as shale gas and coal-bed gas, and is working on large-scale shale gas exploitation. It is improving relevant policies for the exploitation and utilization of unconventional natural gas. Focusing on the Sichuan, Ordos and Tarim basins, it has built a number of natural gas production bases with an output of more than 10 bcm.”

China has also “mastered the technology for producing oil and gas from coal. It has improved the infrastructure for natural gas utilization, supplied natural gas to more areas, and improved its ability to ensure gas supply for people’s daily life,” according to the White Paper.

The Paper further notes that the government “is promoting natural gas CCHP” and “natural gas power where appropriate. It encourages adding peak-shaving natural gas power stations to power load centers to improve power security.”

Sinopec moves into hydrogen

This does not mean fossil fuel sectors will not be affected at all by the energy transition. For instance, as Bork writes, “China's petrochemical industry is now entering a critical period of transformation towards low-carbon alternatives …Not only are non-fossil fuels steadily gaining in importance, but over the next five years, the growth rate of oil demand will slow down substantially and approach a peak.”

The leading petrochemical companies are already adapting, notes Bork. Sinopec, for example, “has begun forging alliances with four of the largest solar energy companies in China to develop green hydrogen projects. The transformation towards hydrogen energy should help Sinopec defy the eroding competitiveness of fossil fuels. The oil giant now aims to become the largest supplier of hydrogen energy.”

So there is some change in the air, but it is noteworthy that the White Paper hardly mentions hydrogen at all. A recent analysis on the German website Clean Energy Wire that proclaims that Europe is in a race with China “for clean hydrogen superpower status”, or a similar analysis on the website Euractiv stating that “Europe, China battle for global supremacy on electrolyser manufacturing”, may be true from a European point of view, but probably counts for much less from the view of Beijing.