Yao, Lixia
Wo king Pape
Renewable ene gy de elopmen : How close is he People's
Republic o China o achie ing ca bon neu ali y?
ADBI Wo king Pape , No. 1438
P o ided in Coope a ion wi h:
Asian De elopmen Bank Ins i u e (ADBI), Tokyo
Sugges ed Ci a ion: Yao, Lixia (2024) : Renewable ene gy de elopmen : How close is he People's
Republic o China o achie ing ca bon neu ali y?, ADBI Wo king Pape , No. 1438, Asian
De elopmen Bank Ins i u e (ADBI), Tokyo,
h ps://doi.o g/10.56506/HXPU5515
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ADBI Wo king Pape Se ies
RENEWABLE ENERGY DEVELOPMENT:
HOW CLOSE IS THE PEOPLE’S
REPUBLIC OF CHINA TO ACHIEVING
CARBON NEUTRALITY?
Yao Lixia
No. 1438
Ma ch 2024
Asian De elopmen Bank Ins i u e
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Sugges ed ci a ion:
Lixia, Y. 2024. Renewable Ene gy De elopmen : How Close is he People’s Republic
o China o Achie ing Ca bon Neu ali y? ADBI Wo king Pape 1438. Tokyo: Asian
De elopmen Bank Ins i u e. A ailable: h ps://doi.o g/10.56506/HXPU5515
Please con ac he au ho s o in o ma ion abou his pape .
Email: [email p o ec ed]
Yao Lixia is a senio esea ch ellow, Ene gy Secu i y Di ision, Ene gy S udies Ins i u e,
Na ional Uni e si y o Singapo e.
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ADBI Wo king Pape 1438 Y. Lixia
Abs ac
Goals o mi iga e clima e change a e o be achie ed h ough go e nmen s a egies and
policies, as well as he a ailabili y o low-ca bon echnologies, and a e subjec o he
unde lying ins i u ional, poli ical, economic, and o he ac o s ha p omo e o cons ain
p og ess and he pa h aken. A la ge CO2 emi e , he People’s Republic o China (PRC),
has se he goals o ca bon dioxide emissions peaking by 2030 and achie ing g eenhouse
gas neu ali y by 2060. This s udy e iews he PRC’s e o s o phase ou ossil uels and
analyzes he ac o s ha ha e an impac on he PRC’s enewable ene gy de elopmen and
i s pa h owa ds ca bon neu ali y. Fou ac o s a e ound o be c i ical in he deca boniza ion
o he PRC: he cos s o e o i ing exis ing coal- i ed powe plan s and upg ading he powe
g id o accommoda e enewable ene gy; ins i u ional ac o s; echnology ac o s; and ma ke -
based schemes. Gi en hese ac o s and he PRC’s eno mous coal-dependen in as uc u e,
ansi ioning away om ossil uels will be challenging. Ano he big challenge is he
in e mi ence o enewable ene gy sou ces. Hence, he g owing pene a ion o enewable
ene gy in he PRC’s elec ici y mix equi es e ec i e policy ools and app op ia ely designed
ma ke signals. To pu i simply, he PRC has he po en ial o de elop enewable esou ces
on a la ge scale, ye i s ill has a long way o go o achie e ca bon neu ali y.
Keywo ds: People’s Republic o China, ca bon neu ali y, ossil uel phase-ou
JEL Classi ica ion: P28
ADBI Wo king Pape 1438 Y. Lixia
Con en s
1. INTRODUCTION .......................................................................................................... 1
2. THE PRC’S RENEWABLE ENERGY RESOURCE AND CARBON
REDUCTION TARGETS .............................................................................................. 2
3. FOSSIL FUEL PHASE OUT ......................................................................................... 4
4. CRITICAL FACTORS IN ACCELERATING RENEWABLE ENERGY ADOPTION ...... 5
4.1 Cos .................................................................................................................. 5
4.2 Po en ial Ins i u ional Fac o s ........................................................................... 6
4.3 Technology ....................................................................................................... 8
4.4 Suppo i e Schemes ...................................................................................... 10
5. GOVERNMENT’S EFFORTS TO ADDRESS CHALLENGES IN RENEWABLE
ENERGY ADOPTION ................................................................................................ 11
6. CONCLUSIONS AND POLICY IMPLICATIONS ........................................................ 12
REFERENCES ...................................................................................................................... 14
ADBI Wo king Pape 1438 Y. Lixia
1
1. INTRODUCTION
In Decembe 2020, P esiden Xi announced o he Uni ed Na ions ha he PRC’s
ca bon dioxide emissions pe uni o GDP would decline by 65% om 2005 le els, and
he sha e o non ossil uels in he ene gy mix would ise o 25% (Xinhua Ne 2020).
This ollowed an ea lie pledge by he P esiden o he Uni ed Na ions Gene al
Assembly on 22 Sep embe 2020 ha emissions would peak be o e 2030 and ha he
coun y would s i e o achie e ca bon neu ali y by 2060 (Fa and and Da by 2020).
Gi en he ambi ion o he PRC go e nmen , his s udy aims o explo e wha ac o s a e
c i ical o ene gy ansi ion in he PRC and wha challenges should be ackled in he
p ocess o ene gy ansi ion o achie e ca bon neu ali y. Se e al measu es can help
accele a e ene gy ansi ion, such as de eloping enewable ene gy, inc easing ene gy
e iciency, and p io i izing en i onmen al p o ec ion.
Since 2020 when P esiden Xi announced ha he PRC would s i e o achie e ca bon
neu ali y by 2060, an inc easing numbe o schola s ha e been conduc ing esea ch
on he PRC’s clima e mi iga ion and ene gy ansi ion issues. Many o hem a e
quan i a i e s udies using modeling. Some e iewed he PRC’s inancial de elopmen
on ca bon emissions, analyzing he pa hways, and sugges ed ha he PRC should be
ocused in pa icula on he p omo ion o g een inance (Zhou and Zhang 2024). Some
p ojec mi iga ions o ca bon neu ali y in he PRC (Li e al. 2022a); o he s ocus on he
p ojec ion o ca bon neu ali y o a speci ic egion in he PRC, e.g., Beijing–Tianjin–
Hebei Region, inding ha unde he cons ain o he ca bon neu ali y a ge , his
egion should o mula e mo e s ingen emission educ ion measu es o ensu e ha he
o e all ca bon emission will each i s peak in 2030. This indica es ha he inal
alloca ion scheme will g ea ly encou age ca bon emission educ ion in Hebei P o ince
(Zhang e al. 2023a). Zhang e al. (2023b) examine speci ic policies, such as he
Ca bon T ading Pilo Policy and i s impac on he achie emen o he ca bon neu ali y
a ge . Besides s udies using quan i a i e me hods, a ew quali a i e s udies look in o
he PRC’s ca bon neu ali y issue om a policy o legisla i e pe spec i e. Gao e al.
(2023) conduc an e olu iona y analysis o he issuance and implemen a ion o he
PRC’s ca bon neu ali y policies, inding ha he PRC’s ca bon neu ali y policies and
ini ia i es g ew g adually and in an o de ly manne in he p elimina y and decen alized
explo a ion s age om 2006 un il 2013, and con inued o g ow s eadily om 2014 o
2019. The PRC’s ca bon neu ali y policies s a ed o g ow explosi ely om 2020.
Since hen, he e has been a se ies o op-down design policies and suppo i e policies
in a ious indus ies and sec o s. Shi and He (2023) look in o he PRC’s cu en legal
sys em in achie ing ca bon neu ali y goals and discuss he imp o emen o he legal
sys em. I is sugges ed ha a uni ied legisla ion sys em among cen al, local
go e nmen s should be es ablished o achie e ca bon neu ali y.
Li le esea ch is ocused on a comp ehensi e discussion abou he oles and
challenges o enewable ene gy de elopmen in achie ing ca bon neu ali y in he
PRC. This pape is ocused on enewable ene gy because i is c ucial o achie ing
ca bon neu ali y. Ha ing said ha , his pape in ensi ely e iews he PRC’s enewable
ene gy de elopmen and o e all cu en si ua ion in phasing ou he use o ossil uels
in he powe sec o . A e ha , his pape analyzes he c i ical ac o s ha may ha e an
impac on he phasing ou o ossil uels in he PRC. These ac o s include cos ,
ins i u ions, echnology, and ma ke -based schemes. Challenges a e discussed be o e
policy implica ions and sugges ions a e p o ided a he end o he pape .
ADBI Wo king Pape 1438 Y. Lixia
2
2. THE PRC’S RENEWABLE ENERGY RESOURCE
AND CARBON REDUCTION TARGETS
The e is as po en ial in enewable ene gy esou ces in he PRC. I has he highes
hyd opowe po en ial capaci y in he wo ld. In pa icula , he hyd opowe capaci y ha
can be echnologically ha nessed is 542 GW, while he capaci y ha can be ha nessed
o economic bene i s is 402 GW (Huang and Yan 2009). The po en ial hyd opowe
capaci y is une enly dis ibu ed in he PRC’s e i o ies as 78% o hem a e
concen a ed in he sou hwes , nea he Tibe an pla eau (Huang and Yan 2009).
The PRC has conside able po en ial in u ilizing sola ene gy. Many p o inces, such as
Tibe , Xinjiang, Qinghai, Gansu, Ningxia, and Inne Mongolia, ha e dese landscapes,
high adia ion, and many hou s o sunshine, making hem sui able o he ins alla ion o
sola panels. I is es ima ed ha i 1% o he PRC’s dese a ea we e co e ed by sola
pho o ol aic sys ems wi h an annual ene gy gene a ion o 120 kWh/m2, he PRC would
gene a e a leas 1,296 TWh om sola ene gy (Liu e al. 2011), almos ou imes he
PRC’s o al yea ly sola powe gene a ion. The PRC’s sola ene gy po en ial is
une enly dis ibu ed as hose places wi h he highes sola po en ial a e concen a ed
in he no he n and wes e n a eas o he coun y. As o wind powe , he PRC has a
echnically exploi able onsho e wind ene gy o 2,548 GW o places ha a e 10 m
abo e g ound le el (Liu e al. 2011). Mos o he PRC’s po en ial onsho e wind
esou ces a e concen a ed in he no h and no heas egion, especially in Inne
Mongolia. As ega ds o sho e wind, he PRC has a po en ial 400–500 GW o o sho e
wind ene gy capaci y ha is concen a ed ou side he sou he n and sou heas e n
coas line (Zhang e al. 2017). The PRC is also ich in biomass esou ces, which a e
mainly ex ac ed om biogas ha can be gene a ed om indus y was ewa e , li es ock
manu e s aw, i ewood, o es was es, municipal was es, and ene gy c ops (Liu e al.
2011). Acco ding o he BP S a is ical Re iew 2022, abou 35% o he o al elec ici y
gene a ion was om non ossil uels in he PRC in 2021. The annual g ow h a e o
ins alled sola capaci y and wind capaci y in he PRC was abou 58.3% and 21.6%,
espec i ely, om 2011 o 2021. The sha e o he PRC’s ene gy consump ion om
enewable esou ces is expec ed o con inue o inc ease as he cu en ins alled
elec ic capaci y om enewable esou ces in he PRC is becoming mo e signi ican .
In he mean ime, howe e , he PRC has been he wo ld’s la ges emi e o ca bon
dioxide emissions since 2005. As o 2021, he PRC accoun ed o 30.9% o he wo ld’s
ca bon dioxide emissions (BP S a is ical Re iew 2022). The PRC’s ca bon dioxide
emissions om ene gy ha e isen h ee old since 2000. Howe e , he end has been
qui e e a ic, eac ing o changes in economic policy. The g ow h o emissions
accele a ed wice in esponse o he economic s imuli ollowing he Asian and Global
inancial c ises, espec i ely (Figu e 2.1). Since 2013, he e has been a slowe ising
end in CO2 emissions co esponding o he “new no mal” economic si ua ion.1 The
slowing down o he PRC’s inc ease in CO2 emissions since 2013 is also due o he
success ul implemen a ions o emissions con ol policies in he 13 h Fi e-Yea -Plan.
Ne e heless, he PRC now accoun s o abou 30% o he wo ld’s ca bon dioxide
emissions om ene gy.2
1 “New no mal” is a concep used by he PRC go e nmen and economis s o desc ibe he ac ha
annual GDP g ow h has slowed om he double-digi le els o many yea s when he economy was
booming.
2 BP, BP S a is ical Re iew 2022.
ADBI Wo king Pape 1438 Y. Lixia
3
Figu e 1: PRC Ca bon Dioxide Emissions om 2000 o 2021
(Million Tonnes o Ca bon Dioxide)a
a BP, BP S a is ical Re iew 2022.
In e ms o CO2 emissions by uel ype, mos o he PRC’s CO2 emissions a e emi ed
om he use o ossil uels, including coal, c ude oil, and gas. Figu e 2.2 shows he
b eakdown o he PRC’s CO2 emissions by uel ype om 2000 o 2020. In gene al,
mos CO2 is emi ed om he use o coal, which accoun s o 70%–80% o all CO2
emissions. The use o oil accoun s o he second-highes amoun o CO2 emissions
a a ound 15% o he o al, while emissions caused by using cemen and gas accoun
o he emainde . F om 2000 o 2010, he pe cen age o emissions om using coal
s eadily inc eased om a ound 70% o 76.4% o all emissions in he PRC. Howe e ,
om 2011 o 2020, his igu e d opped om 76.4% o 69.5%, which sugges s ha he
PRC’s deca boniza ion policies ha e p o en hei e ec i eness.
Figu e 2: Sha es o he PRC’s CO2 Emissions by Fuel Type (2000–2020)
(%)
Sou ce: Ou Wo ld in Da a (2022).
ADBI Wo king Pape 1438 Y. Lixia
4
On op o his, he PRC go e nmen is con inuing wi h i s a ge s in educing ene gy
in ensi y. I plans o educe i s indus ial ene gy consump ion pe uni o GDP by 13.5%
du ing he pe iod 2021–2025 by in oducing new echnologies and inancial se ices.
Fu he , as indus ies accoun o abou 65% o he o al na ional ene gy consump ion,
i is belie ed ha imp o ed e iciency would be a c i ical measu e in educing ene gy
in ensi y. By imp o ing he ene gy e iciency o indus ial en e p ises, abou 37% o he
coun y’s planned ca bon emission educ ions could be achie ed om now un il he
middle o his cen u y (Reu e s 2022).
Gi en he PRC’s ich enewable ene gy esou ces and i s a ge o ca bon educ ion,
he coun y can build on i s cu en enewable ene gy momen um, as a powe sec o
domina ed by enewables can accele a e he PRC’s enewable ene gy ansi ion. In
o he wo ds, he accele a ed de elopmen o he PRC’s enewable sec o is a conc e e
s ep in he coun y’s e o s o make ca bon emissions peak by 2030 and o achie e
ca bon neu ali y by 2060.
3. FOSSIL FUEL PHASE OUT
The PRC has a de ailed plan o educe ossil uels in i s ene gy mix. Di e en PRC
mas e plans o na ional ene gy de elopmen ha e ou lined ha he sha e o ossil uel
is expec ed o d op o below 20% by 2060 (Regan 2021). Fu he mo e, he PRC’s 14 h
Fi e-Yea Plan on ene gy aims o phase ou 30 GW o ine icien coal- i ed capaci y,
which accoun s o abou 3% o he cu en ins alled powe capaci y (Lin 2022). To
phase ou ine icien capaci y, he PRC is expec ed o shu down a signi ican
p opo ion o i s coal powe plan s om now un il 2030. Mo eo e , he PRC is expec ed
o con inue o imp o e he e iciency o i s coal- i ed uni s and educe he a e age
amoun o coal used o each kilowa -hou o elec ici y o educe he g eenhouse gas
emissions o i s coal- i ed powe plan s (Xue and Ng 2021).
Howe e , he demand o Chinese goods has su ged since he wo ld s a ed o eopen
a e COVID-19. Chinese ac o ies hence need a lo mo e elec ici y, mo e han hal
o which is p oduced by coal. In he mean ime, coal p oduc ion has been slowed down
as he PRC go e nmen a emp s o make he coun y ca bon neu al by 2060.
Res ic ions on he impo o Aus alian coal made he sho age o coal supply e en
wo se. The balance be ween supply and demand pushed up coal p ices, while
elec ici y p ices we e s ic ly con olled by he go e nmen . As a esul , coal- i ed
powe plan s d as ically educed hei ou pu as hey we e unwilling o ope a e a a
loss (Hoskins 2021). These powe sho ages ha e caused many inciden s o blackou s
ac oss he PRC, wi h some powe g id ope a o s ha ing o a ion elec ici y o
impo an businesses and indus ies (You 2022). To mi iga e he c isis, P esiden Xi
Jinping announced ha coal was s ill he PRC’s main sou ce o ene gy, which was
ollowed by PRC go e nmen mee ings ha o de ed mo e han 150 coal mines in majo
coal-p oducing egions, such as Shanxi, Shaanxi, and Inne Mongolia, o p oduce an
ex a 220 million onnes o coal (You 2022). As such, he PRC go e nmen had o elax
coal mining ope a ion egula ions, e o m powe p icing, and manda e coal- i ed powe
plan s o inc ease hei ou pu o ensu e ha he PRC has enough ene gy o ope a e i s
economy (Xue and Ng 2021). Al hough he PRC had p e iously announced i s plan o
phase ou coal- i ed powe plan s in he u u e, he immedia e powe c isis has led i s
go e nmen o amp up coal p oduc ion o now.
ADBI Wo king Pape 1438 Y. Lixia
11
5. GOVERNMENT’S EFFORTS TO ADDRESS
CHALLENGES IN RENEWABLE ENERGY ADOPTION
In e mi en enewable ene gy sou ces c ea e challenges o use s, which is a hu dle
o phasing ou coal powe . La ge-scale p oduc ion o powe om in e mi en
enewable esou ces such as sola and wind c ea es challenges o he s abili y o he
elec ici y g id. Fu he , big g ow h wi h limi ed u iliza ion ha ms he a e o e u n o
enewables p ojec s.
Sys em in lexibili y and ansmission bo lenecks a e he main causes o he
cu ailmen s. One big challenge lies in he connec ion o elec ici y p oduced by
enewables o he powe g id. Since he e is a ime lag be ween he ou pu o
enewable elec ici y and g id companies ob aining pe mi s o build local g id acili ies,
he e is signi ican was ed sola and wind powe (Chen 2017). To sol e his p oblem,
he PRC go e nmen has suspended app o al since Ma ch 2016 o new wind a ms in
p o inces whe e annual wind cu ailmen 4 a es ha e exceeded 20%. Since June 2018,
his h eshold has been u he igh ened om 20% o 5% (Guo e al. 2023).
The de elopmen o ene gy s o age is ano he s a egy aimed a ackling he
cu ailmen p oblem. As ou lined in he 14 h FYP on Ene gy S o age De elopmen , he
PRC would achie e la ge-scale comme cializa ion o new ene gy s o age echnologies
wi h mo e han 30 GW o ins alled nonhyd o ene gy s o age capaci y by 2025. As o
2021, he e we e 146 app o ed ene gy s o age p ojec s inside he PRC (Bian 2023).
Ano he challenge in adop ing enewable ene gy comes om he eluc ance o local
companies o use hese in e mi en sou ces. Fo example, powe g id companies in
di e en p o inces wo k collec i ely o buy elec ici y gene a ed om enewable
ene gy, in acco dance wi h he equi emen o he Renewable Ene gy Law ha obliges
hem o pu chase enewable elec ici y. Howe e , he powe g id companies appea o
gi e p io i y o locally gene a ed and mo e p ice-compe i i e elec ici y. Some e en
doub he sa e y o long-dis ance ansmission lines, as he in e mi en powe lows
may cause sys em ins abili y and majo powe ou ages (Chen 2017).
O e coming hese challenges equi es he go e nmen o de elop p uden policies and
o be s ic wi h implemen a ion. In pa icula , gi en he decele a ing economy, he
adop ion o enewable ene gy could be challenging and di icul . I is an ene gy
p oblem, bu solu ions can be ound ou side he ene gy sec o i sel . The go e nmen
has issued policies o encou age ene gy consume s o use mo e enewable ene gy.
These policies include he Clean Ene gy Consump ion Ac ion Plan, and an obliga ion o
use enewable ene gy o p o inces, g id companies, and la ge ene gy consume s
(Ho e 2020). Howe e , many o hese policies a e go e nmen manda es, whe eas ew
ma ke incen i es a e c ea ed. To add ess hese challenges, ma ke incen i es,
pa icula ly o ene gy s o age in es men , a e needed. The ma ke mechanism o
ene gy s o age is s ill in i s in ancy. The cu en elec ici y p icing mechanism does no
ully e lec he alue c ea ed by new ene gy s o age, which discou ages in es men in
new ene gy s o age p ojec s. Hence, imp o emen s in he p icing mechanism a e
necessa y, which would o some ex en suppo he comme cializa ion o new ene gy
s o age echnologies (S&P Global 2023).
4 The phenomenon ha some elec ici y canno be in eg a ed in he powe g id is called “cu ailmen .”
ADBI Wo king Pape 1438 Y. Lixia
12
6. CONCLUSIONS AND POLICY IMPLICATIONS
The PRC has he po en ial o de elop enewable esou ces on a la ge scale, ye i s ill
has a long way o go o achie e ca bon neu ali y.
The e is s ill a isk ha he PRC’s g owing coal capaci y may ha m he coun y’s e o s
o deca bonize i s ene gy mix. The ossil uel phase-ou p og ess may ace a se back
due o he powe sho ages in 2021 ha p omp ed he PRC go e nmen o ake
measu es o inc ease coal p oduc ion o sa egua d ene gy secu i y. Despi e ha ing
announced he coun y’s willingness o phase ou coal- i ed powe plan s, he PRC has
ecen ly inc eased i s coal p oduc ion o mi iga e i s powe c isis, which caused many
inciden s o blackou s ac oss he PRC (You 2022).
A e his powe c isis, he PRC announced plans o cons uc new coal- i ed
powe plan s. In he i s six weeks o 2022, a o al o 7.3 GW ac oss i e new coal- i ed
powe plan s we e app o ed o cons uc ion (You 2022), 90 GW o new coal- i ed
powe plan s we e unde cons uc ion, and 160 GW o coal-powe p ojec s we e in
ea lie de elopmen s ages (Tay 2022). To acili a e hese new p ojec s, he PRC’s
economic planne s ha e app o ed a s a e in es men o mo e han 24.1 billion yuan
(USD3.8 billion) o p oduce mo e han 19 million onnes o coal annually. As a esul
o hese policies, Chinese coal p oduc ion in Janua y and Feb ua y 2022 eached
690 million onnes, which was a 10.3% yea -on-yea inc ease (You 2022). Mo eo e ,
he PRC has a plan o e o i 200 GW o coal- i ed powe plan s du ing he pe iod
2021–2025 o enhance he lexibili y o i s elec ici y p oduc ion, which will inc ease he
g id’s capabili y o apidly amp up i s ansmission in he case o low p oduc ion o
enewable ene gy esou ces (Yin 2022). This mo e was mo i a ed by he decision o
he PRC’s poli ical leade s o asse ha he signi icance o coal powe in he PRC’s
ene gy mix will no change in he sho e m o accommoda e he demands o he
economy. Consequen ly, he PRC has been bu ning mo e coal o d i e i s economic
goal. In pa icula , i s coal consump ion in 2021 inc eased by 4.6% compa ed o he
2020 le el, which was he s onges g ow h a e in he las decade (Fe is 2022). The
cons uc ion o 33 GW o new coal- i ed powe plan s in 2021 and inc easing coal
p oduc ion in exis ing powe plan s ha e led o an inc ease o 4% compa ed o he
2020 le el in he PRC’s ca bon dioxide emissions (Fe is 2022).
The e ha e been a ious conce ns o e he implica ions o he PRC’s enewed
in e es s in coal- i ed powe plan s o i s p e iously announced ossil uel phase-ou
goals. As coal- i ed powe plan s a e s ill needed o he PRC’s indus ializa ion, he
coun y may ace p oblems in eaching i s deca boniza ion a ge s by 2025 and 2030,
and he addi ional coal- i ed powe plan s ha may ende he PRC unable o make i s
coal consump ion peak by 2030. Some obse e s exp ess di e en conce ns, such as
o e he li e span o he PRC’s coal- i ed powe plan s ha a e expec ed o las un il
2040 be o e being mos ly phased ou , which will esul in he p olonged use o coal-
i ed powe plan s in he PRC’s ene gy p oduc ion (Xie 2021). Hence, al hough he
PRC has announced a ious goals and s a egies wi h a iew o phasing ou ossil
uels, i s ecen in e es s in coal- i ed powe plan s ha e p omp ed conce ns abou
whe he i s goals can be ul illed by hei s ipula ed deadlines.
Gi en he abo e es aining ac o s and he PRC’s eno mous coal-dependen
in as uc u e and la ge hea y-manu ac u ing base, ansi ioning away om ossil uels
will be challenging. The success o he enewable ene gy plan elies on la ge-scale
enewable ene gy bases and suppo i e schemes o deploy enewable echnology. The
g owing pene a ion o enewable ene gy in he PRC’s elec ici y mix equi es e ec i e
ADBI Wo king Pape 1438 Y. Lixia
13
policy ools and app op ia ely designed ma ke signals. The ma ke -based schemes
need ime o be ma u e enough o suppo enewable de elopmen .
Ye despi e he challenges, he PRC is se iously making i s way owa d
deca boniza ion. I is cu en ly he op global p oduce o enewable ene gy powe , and
a leading manu ac u e o elec ic ehicles. I has ini ia ed a ca bon ading scheme,
and i has imp o ed ene gy e iciency d ama ically ac oss mul iple sec o s.
Ha ing said ha , he PRC should in es in he necessa y in as uc u e, pa icula ly
ad anced powe g ids, as u u e deploymen o housands o sola and wind acili ies
will inc easingly equi e lexibili y in powe g ids. The PRC should also ocus on
ins i u ional e o ms ha could acili a e as e deploymen o low-ca bon echnologies
wi hin he decade (Lee and Sch ag 2022). Mo e impo an ly, he PRC could p io i ize
he pu sui o sho - e m mi iga ion a ge s ha can ake e ec as soon as possible, as
opposed o long- e m ambi ions ha may appea un ealis ic o he public. This also
equi es he ele an ins i u ional e o ms o be in place o acili a e he ealiza ion o he
sho - e m a ge s.
As a as ins i u ional ac o s a e conce ned, he ole o cen alized go e nmen
planning, s anda ds, egula ions, subsidies, and o he suppo i e schemes ha e made
imp essi e con ibu ions o he coun y’s low-ca bon success. La ge s a e-owned
companies may con inue o play an impo an ole in building and ope a ing he PRC’s
elec ici y sys em. Na ional ene gy in as uc u e p ojec s always in ol e high cos s ha
ake yea s o eco e . Fo example, huge p ojec s such as long-dis ance ansmission
lines will need longe ime and mo e expense han local-le el small p ojec s (Lee and
Sch ag 2022). The e o e, i could be expec ed ha s ong s a e in e en ion and
inancial suppo a e s ill needed o enewable ene gy de elopmen in he PRC.
Fu he , ma ke o ces a e key o sol ing oday’s p oblems. As o he suppo i e
schemes, he PRC has ca ied ou he EET pilo p ojec s in se e al p o inces, including
Henan, Zhejiang, Fujian, and Sichuan, since 2017. La ge ene gy-in ensi e en e p ises
a e co e ed by he EET sys em. Since he PRC’s EET sys em and ETS o e lap as a
as he co e age o en e p ises is conce ned, Li e al. (2022b) a gue ha ESQ and CO2
allowances can be mu ually con e ed o a oid epea ed accoun ing o CO2 emissions
educ ion and ene gy sa ings. In addi ion o an emissions ading sys em, i is also
c ucial o de elop an ad anced new ene gy s o age indus y, as his is he key o
expanding enewable ene gy adop ion. In his ega d, i is sugges ed ha a ma ke -
o ien ed app oach should be adop ed a he han elying on go e nmen policies.
ADBI Wo king Pape 1438 Y. Lixia
14
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