China - Country Commercial Guide
Energy

This is a best prospect industry sector for this country.  Includes a market overview and trade data.

Last published date: 2022-01-04

Clean Technologies

In September of 2020, President Xi Jinping announced China’s commitment to peak carbon emissions by 2030 and reach carbon neutrality by 2060 while striving to double the size of China’s economy by 2035. According to the International Energy Agency(IEA), China’s most recent Five-Year Plan set an 18 percent reduction target for CO2 intensity and a 13.5-percent reduction target for energy intensity from 2021 to 2025. These initiatives provide opportunities for U.S. companies in sectors that intersect with China’s industrial and environmental goals.

Natural Gas

Natural gas is China’s fastest-growing primary fuel which saw demand quadruple in the past decade. Growing the natural gas sector is critical in China’s efforts to reduce reliance on coal. According to the IEA, China is the world’s sixth-largest natural gas producer, the third-largest consumer, and the second-largest importer. In 2050, the U.S. Energy Information Administration (EIA) expects China to consume nearly three times as much natural gas as it did in 2018, which was 280.30 b/cm.  China’s natural gas consumption accounted for 8.3% of its total energy mix in 2019.  China anticipates boosting the share of natural gas as part of total energy consumption to 14% by 2030. Before COVID 19, China was expected to account for a third of global demand growth through 2022, thanks in part to the country’s “Blue Skies” policy and the strong drive to improve air quality. China’s relatively strong economic recovery from the COVID 19 crisis will probably increase that share. Natural gas is imported either through pipelines or as liquefied natural gas (LNG) on ships. China does not depend heavily on the United States as a supplier of LNG, but China has ranked among the top four customers of U.S. LNG every year since exports began in 2016. According to Reuters, in 2019, the largest sources for Chinese LNG imports were Australia, Qatar, Malaysia, and Indonesia.  With increasing calls and actions in the international community against new builds of unabated gas-fired generation, it is anticipated that there will be a huge demand for design and equipment related to the abatement and CCUS (see below) to be able to utilize natural gas with a lower carbon footprint.

Energy Efficient Manufacturing

Energy efficiency in the manufacturing field is of increased importance in China. To achieve that goal, the Chinese government has announced new infrastructure initiatives meant to pivot away from highly polluting manufacturing to new investments in manufacturing that emphasize energy efficiency. According to Reuters, in 2020, China lowered coal as a primary use of energy to 56.8%, down from 68% in 2010. However, coal still accounts for nearly 70% of electricity generation. In 2019, China invested $83.9 billion in clean energy, roughly 23% of global energy investment, according to reports from the Center for Strategic and International Studies.

Carbon Capture, Utilization, and Storage (CCUS)

CCUS is still an emerging technology with economic complications stemming from scalability; however, the market size is expected to grow from $1.6 billion in 2020 to $3.5 billion in 2025, according to Daxue Consulting. More optimistic estimates believe that the market could reach $1 trillion by 2030. While most CCUS efforts come from capturing carbon from CO2-dense flue gasses at fossil fuel plants, direct air capture (DAC) CCUS is promising because of its ability to be deployed anywhere. Currently, the most profitable application of CCUS is selling captured CO2, which is pressurized and then pumped into oil wells to enhance oil recovery. Reports estimate that for the world to reach its carbon goals by 2050, 2,000 CCUS facilities must be built to capture CO2. With only seven operational CCUS facilities in China, there will be a massive need for China to construct these facilities in the coming decades.

Green Building

Green building has grown in popularity in China. While sustainable buildings make up a small percentage of China’s construction market, China is adopting more green building practices, which presents opportunities for U.S. architecture, construction, and engineering services firms. According to the China Business Review, new regulations require that 70% of new urban buildings be certified green buildings by 2022. Major municipalities, including Shanghai, Beijing, and Shenzhen, plan to exceed that goal, requiring all new commercial buildings to be green buildings.  This also includes plans to renovate schools, hospitals, and public buildings to be more energy-efficient. The ongoing State Council Green Building Action Plan, launched in 2014, mandates that public facilities such as schools, hospitals, museums, stadiums, and affordable housing, as well as any single building area over 20,000 square meters, such as airports, railway stations, hotels, restaurants, shopping malls, offices, and other large public buildings, must meet the green building standards of China’s 3-Star Rating System GBEL (The Green Building Evaluation Label). China’s Green Building Action Plan also provides the refurbishment of some 400 million square meters of existing urban housing in northern China and 400,000 rural dwellings subject to major thermal rehabilitation works.  According to the U.S. Green Business Council, in 2018, LEED-certified Grade A office buildings exceeded 523 million square meters across greater China, an increase of 7.3% from the previous year and accounted for over 27% of the total market share in ten prominent cities. In 2019, China ranked #1 for LEED Certification outside of the U.S. with over 79 million gross square meters, an increase of 14% from the previous year.

Trade Events

China LNG & Gas International Exhibition & Summit-Shanghai