Assessing the Energy Efficiency Gains and Savings in China’s 2060 Carbon-Neutral Plan

Abstract

At the end of 2020, the Chinese government announced the pledge to become carbon neutral in the year 2060. Simultaneously, quality growth objectives were established, which were environmentally friendly and promoted the health and wellbeing of the population. The first objective of this study is to assess the gains in energy efficiency and the savings in energy demand that this commitment implies. Secondly, the feasibility of achieving these objectives of savings and efficiency increases is discussed based on an international analysis. The method is based on a quantitative estimate of the primary energy demand throughout the period from 1965 up to the year 2060. For this purpose, long historical series taken from reliable international sources are analyzed. The methodology applied to estimate and project future energy demand is new and based on several steps: The first consists of analyzing the trends of the series and estimating the relationships between them using a robust procedure. Secondly, equilibrium relationships are estimated, which avoids the eventual instabilities involved in the estimation of dynamic models. The third characteristic is based on the bootstrap, estimating and simulating the model by selecting random samples of different sizes from the available dataset. The simulations generate a complete probability distribution for the expected energy demand, which also allows for carrying out a risk analysis, assessing the risk of the demand becoming significantly larger than the expected average. The first result obtained is that the primary energy demand forecast for 2060 is much higher than the demand of the official forecasts by almost three times. However, taking into account the objective to replace 85% of fossil sources with renewables, this discrepancy is greatly reduced and becomes approximately 50% higher than the official forecast. If the savings analyzed in relevant international references are accounted for, then an additional reduction of even up to 40% of this demand could be achieved, so that the final demand would fall further, close to official forecasts. The main and final conclusion is that although the objective of making the Chinese economy carbon neutral by 2060 is feasible, it implies a radical transformation that will necessarily require a determined and unwavering political commitment throughout the entire period considered.