Why we need global leadership on pressing energy challenges, and why China has such an important role to play

Skyscrapers in Shanghai, China, with solar panels in the foreground

Neil Hirst is a Senior Policy Fellow for Energy and Mitigation at the Grantham Institute. Over the next few months, he will be working with Professor Yufeng Yang, from the Energy Research Institute (ERI) of  National Development and Reform Commission (NDRC) of China, who recently joined the institute funded by a Grantham Research Fellowship. Here, Neil explains two of the topics they will be working on: reforming energy governance, and getting energy storage onto the G20 agenda.  

Neil Hirst and Yufeng Yang

In recent years, China’s contribution to world leadership on climate and energy policy has been indispensable. The success of the 2015 Paris climate change conference was assured by the joint statement of Presidents Xi Jinping and Barack Obama in November 2014, in which they committed themselves to work for an ambitious outcome. Since the administration of President Donald Trump announced its intention to withdraw the United States from the Paris Agreement on climate change, China’s strong commitment has been crucial for reassuring other participants and the future of the Agreement.

China’s domestic environmental policies are equally important. As the world’s largest energy market, reducing its carbon footprint will have immense implications for global climate targets.  It has been estimated that China’s commitment to reduce the carbon intensity of its economy by 60-65% by 2030, compared to 2005 levels, could achieve a reduction of carbon emissions of 1.7 metric tons per year, compared to currently projected levels[i]. That is more than three times the UK’s total greenhouse gas emissions, or five per cent of the global emissions from energy.

Reforming global energy governance

One of the greatest weaknesses of energy governance today is that membership of the International Energy Agency (IEA), the most influential energy body in the world, is still confined to rich countries who belong to the Organisation for Economic Cooperation and Development (OECD). However, China – not a member of the IEA – is the world’s largest energy user, as well as being the largest oil importer and the largest manufacturer and user of renewable energy. Without China and other major developing nations on board, we simply cannot satisfy global energy policy challenges, such as climate change, energy security and the extension of modern energy to those who are without it today.

Over recent years, there has been significant progress, with the G20 becoming increasingly involved with energy issues. In 2014, it published the “Principles on Energy Collaboration”, and its energy sub-group, the Sustainability Working Group, has become increasingly active. Now, the G20 is pursuing initiatives to promote energy efficiency, scale up renewables, enhance people’s access to energy in Africa and Asia, and stimulate financial support to fund an international move to low-carbon technologies .

Similarly, the IEA is taking steps to broaden its range beyond developed countries by entering into association with China, India, Indonesia, Morocco, and Thailand – a move described by the IEA itself  as the “first step towards building a truly global energy organisation”. Although such an association falls short of full membership, this move enables much closer cooperation and participation. In fact, the Grantham Institute and ERI were part of the dialogue that brought about these developments – the reports of our work can be read in “Global Energy Governance Reform and China’s Participation” on the Grantham Institute website, and was published by Tsinghua University Press.

However, if humanity is to limit global warming to the target of two degrees Celsius set by the Paris Agreement, and provide secure, affordable energy that meets the needs of economic growth and prosperity around the world, then we need more improvements in global leadership on pressing energy challenges. This means we need more inclusive institutions that get all the major players around the table – another compelling reason for the IEA to fully open its membership to key developing countries. In addition, we need to assign specific tasks to the organisations best suited to carry them out. The G20, for example, could lead in promoting energy storage technologies. This, and other similar initiatives, would help tackle the global challenges of climate change, energy security, and access to energy.

Getting energy storage on the G20 agenda

Another priority for Professor Yang’s fellowship is energy storage. Solar and wind power have the potential to become the main energy sources of the future. In recent years, costs have declined spectacularly and in 2015, 70% of all investment in new electricity generation was in renewables. However, intermittency remains a problem – we need to find ways of meeting energy needs at times when the wind isn’t blowing or the sun isn’t shining. This is partly about building sophisticated electric grids, adjusting energy use to fit in with availability, and establishing international connections that give access to more diverse electricity supplies. However, energy storage – potentially one of the most effective ways to manage intermittency – is crucial.

Currently, there are a wide range of storage technologies, and different models for how it could be used: small batteries are already being sold for home use; pump storage is increasingly being embedded in electric grids; and electric cars’ batteries may soon be able to contribute too. There is everything to play for in making the best use of storage in energy systems, but governments need to work together to find the best ways to promote storage technologies and integrate them into electric systems. China is one of the largest manufacturers of electric batteries today and may be on course to become the largest supplier and user of electricity storage. Their role in energy storage technology is indispensable.

Professor Yang’s visit to the Grantham Institute provides an exceptional opportunity for the UK and China to strengthen their collaboration on key topics like energy storage, as well as influence global energy policy. This will help to ensure critical global objectives on climate change and prosperity are tackled coherently.

[i] Centre for Climate and Energy Solutions, China’s Contribution to the Paris Climate Agreement, July 2015

Leave a Reply