China’s Renewable and Green Energy Industry in 2024: Electrification and Transition to Renewable Energy

Introduction

As of 2024, China’s renewable energy and electrification efforts have cemented its position as the world’s leading renewable energy producer and consumer. With the ambitious goal of achieving carbon neutrality by 2060 and peaking carbon emissions by 2030, China continues to invest heavily in renewable energy technologies such as solar, wind, hydropower, and bioenergy, while accelerating the electrification of its industrial, transportation, and residential sectors. This comprehensive report explores the state of China’s renewable energy landscape, with an emphasis on electrification, providing the most up-to-date and relevant metrics.

1. Overview of China’s Renewable Energy Industry (2024)

China’s renewable energy sector has grown rapidly, driven by strong government support, technological advancements, and the country’s pressing need to reduce its dependence on fossil fuels. Renewable energy now accounts for a substantial portion of China’s total energy production, supporting the electrification of key sectors like transportation, industry, and residential energy use.

Key Industry Metrics (2024)

• Total Installed Renewable Energy Capacity: By 2024, China’s total installed renewable energy capacity exceeded 1,300 GW (gigawatts), contributing over 55% of the nation’s total electricity generation.
• Wind Energy: China’s installed wind energy capacity reached 420 GW, maintaining its position as the largest producer of wind power globally, accounting for around 40% of the world’s wind capacity.
• Solar Energy: China’s solar energy capacity surpassed 420 GW in 2024, continuing to lead the world in solar power production. Solar energy now accounts for over 30% of China’s renewable energy generation.
• Hydropower: China remains the world’s largest hydropower producer, with 410 GW of installed capacity in 2024, contributing to grid stability and providing a significant portion of the country’s renewable energy.
• Investment in Green Energy: In 2023, China invested more than USD 350 billion in renewable energy infrastructure, accounting for around 35% of global green energy investment.
• Employment: Over 5.5 million people were employed in China’s renewable energy sector in 2023, with significant growth in solar, wind, and electric vehicle (EV) industries.
• CO2 Emission Reduction: China’s renewable energy industry helped reduce its CO2 emissions by over 3 billion metric tons in 2023, aligning with its ambitious climate goals.

2. Electrification of Society in China

China’s electrification strategy is integral to its broader decarbonization goals. Electrification, particularly when powered by renewable energy, is helping reduce emissions in sectors such as transportation, residential energy use, and public infrastructure. The electrification of society includes a focus on increasing the share of electricity in overall energy consumption, enhancing energy efficiency, and reducing reliance on coal and other fossil fuels.

Electrification Rate

• Overall Energy Mix: By 2023, electricity accounted for 35% of China’s total energy consumption, with the government targeting an increase to 50% by 2035. This shift is supported by the rapid deployment of renewable energy technologies and efforts to electrify key sectors.
• Drivers of Growth: The electrification of transportation, heating, and cooling systems in urban areas, as well as the transition of industrial processes to electric power, are major contributors to the increasing electrification rate.

Residential and Commercial Electrification

• Electric Heating and Cooling: The adoption of electric heating and cooling systems, particularly electric heat pumps, is expanding rapidly. By 2024, over 15 million heat pumps were in operation across residential and commercial sectors, reducing reliance on coal and natural gas for heating and cooling.
• Rooftop Solar and Distributed Energy: China’s distributed solar energy capacity reached 120 GW in 2024, with rooftop solar installations playing a key role in the electrification of residential and commercial buildings. The government’s incentives for distributed solar, such as subsidies and feed-in tariffs, are encouraging more households and businesses to generate their own electricity.
• Energy-Efficient Appliances: There has been a significant shift toward the use of electric and energy-efficient appliances in urban areas, particularly for cooking and household energy use. As of 2024, more than 55% of Chinese households used electric cooking appliances, such as induction stoves.

Electrification of Public Infrastructure

• Electric Public Transport: China has become a global leader in the electrification of public transportation. By 2024, over 600,000 electric buses were operating in cities across China, making up more than 95% of the global electric bus fleet. This electrification effort has significantly reduced emissions from urban transportation systems.
• Electric Rail Systems: China’s electric-powered rail system continues to expand, with the country operating the world’s largest network of fully electrified high-speed rail, spanning more than 45,000 kilometers. The electrification of rail networks has been a crucial factor in reducing emissions from long-distance passenger and freight transport.

3. Electrification of China’s Industrial Sector

Electrification of industry is a central element in China’s efforts to reduce emissions from some of its most carbon-intensive sectors, such as steel, cement, chemicals, and manufacturing. By transitioning from fossil fuels to electric power, China aims to improve energy efficiency, reduce emissions, and modernize its industrial base.

Electrification of Heavy Industries

• Steel Industry: China is the world’s largest producer of steel, and efforts to electrify the industry are gaining momentum. Electric arc furnaces (EAFs), which are powered by electricity and produce steel with fewer emissions, accounted for 15% of China’s steel production in 2024, up from 12% in 2022. The government aims to increase this share to 30% by 2030.
• Cement Industry: The cement industry, responsible for about 7-8% of China’s carbon emissions, is undergoing a transition to electric processes. New technologies, such as electric rotary kilns, are being deployed to reduce the carbon footprint of cement production, with electrification expected to contribute significantly to decarbonization efforts.
• Chemical Industry: The chemical sector is increasingly integrating electrified processes, particularly through the use of renewable electricity to power chemical production facilities. Green hydrogen, produced from renewable energy, is also being adopted in the chemical industry to replace fossil fuel-based feedstocks.

Electric Machinery and Industrial Equipment

• Electrification of Industrial Equipment: China is electrifying a wide range of industrial machinery, from electric boilers to electric-powered manufacturing equipment. In 2024, approximately 25% of industrial heating systems were electrified, with a target to reach 50% electrification by 2035.
• Smart Manufacturing and Automation: Advanced manufacturing technologies, such as robotics, AI-driven automation, and smart energy management systems, are helping reduce energy consumption in factories and industrial facilities. Many of these technologies are powered by renewable electricity, contributing to both energy efficiency and emissions reduction.

4. Electrification of China’s Transportation Sector

Electrification of the transportation sector is a cornerstone of China’s strategy to reduce emissions from one of the largest contributors to its carbon footprint. With the world’s largest electric vehicle (EV) market and a rapidly growing network of electric public transportation, China is accelerating the shift away from fossil fuel-powered transportation.

Electric Vehicles (EVs)

• EV Market Leadership: China remains the world’s largest market for electric vehicles. In 2023, over 7 million electric vehicles were sold in China, representing more than 55% of global EV sales. The country’s automotive industry continues to scale up EV production, with plans to reach 15 million EVs sold annually by 2030.
• EV Infrastructure: To support the rapid growth of electric vehicles, China has expanded its EV charging infrastructure. By 2024, China had installed over 5 million EV charging points, the most extensive network in the world, and plans to expand this to 10 million by 2030.

Electric Public Transportation

• Electric Buses: With the largest electric bus fleet in the world, China is leading the global transition to zero-emission public transport. By 2024, more than 95% of the public buses in major cities such as Beijing, Shenzhen, and Shanghai were electric, significantly improving air quality and reducing urban emissions.
• Electric Trucks and Freight: Electrification is also expanding into heavy-duty transport, with over 100,000 electric trucks in operation by 2024, primarily in logistics and short-haul freight transportation. The development of high-capacity batteries is making electric trucks more viable for long-distance shipping.

Electrification of Rail and Metro Systems

• Electric Rail: China’s extensive high-speed rail network is fully electrified, with over 45,000 kilometers of electric rail lines in operation by 2024. This network plays a key role in reducing emissions from long-distance passenger and freight transport.
• Urban Rail Systems: In addition to its high-speed rail network, China is rapidly expanding its electrified metro systems in cities. More than 90% of urban rail systems in major Chinese cities were electrified by 2024, offering a cleaner alternative to cars and buses.

5. Electrification of the Marine Industry

China’s maritime industry, including shipping and port operations, is undergoing a transformation as part of the country’s broader electrification efforts. Electrification of marine vessels and port infrastructure is crucial for reducing emissions in this sector, which is responsible for a significant portion of China’s carbon output.

Electrification of Ships and Vessels

• Electric Ferries and Cargo Ships: China is a leader in the deployment of electric ferries and inland electric cargo ships. By 2024, China had introduced over 250 electric vessels, primarily operating along major waterways like the Yangtze River and in coastal regions. These vessels help reduce emissions from maritime transport and improve air quality in port cities.
• Battery-Powered Ships: Battery-electric ships, including ferries and short-haul cargo vessels, are increasingly being adopted for both passenger and freight transport. The continued development of high-capacity batteries is expected to expand the range and capabilities of electric ships in the coming years.

Electrification of Ports and Port Operations

• Shore Power and Cold Ironing: China has made significant investments in shore power (cold ironing) systems, allowing ships to connect to the grid while docked, thus reducing emissions from ships at berth. By 2024, more than 80% of China’s major ports were equipped with shore power systems, contributing to a substantial reduction in port-related emissions.
• Electric Port Equipment: China is also electrifying its port operations by replacing diesel-powered cranes, trucks, and forklifts with electric alternatives. By 2024, over 40% of the equipment in China’s largest ports was electric, with a goal of achieving full electrification of port operations by 2030.

6. Government Policies and Initiatives for Electrification

The Chinese government has introduced a wide range of policies and incentives to support electrification and renewable energy deployment. These policies are designed to accelerate the transition to a low-carbon economy and reduce the country’s reliance on fossil fuels.

Five-Year Plans and Carbon Neutrality Targets

• 14th Five-Year Plan (2021-2025): The current Five-Year Plan sets ambitious targets for expanding renewable energy and increasing the share of electricity in the energy mix. By 2025, China aims to have 20% of its energy consumption come from non-fossil fuels.
• Carbon Neutrality by 2060: China’s commitment to achieving carbon neutrality by 2060 has accelerated the adoption of electrification technologies across key sectors. Electrification is seen as a key tool for reducing emissions in transportation, industry, and buildings.

Financial Incentives and Subsidies

• Renewable Energy Subsidies: China continues to offer subsidies and feed-in tariffs (FITs) for renewable energy projects, including wind, solar, and bioenergy. These incentives encourage investment in clean energy technologies and support the expansion of distributed energy systems.
• Electric Vehicle Incentives: Subsidies for electric vehicles remain a central policy tool for promoting the adoption of EVs. Tax breaks, purchase subsidies, and incentives for the installation of home charging infrastructure are helping drive EV sales across the country.

Grid Modernization and Energy Storage

• Smart Grid Development: China is investing heavily in modernizing its electricity grid to better integrate renewable energy sources and manage fluctuating demand. As of 2024, more than 80% of China’s grid had been upgraded with smart grid technologies, improving efficiency and reliability.
• Energy Storage Systems: Energy storage technologies, including lithium-ion batteries and pumped hydro storage, are critical for supporting the integration of intermittent renewable energy. China’s installed energy storage capacity reached 50 GW by 2024, with plans to expand this capacity to 100 GW by 2030.

7. Future Outlook for China’s Renewable Energy and Electrification

China’s renewable energy sector and electrification efforts are expected to continue expanding rapidly, driven by ambitious climate goals and strong government support. By transitioning to renewable electricity and electrifying key sectors, China is laying the foundation for a sustainable, low-carbon future.

Projections for 2030

• Renewable Energy Capacity: China’s total renewable energy capacity is projected to exceed 2,000 GW by 2030, with wind and solar energy accounting for the majority of new installations.
• Electrification of Industry: By 2030, China aims to have 50% of its industrial heating systems electrified, with electric-powered processes playing a central role in reducing emissions from heavy industries like steel and cement production.
• Electric Vehicle Adoption: EVs are expected to make up over 40% of new car sales in China by 2030, contributing significantly to the reduction of emissions from the transportation sector.

Key Trends

• Green Hydrogen: Green hydrogen, produced using renewable energy, is expected to become a key component of China’s energy transition, particularly for decarbonizing hard-to-electrify sectors like heavy industry and long-distance transport.
• Energy Storage and Grid Integration: Energy storage will play a critical role in stabilizing China’s grid as renewable energy penetration increases. Investment in large-scale battery storage and pumped hydro will be crucial for balancing supply and demand.

Conclusion

China’s renewable energy and electrification efforts are transforming the country’s economy, reducing its reliance on fossil fuels, and helping meet its ambitious climate goals. With significant progress in electrifying key sectors such as transportation, industry, and public infrastructure, China is leading the global transition to a low-carbon future. As the country continues to scale up its renewable energy capacity and modernize its grid, it will play a central role in shaping the future of global sustainability.

Bonus information

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Kjeld Friis Munkholm Associate Parter at Vejle - China Business Center

www.munkholmconsulting.com

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