China could stand to benefit economically if it can successfully replace coal with renewable energy, according to a report by financial analytics company TransitionZero.
The study looked at the costs, or savings, that the Chinese government would incur if it replaced its existing coal-fired power plants with zero-carbon alternatives.
“What we found is China could save $1.6 trillion by doing that,” said Matthew Gray, co-CEO of TransitionZero, a London-based firm.
“There’s a huge economic incentive for China to get off coal,” he told CNBC’s “Capital Connection” on Thursday.
China has ‘great deal of work’ to do
China last year pledged to bring its total greenhouse emissions to a peak by 2030 and achieve net-zero emissions by 2060.
Gray said that will require an “orderly transition” — but that’s “something that we’re not seeing at the moment,” he pointed out. The country is the world’s biggest emitter of carbon dioxide and still relies on coal for much of its energy needs.
“The first thing they obviously need to do is to stop investing in new coal-fired power plants,” he said, noting that these are “long-life assets” that may still be in operation in 40 years’ time.
“Anything built now — if China is to meet its net-zero target — will need to be shut down prematurely and therefore be a stranded assets risk problem,” he said.
Photovoltaic panels cover Tiangang Lake in Suqian, Jiangsu province, China, April 13, 2021.
Costfoto | Barcroft Media | Getty Images
He pointed out that China “already dominates zero-carbon technologies” — such as electric vehicles, solar energy and battery storage, and said the country is able to expand that infrastructure in order to reach its net-zero emissions goal.
The “far more concerning” aspect is whether China is willing and able to wind down its coal-powered plants. “They’re going to have to shut down those coal-fired power plants by 2040 or shortly thereafter, and that is going to be a huge challenge,” he said.
“There’s a great deal of work that China will still need to do,” he said.