As the world’s largest developing nation, China is experiencing continuous economic growth and urban expansion. In order to sustain this growth, the nation has had to heavily invest in its energy industry by building coal-fired power plants, establishing wind farms, and increasing the capacity of nuclear power stations. China is now the world’s leading energy consumer and its energy industry accounts for close to 20 percent of the global energy market.

This article explores the current energy industry in China and looks at some of the challenges and opportunities that it provides.

China’s Growing Energy Appetite

As one of the world’s leading economies, China’s energy use has grown considerably in recent years and is set to continue growing into the future. Over the last decade the nation’s primary energy consumption has grown from 2195Mt of oil equivalent (Mtoe) in 2006 to 4558.3Mtoe in 2016. This represents a 110 percent increase in just 10 years and highlights the vast energy demand from the nation.

Coal Dominates China’s Energy Supply

Today, coal fuels much of China’s energy supply. In 2016, coal made up 59.1 percent of China’s energy consumption with a total of 2713Mtoe. This is considerably greater than the next largest supplier of energy, petroleum, which accounted for 14.2 percent at 643Mtoe. Natural gas is the third largest energy supplier, representing 8.3 percent of China’s energy supply with a total of 379Mtoe in 2016. Nuclear energy accounts for 4.1 percent (183.5Mtoe) and hydropower 6.5 percent (294.2Mtoe) in 2016.

China’s Renewable Energy Revolution

China has been investing heavily in renewable energy sources as a means of reducing the nation’s reliance on coal. In 2016, renewable energy sources accounted for 12.1 percent (538.9Mtoe) of the total energy consumption in China. This is an increase from just 8.7 percent (359Mtoe) in 2006 and highlights the nation’s commitment to clean energy.

Wind energy has emerged as the leading source of renewable energy for China. In 2016, the nation had the added capacity of 51.7 gigawatts (GW) of wind power, making it the world leader in terms of capacity. Solar energy is rapidly catching up and in 2016 China added 34.5GW of new solar capacity, also becoming the world leader in terms of solar capacity.

Challenges China Faces With Renewable Energy Sources

Although China has made impressive strides in terms of increasing renewable energy sources, the nation still faces numerous challenges. A lack of sufficient transmission lines and storage capacity hinder the ability of China to effectively utilize these new renewable sources of energy. Furthermore, there are challenges in terms of the technology and costs involved with renewable sources of energy, particularly for solar and wind power.

In addition, the government has yet to implement a carbon trading scheme which would be beneficial for boosting investments in renewable energy sources.

Opportunities Presented by China’s Energy Industry

Despite the challenges, there are also numerous opportunities in China’s energy industry. With the increased use of renewable energy sources, the nation is well placed to become a leader in green technology and practices. This could lead to the nation becoming an innovator in the energy industry and allowing it to export its technologies and practices to other nations.

Similarly, the development of nuclear energy could also offer many opportunities. China is currently the world’s leading developer of nuclear energy and the nation plans to add an additional 53GW of nuclear energy by 2030. The increased use of nuclear power provides an opportunity for China to reduce its reliance on coal and become a leader in nuclear technology.

The Growing Role of Natural Gas

Amidst the challenges and opportunities presented by the nation’s energy industry, natural gas has proven to be a reliable and clean source of energy for China. This is due its abundance and the fact that it produces fewer emissions compared to coal, oil and nuclear.

In 2016, natural gas represented 8.3 percent of China’s total energy consumption. This is an increase from 7.1 percent in 2006 and highlights the role that natural gas has been playing in helping to reduce the nation’s reliance on coal.

China’s energy industry has seen immense growth in the recent years. Coal dominates the energy sector and renewables are growing but still face considerable challenges. Natural gas has also grown in prominence and continues to provide China with a reliable and clean source of energy.

Going forward, China needs to continue to invest in renewable and nuclear energy sources while taking advantage of the opportunities they provide. At the same time, continued investment in natural gas infrastructure would ensure that China is able to meet its energy needs as it continues to develop and expand its economy.