China, the world's largest emitter of greenhouse gases, has committed to net-zero carbon dioxide emissions by 2060. The move is a significant change in direction for the country, which has heavily relied on coal-fired power plants for much of its energy needs. In response, state-owned energy majors have started ramping up their renewable energy investments.
Three companies, China Petroleum and Chemical Corp or Sinopec, China National Offshore Oil Corp (CNOOC), and PetroChina are at the forefront of these investment efforts. The companies have set aside a joint investment of $14.5 billion in renewable energy projects in China to diversify their energy portfolios.
Sinopec Chairman Ma Yongsheng explained, "We want to become China's top player in hydrogen,” adding, "We will expand investments in renewable energy every year.”
The company wants to become China's top player in the emerging hydrogen market and envisages expanding its existing infrastructure to set up more hydrogen stations for fuel cell vehicles.
China's national hydrogen plan aims to have at least 50,000 fuel cell vehicles on the road by 2025, up from around 12,000 at the end of 2022, requiring a widespread network of hydrogen refueling stations. Sinopec has also launched a green hydrogen project in Inner Mongolia to fuel a coal-processing plant. It aims to reduce the plant's carbon dioxide emissions by around 1.4 million tonnes per year.
CNOOC, with a focus on offshore drilling in the past, is pivoting to offshore wind power platforms investing around $15 billion to $30 billion in new energy sources.
Its first project in this direction involves building the Haiyou Guanlan deep-sea floating wind power platform, scheduled to commence operations in June.
The wind platform, placed over 100 kilometers from the shore of Hainan province, is projected to generate 22 million kilowatt-hours a year on average.
CNOOC CEO Zhou Xinhuai said his company would allocate 5-10% of its yearly budget to new energy sources.
PetroChina, China's largest oil and natural gas producer, set up a research hub in Shenzhen to focus on new energy sources, aiming to invest $10 billion annually by 2025. The energy company invested around $1.2 billion in solar power and other renewables, including the Xinjiang region, where its investment increased its total capacity six-fold in 2022.
China's move towards net-zero carbon emissions is not just limited to state-owned enterprises. The government has set ambitious targets for renewable energy development. China's wind and solar energy sectors are expected to reach 28% of the country's electricity production by 2030 and 81% by 2060, up from 13% in 2022.
The government has also increased financial incentives for renewable energy, with investment in wind and solar power likely to exceed $600 billion by the end of this decade.
Although the move towards renewable energy investments represents a new beginning, it has challenges. As the country moves away from coal-fired power plants, state-owned energy majors are under pressure to reimagine their businesses to remain competitive.
The transition comes as China struggles with an electricity shortage and surging inflation, which might impact the growth of new energy sources.
Nonetheless, China's state-owned energy giants are determined to seize the opportunities created by the country's energy transition, not just to reduce emissions but to expand their businesses, retain their market dominance, enter new markets, and improve their corporate image.
By Michael Kern for Oilprice.com
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