China mulls stronger clean energy goals for next five years

China is considering proposals to accelerate its adoption of clean energy as part of its next five-year plan that begins in 2021, as the world’s biggest polluter takes steps to reduce its emissions of greenhouse gases.

China’s current goal is to derive as much as 20% of its primary energy use from non-fossil fuels by 2030. One option under consideration is to bring forward that target, according to people familiar with the discussions who asked not to be identified, possibly to 2025. Another proposal is to cut the share of coal in the energy mix to 52% by 2025, from the 57.5% planned for the end of this year, one of the people said.

The nation’s top leadership will next month lay out its broad strategy for 2021-2025, with specific details to be released in March next year. The new energy policy is likely to be an exercise in juggling the sometimes competing demands of delivering economic growth, promoting energy security and mitigating the worst effects of global warming.

The National Energy Administration, which is fielding the proposals, didn’t immediately respond to a fax seeking comment.

“The target setting is in early discussions that require opinions not only from the NEA but also industrial regulators,” said Peng Peng, secretary general of the China New Energy Investment and Financing Alliance.

Promoting renewables at the expense of dirty energy like coal doesn’t necessarily mean that consumption of fossil fuels would fall, as total power needs rise as the economy expands. Unlike other major economies, China is expected to show some growth this year as it emerges more quickly than other countries from the coronavirus pandemic.

Still, China has done a little better than it expected in its transition to clean energy so far, even as it remains the world’s biggest miner and consumer of coal. The share of non-fossil fuels in the energy mix was 15.3% in 2019, surpassing the 15% goal set for 2020.

Moreover, as a major producer of both energy sources, China is likely to favor renewables and coal over imported fuels when it comes to assessing its energy security needs at a time of worsening trade relations and fraying supply chains. “Security of supply is firmly back on the agenda,” Wood Mackenzie Ltd. said in a note this week.

Chinese renewable energy stocks have been on a tear on speculation that Beijing could increase its requirements for solar and wind power. Bringing forward the 20% target to 2025 could see solar installations more than triple from 2019 levels to 105 gigawatts a year, while wind could almost double to 48 gigawatts, Zhu Yue, an analyst at Industrial Securities Co., said in a note.

Longi Green Energy Technology Co., the world’s largest solar company, dropped 2.6% in early trading Friday in Shanghai, pairing gains since Sept. 10 to 13%. GCL-Poly Energy Holdings Ltd., one of the top producers of polysilicon, which is used to make solar power cells, gained as much as 4.9% in Hong Kong and extended its rally over that period to 19%.