Clean energy now a record share of China’s GDP, with minimal emissions impact: study | News | Eco-Business

Without the growth from clean energy-related technologies, its analysis showed that the country would have only seen 3.6 per cent growth in GDP – missing its 5 per cent target for 2024. Three-quarters of clean energy’s contributions to China’s GDP growth were dominated by “big three” products – electric vehicles (EVs), batteries and solar.

Meanwhile, clean energy financing in China also reached 6.8 trillion yuan (US$938 billion) – nearly matching the amount that went into fossil fuels globally in 2024 and almost equivalent to the size of Saudi Arabia’s economy.

Notably, the growth in the nation’s energy storage capacity rivalled the increase in fossil-fuelled power generation capacity for the first time. 

“This is significant, because a key rationale for building coal- and gas-fired power plants has been capacity adequacy,” the authors wrote, adding that these electricity storage facilities can displace the need for fossil fuel-based capacity.

In total, approximately 50 gigawatts (GW) of battery storage, pumped hydro and hydrogen production capacity was added, while fossil fuel-based power generation capacity grew by 54 GW.

China’s continued coal expansion amid its skyrocketing renewables additions has been a cause of concern. A separate CREA analysis published last week found that 94.5 GW of new coal capacity began construction in 2024 – reaching its highest level in a decade and accounting for 93 per cent of coal capacity added worldwide. This bucked global trends, where coal fleets outside of China shrank by 9.2 GW in 2024.

Driving GDP, but not emissions

Given the energy-intensive nature of manufacturing sectors linked to clean energy, particularly the production of batteries for EVs, polysilicon for solar panels, as well as aluminum, steel and glass for clean energy components, there has been increasing scrutiny over their contribution to China’s emissions growth.

But CREA’s analysis found that their role in driving China’s emissions is limited, with the production of EVs, batteries and solar only contributing to 0.9 percentage points of the country’s emissions growth in 2024. Additionally, the analysis shows that these three sectors contributed just 0.5 percentage points out of the overall 6.8 per cent increase in the country’s electricity demand over the same period.

In response to Eco-Business’ queries, Lauri Myllyvirta, lead analyst at CREA and a co-author of the report, clarified that the analysis tried to take into account the full supply chain, regardless of the country in which production has taken place. 

In the past few years, numerous media reports have revealed how Chinese-funded nickel mining facilities supporting its EV boom have fuelled significant damage to the environment and local communities in Indonesia, which is home to the world’s largest reserves of the critical mineral.

But Myllyvirta told Eco-Business that the energy-intensive parts of the manufacturing processes tend to take place in China, including the production of aluminium, polysilicon or nickel smelting.

“China generally imports raw materials and carries out the refining in-country,” he said. “Indonesia’s upstreaming policy has of course sought to change this, and in the case of nickel, already has.”

“However, the narrative of ‘nickel being produced for EVs’ has taken on a life of its own because it’s so attractive from a storytelling perspective. In reality, the vast majority of EV batteries produced in China use the lithium iron phosphate (LFP) chemistry which doesn’t require nickel.”

“The nickel use in China is predominantly for steel production, which also goes into EVs of course but that represents a tiny fraction of overall steel use,” said Myllyvirta, adding that mining is generally responsible for a small part of the energy use in supply chains.

The additional emissions from producing clean energy technologies need to be compared with the emissions savings from using them instead of fossil-fuelled alternatives, like coal-fired power stations or combustion-engine cars, in order for more accurate carbon accounting, stated the report.

Myllyvirta said that most clean energy applications have an emissions payback time of a few years. “They increase emissions at the time of production and then begin to deliver emissions reductions when put into use,” he said.

But the payback time could vary depending on where these cleantech products are used, said Myllyvirta. 

For instance, China-produced solar panels that are imported by a country with a much cleaner power system will take a longer time to reach a breakeven point in carbon emissions; but if used in a nation with higher emissions, like Indonesia, it will reach that point faster. In the case of made-in-China EVs, they would pay back their production emissions within a shorter period of time in countries with lower-carbon electricity, compared to countries where power generation emissions are very high, like Indonesia, India or South Africa.

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