Clean Energy Accounts For The Majority Of China’s GDP Growth In 2023

Clean Energy Accounts For The Majority Of China's GDP Growth In 2023 - Carbon Herald
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China has achieved unprecedented economic growth thanks to investments in clean energy, according to a new sector-by-sector analysis for Carbon Brief. According to Carbon Brief, the analysis from official figures and industry data shows a huge surge in investment in Chinese clean energy in 2023 with solar power, electric vehicles (EVs) and batteries as top drivers. 

Investments in the broad clean energy sector rose 40% year-on-year to 6.3tn yuan or $890 billion which is a massive year-on-year growth. With total Chinese investments growing by just 1.5tn yuan in 2023, clean energy accounted for all of the growth, while investment in sectors such as real estate and other areas shrank.

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The clean energy definition in the analysis includes renewables, nuclear power, electricity grids, energy storage, EVs and railways, the technologies identified by China to decarbonize the production and use of energy. 

The figures show that the clean energy sector including production contributed 11.4tn yuan ($1.6tn) to the Chinese economy in 2023, up 30% year-on-year. Thanks to this, China’s GDP rose to 5.2%. Without the growth from clean-energy sectors, China’s GDP would have missed the government’s growth target of “around 5%”, rising by only 3.0% instead of 5.2%.

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The example from China is yet another proof for the growing importance of the green energy transition as a main driver of economic growth, especially for developing economies. 

Solar power, along with manufacturing capacity for solar energy generation, EVs and batteries, were the main focus of China’s clean-energy investments in 2023, as per the analysis.

Solar power became the largest contributor to growth in China’s clean-technology economy for 2023. Its record growth combined 1tn yuan of new investment, goods and services, as its value grew from 1.5tn yuan in 2022 to 2.5tn yuan in 2023, an increase of 63% year-on-year.

The installed wind capacity also increased remarkably by 84% YoY reaching 41GW of new additions. Electricity storage and hydrogen are also identified as having a massive potential to decrease China’s reliance on fossil fuel energy. 

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Constructions of new capacity in pumped hydro storage, new battery manufacturing and electrolysers for green hydrogen production are scaling up rapidly. Efficient energy storage to meet the intermittent production of renewable energy (solar and wind) is one of key stoppers of mass adoption of renewables to replace fossil fuel energy generation. Fast deployment of large-scale energy storage technologies are critical to allow for the integration of larger amounts of variable wind and solar power into the grid.

The analysis also explains the reason behind the clean energy investment boom in 2023. One of the key reasons is a major pivot in China’s macroeconomic scene – falling investments in other sectors where redirected to clean energy. The pivot happened as investments in the real estate sector dropped 10% YoY in 2022 and another 9% in 2023 which caused a gap in aggregate investment demand. 

Under pressure to attract investment, local governments offered generous subsidies, help arranging financing,eased private-sector access to financial markets and bank loans during the Covid-19 pandemic, which all facilitated the growth of the clean energy sector. China’s clean energy policies and wider industrial green transition policies are the main prerequisite for this shift to scale up. 

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