In a recent collaborative effort, the Center for International Energy Security Studies at the University of the Chinese Academy of Social Sciences (Graduate School) and the Social Sciences Documentation Publishing House have unveiled the "Annual Development Report on World Energy (2024)."
From: China.org.cn
In a recent collaborative effort, the Center for International Energy Security Studies at the University of the Chinese Academy of Social Sciences (Graduate School) and the Social Sciences Documentation Publishing House have unveiled the "Annual Development Report on World Energy (2024)." This comprehensive report focuses on the theme of "Global Energy Transition and China's Energy Security," offering a retrospective analysis of the characteristics of development in the global energy market. It explores the influencing factors, intrinsic connections, and developmental trajectories, providing assessments of future trends along with a focused analysis of key events impacting international and domestic energy security. The report aims to deliver judgments and predictions about the global energy landscape and its direction while presenting recommendations for the advancement of China’s energy sector.
Impact of Global Economic and Geopolitical Factors
Reflecting on 2023, the short-term and long-term effects of the global economy, geopolitics, great power competition, regional conflicts, and climate change on the world’s energy structure have become increasingly evident. The continuous interest rate hikes by the United States have led to capital returning to the dollar, slowing down the growth of European countries, Japan, and other economies, and causing a crisis in the U.S. banking sector. The OECD estimates that global economic growth in 2024 will be approximately 2.9%, with slow economic growth suppressing energy demand. Geopolitical tensions have begun to spill over into the energy sector, with the U.S. and European countries discussing or implementing "energy geopolitics" policies, attempting to politicize energy and leverage it as a geopolitical tool.
Trends in Global Energy Consumption
In response to China’s technological and market advantages in new energy sectors such as photovoltaics, lithium batteries, and electric vehicles, the United States has used sanctions and protective policies to disrupt trade liberalization and diversification. The impact of the Ukraine crisis on European and global energy patterns is deepening, while the sudden outbreak of the Israeli-Palestinian conflict has sent shockwaves through the Middle East, a key global energy region. Extreme weather events induced by climate change are becoming more severe, prompting governments and societies to focus more on carbon emissions and climate change, collectively driving the transition to low-carbon and clean energy.
In 2023, global coal consumption reached 8.536 billion tons, a year-on-year increase of 1.4%, with global coal production at 8.741 billion tons. China's coal consumption was 4.732 billion tons, an increase of 5.6% year-on-year, which accounts for approximately 55% of total global coal consumption. Despite the rise in global consumption, international coal prices remained generally stable, and domestic coal prices also held steady at a high level.
In 2023, the global crude oil market experienced significant fluctuations, with international oil prices declining to a yearly low of $72.9 per barrel in early May and then rising to a yearly high of $97.1 per barrel in September. China's crude oil imports reached approximately 560 million tons, an 11% year-on-year increase, highlighting its continued dependence on imports. The global natural gas market recovered slowly, with consumption reaching about 3.96 trillion cubic meters, up 0.5% year-on-year. Notably, natural gas demand surged in the Asia-Pacific and Middle East regions. China’s natural gas production amounted to 235.3 billion cubic meters, a 5.7% year-on-year increase, while consumption reached 391.7 billion cubic meters, up 6.6%, indicating growing reliance on imports.
In 2023, there were 72 nuclear power units under construction globally, with an installed capacity of 82.91 million kilowatts. Six new units were brought online, adding 5.703 million kilowatts of installed capacity, and 11 new nuclear power units were approved or started, contributing 13.5 million kilowatts. Five units were retired, with an installed capacity of 6.331 million kilowatts. COP 28 highlighted the critical role of nuclear and new energy in achieving global net-zero greenhouse gas emissions and limiting temperature increases to 1.5°C, marking a significant moment for nuclear energy in the global climate change agenda.
In 2023, global photovoltaic capacity reached new heights, with 420 GW of freshly installed capacity. China's new photovoltaic grid-connected capacity soared to 216.88 GW, reflecting a remarkable 148% year-on-year increase, pushing cumulative capacity past 600 GW, making it the largest globally. China’s exports of photovoltaic main materials (wafers, cells, and components) totaled $49.066 billion, with an export volume of about 211 GW, a 36.6% year-on-year increase, representing approximately half of the world's photovoltaic market. The initial full investment cost of China's ground photovoltaic systems is about 3.4 yuan/watt, down from4.13 yuan/watt in 2022, reflecting a decrease of 0.73 yuan/watt.
Future Outlook for Energy Markets
Looking ahead to 2024-2025, global economic recovery is anticipated to accelerate. The escalation of the Iran conflict and potential interest rate cuts by the Federal Reserve may support oil prices. However, factors such as increased U.S. production, the Iran conflict not escalating into war, diminishing effectiveness of OPEC+ production policies, and slower-than-expected rate cuts by the Federal Reserve could exert downward pressure on oil prices. It is expected that Brent crude prices will fluctuate around a central price of $85 per barrel.
According to the IEA, global coal demand is projected to peak in 2023 and begin declining in 2024. The growth in coal consumption in India and ASEAN is offsetting declines in the EU and U.S., with China emerging as an indicator of global coal demand trends. As China's energy supply gradually transitions into a long-term mechanism, and with strict prohibitions against adding new steel capacity while fully upgrading traditional industries, China's coal demand is expected to continue growing year-on-year in 2024, but at a moderated pace, along with a slowdown in new coal capacity additions.
Amidst the evolving international political landscape, the global natural gas market is undergoing significant changes, with demand and trade patterns shifting towards the Asia-Pacific region. In 2024, the global natural gas market will face increased uncertainties while maintaining a precarious balance between supply and demand, suggesting that the market pattern will continue to undergo dynamic adjustments. According to the China Photovoltaic Industry Association, China's new installed photovoltaic capacity is projected to exceed 200 GW in 2024, with cumulative installed capacity expected to surpass 810 GW. By 2030, new installed capacity is set to reach 310 GW. As module efficiency steadily improves, the overall system cost is expected to decline, potentially reducing the initial full investment cost of photovoltaic systems to around 3.16 yuan/watt. However, geopolitical tensions and trade protectionism may negatively affect China's photovoltaic exports.
As we look to the future, the global energy transition is gaining irreversible momentum. With the "UAE Consensus" taking shape, countries worldwide are gradually reducing their reliance on fossil fuels and making decisive steps towards renewable energy sources. China, as a major energy consumer, is leading this global shift, spearheading advancements in new energy sectors such as photovoltaics, wind power, nuclear energy, and batteries. The nation is committed to establishing a zero-carbon and cleaner energy system.
Nonetheless, the global energy market faces challenges. Geopolitical tensions, a resurgence of trade protectionism, and demand volatility due to economic recovery present significant risks that could disrupt the energy transition and threaten national energy security. In response to these uncertainties, China is intensifying its energy investments and innovations, aiming to increase the share of renewables in its energy portfolio and reduce dependence on fossil fuels. Additionally, the country is strengthening its diversified energy supply system to enhance self-sufficiency and mitigate external risks.
China's Role in Global Energy Governance
Beyond domestic initiatives, China, as a responsible global power, is dedicated to actively participating in global energy governance. The country is enhancing cooperation with the international community to jointly address the challenges of climate change and energy transition. This collaborative approach is essential for navigating the complex dynamics of global energy and securing a sustainable future for all.