China requires $12.5 trillion for carbon neutrality

China’s drive to transform from coal-based energy to a low-carbon system will need a huge investment to reinvent its energy system by building or retrofitting its massive energy infrastructure, according to Shell.

The Anglo-Dutch supermajor concludes in its latest analysis that China will require USD 12.5trillion between 2020 and 2060 to achieve carbon neutrality, a timeline set by Chinese president Xi Jinping in 2020.

Of the total outlay, more than 50% will be needed over the next two decades, Shell says.

“This is necessary for early decarbonisation of the power sector to ensure that China is well placed to extend low-carbon electricity to decarbonise end use-sectors,” the company states in its report, adding that early infrastructure investments this decade will also help China’s economic recovery.

Shell anticipates there will be large increases in investment in infrastructure related to bioenergy, hydrogen, and carbon capture, utilisation, and storage – particularly from the 2030s onwards – as technologies and markets mature and they are deployed to reduce emissions in hard-to-electrify sectors.

Significant investment is also required in the transport, industry, and building sectors to boost energy efficiency.

Shell adds investments in low-carbon energy demand technologies will dominate, particularly in the later decades. For example, the company states that in the 2050s roughly 80% of such investments will relate to heavy industries and long-distance road freight, shipping, and aviation.

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