Energy transition needs more capital: Sinopec ex-chair

China is committed to fulfilling its 2060 carbon-neutral target but more capital is needed to help other developing countries accelerate their energy transition to make real progress globally, said former chairman of Chinese state-controlled energy firm Sinopec, Fu Chengyu.

China expects the developing world to make real moves towards carbon neutrality, but "if the major western countries or developed countries do not put a lot of capital and technology [towards] helping developing countries", there will not be much real progress in the next five years, he said yesterday at the virtual Energy Intelligence Forum 2021, and added that there has not been much progress since the 2015 Paris climate agreement.

China does not want this to happen again after the UN Cop 26 climate summit in November, and Fu stressed the need for cooperation.

China wants to cooperate with the western world, especially the US, but the US "selectively picks areas for cooperation" while trying to contain China in other aspects, which is why differences arise, Fu said.

Chinese president Xi Jinping's declaration last year that China would achieve peak emissions by 2030 and carbon neutrality by 2060 has spurred US president Joe Biden to step up climate action. But China is also concerned about political leaders in the US changing their minds, which makes it challenging for the rest of the world, who are trying to honour their own commitments.

"Even though President Biden is committed on climate change, we don't know whether or not he will continue to the next term. If somebody else comes up… they may change [their commitments] again. This is something that really worries us. But we think the US is working in the right direction," he said, adding "whether or not the US does what they want… China will continue with its commitments".

Xi recently announced that China will stop building overseas coal-fired power plants . But to help developing countries move towards renewables, Fu said that "you have to bring affordable and secure supplies to the local markets. A lot of the markets cannot afford higher energy prices".

Fu suggested that China can help other developing countries by bringing more investment, "especially to [Belt and Road Initiative] countries", to allow for more clean energy to replace fossil fuels.

Balancing priorities China is also concerned about how to maintain economic growth while moving towards carbon neutrality and environmental protection.

It is facing an energy crisis as the government has imposed electricity rationing in various provinces to try and achieve its 2021 goal for reducing energy use. Energy-intensive industries such as steel and chemicals have been requested to reduce output, and a shortfall of coal has exacerbated the problem, which could have knock-on effects globally.

But this should not be happening as China has enough power capacity, and is instead a management issue, Fu said. "China needs to improve on management – how to balance future needs, future carbon issues, and current economic growth. [This is a] big lesson for China, we have not seen such a situation in more than 10 years," he said, adding that once the government decides to do something, it will do it quickly, but the impact of the current shortage will likely continue for another 1-2 months.

Gas is a very important medium for China in its transition to low- or non-carbon energy, he stressed. "Currently, a little more than 60pc of the total primary energy is from coal. We need to cut coal, and how to replace this coal is with renewable energy and gas."

Carbon capture is another option. "Carbon will be captured and I believe China will develop a new utilisation for CO2 in the next maybe 5-10 years. This will be on a large scale… There are a couple of technologies in the industrial trial phase. Once successful, [this will] solve a lot of current issues," he said.

By Prethika Nair

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