{"id":10889,"date":"2022-09-07T07:30:27","date_gmt":"2022-09-07T07:30:27","guid":{"rendered":"https:\/\/focus.cbbc.org\/?p=10889"},"modified":"2025-04-23T09:37:24","modified_gmt":"2025-04-23T09:37:24","slug":"electricity-costs-and-chinas-race-for-net-zero","status":"publish","type":"post","link":"https:\/\/focus.cbbc.org\/electricity-costs-and-chinas-race-for-net-zero\/","title":{"rendered":"Electricity Costs and China’s Race for Net Zero"},"content":{"rendered":"

Cheap energy has allowed China to emerge as a leader in green technologies. But with intense heatwaves causing water to become scarce this summer, Torsten Weller<\/strong> argues that fundamental adjustments will be needed to ensure that net zero goals can be met<\/span><\/h2>\n

Rising energy costs are probably one of the most pressing issues in current UK politics. And while the spike in electricity and heating bills is probably temporary, electricity prices might well play a much larger role in economic growth in the coming years and decades.\u00a0<\/span><\/span><\/p>\n

The main reason for this is climate change and the global race for net zero targets and technologies. A little-known feature of the transition from fossil fuels to renewable energies and carbon neutral industries is that a lot of the changes will require more, not less electricity.\u00a0<\/span><\/span><\/p>\n

Consequently, cheap power might well be the most important variable determining not only the success of a clean energy transition, but also which countries are best placed to benefit from the opportunities of the net zero economy.\u00a0<\/span><\/span><\/p>\n

This brief looks at the importance of electricity for businesses in the coming decades, in particular focusing on the prospects in both China and the UK.\u00a0<\/span><\/span><\/p>\n

\"Launchpad<\/a><\/p>\n

Background\u00a0<\/span><\/span><\/h4>\n

The net zero goals that were adopted at last year\u2019s COP26<\/a> Summit in Glasgow will have far-reaching consequences, the most crucial of which might well be the growing importance of electricity costs for businesses.\u00a0<\/span><\/span><\/p>\n

Take the steel industry for instance. Reducing carbon emissions \u2013 for example by switching from blast furnaces (burning iron ore) to environmentally friendlier electric arc furnaces (which use scrap metal) \u2013 would require up to five times the amount of electricity currently used.\u00a0<\/span><\/span><\/p>\n

According to a study by McKinsey, electricity demand in the UK could jump from the current 300 terawatt hours to 590 terawatt hours. So, while overall energy consumption would drop by 34%, electricity consumption could rise by a staggering 97%. The International Energy Agency (IEA) comes to a similar conclusion, predicting that international industrial electricity consumption will more than double between 2020 and 2050.<\/span><\/p>\n

In a globalised world, this also means that electricity costs will be a key factor for determining where green technologies<\/a> and businesses can thrive \u2013 and where they can\u2019t. In a world where China is seen as a \u2018systemic competitor\u2019 \u2013 according to the now widely accepted notion put forward in last year\u2019s Integrated Review<\/a> \u2014 the key metric could be electrification rather than computerisation.\u00a0<\/span><\/span><\/p>\n