China’s changing energy landscape

China is the world’s largest consumer of energy and has been the most important source of growth for global energy over the past 20 years. But as China adjusts to a more sustainable pattern of growth, its energy needs are likely to change

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Spencer Dale, group chief economist, discusses the changing energy needs of China

China really matters. It's the world's largest market for energy; it's also the world's largest growth market for energy.
Spencer Dale, group chief economist

China’s demand for energy is projected to grow by less than 2% p.a. over the period of the Outlook, compared with over 6% p.a. over the past 20 years.

Part of this slowing reflects an easing in economic growth: annual GDP growth averages close to 5% p.a. between now and 2035, around half the average pace of growth since 2000.

The slowing also reflects continuing sharp declines in energy intensity as economic activity within China gradually shifts away from energy-intensive industrial output towards more energy-light consumer and services activity, and policies drive further improvements in energy efficiency.

Over the course of the Outlook, China’s energy intensity will decline by 3% p.a. - significantly quicker than the projected global average - converging on US levels by 2035.

China’s demand for energy is projected to slow and grow by less than 2% p.a. over the next 20 years

GDP and primary energy growth (% per annum)

As China adjusts to a more sustainable pattern of growth, its energy needs are likely to change

Energy intensity (toe per thousand - $2010 GDP)

China’s energy intensity will decline at a significantly quicker rate than the projected global average - to converge on US levels by 2035

Lower carbon energy mix

China is also shifting towards a lower carbon energy mix with coal being displaced by lower carbon alternatives.

The energy mix is likely to change significantly over the next 20 years, driven by the country’s changing economic structure and a policy commitment to move to cleaner, lower carbon fuels.

In particular, after providing almost two-thirds of China’s increasing energy needs over the past 40 years, China’s coal consumption is projected to broadly plateau over the next 20 years. As a result, the share of coal in China’s energy demand falls from around two-thirds in 2015 to less than 45% by 2035.

Much of this reduced share is replaced by renewables, nuclear and hydroelectric power, which supply more than half of China’s increasing energy demands over the course of the Outlook. The share of these fuels in China’s energy mix rises from 12% in 2015 to over 25% by 2035.

China’s consumption of natural gas also increases sharply, with its share almost doubling between now and 2035 to 11%.

The share of coal in China’s energy demand falls from around two-thirds in 2015 to less than 45% by 2035

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