Energy Insider: Russian Gas to Power Shanghai by Year-End, Beijing Reins In Solar Industry

The latest developments in the energy and climate sector in China include significant advancements in gas, solar, battery logistics, wind, and automotive industries. Russian gas will soon power Shanghai via the newly completed southern segment of the China-Russia east-route pipeline, connecting China’s eastern coastal areas with Heihe on the Chinese-Russian border. This extensive pipeline, which is part of the Power of Siberia project, aims to deliver 38 billion cubic meters of gas annually from Russia to China, meeting the energy demands of megacity clusters like Beijing-Tianjin-Hebei and Yangtze River Delta, according to Xinhua [para. 1-5]. Despite gas being a fossil fuel, China categorizes it as a clean energy source, a notable distinction that underscores the country’s strategy to fortify its energy security [para. 5].

In the realm of solar energy, the Chinese government has instructed solar manufacturers to restrain their rapid expansion for capacity alone and instead focus on technological innovations, product quality, and cost reduction. The updated guidelines introduced new capital ratio requirements for expanding solar production which were not present before, indicating the MIIT’s concern over industry-wide overcapacity [para. 6-12]. This comes after warnings from industry executives about potential interim overcapacity [para. 9-12].

China State Railway Group has launched a pilot rail transport service for EV batteries, involving major battery producers like CATL and BYD. This initiative seeks to address the burgeoning demand and forecasted shortage in logistics capacity, as around 90% of lithium batteries were road-transported domestically last year [para. 13-17]. Rail transport not only offers a more efficient method but also positions Chinese firms for global reach through potential exports via the China-Europe Railway Express [para. 17-18].

In offshore wind energy, China has significantly increased its capacity, connecting 39.1 gigawatts to the grid by September, despite a slowdown due to subsidy cuts [para. 19-21]. This growth, surpassing the UK, showcases China’s position as the global leader in offshore wind power. The sector, despite the slowed growth post-subsidy cuts, is projected to double its capacity by 2025 [para. 21-23].

Finally, in the automotive industry, Chinese carmakers, advised to invest in Mexican local production rather than solely exporting vehicles, can leverage Mexico's access to North American and Latin American markets. This strategic move aims to circumvent geopolitical risks while enhancing their market reach. Yu Yang of JAC Motors suggests Chinese firms should capitalize on Mexico’s advantages and develop local production capabilities [para. 24-26]. However, uncertainties loom with potential policy shifts under the incoming U.S. administration that may affect the viability of Chinese EV-makers in Mexico, such as possible tariffs and changes to EV incentives [para. 27-28].