China’s Leadership Role in Global Energy Transition Gains Prominence

China’s Leading Role in Global Energy Transition

As the world advances towards energy transition, China has emerged as a key player in both the development of clean energy, represented by solar and wind power and hydrogen energy, as well as in climate technology venture capital and green financial products. This was highlighted at the inaugural Bloomberg New Energy Finance Summit held in Beijing.

Experts at the summit generally agreed on the prospects of energy transition, noting that it is entering a critical phase globally, with China set to continue its leading and exemplary role. The energy transition in China is expected to shift from a focus on quantity to quality. While the development of solar and wind energy progresses steadily, the scale effects of the hydrogen energy industry are also becoming increasingly apparent, positioning China as a leader in the global hydrogen economy.

China Remains the Largest Investor in Energy Transition

According to Jon Moore, CEO of Bloomberg New Energy Finance, global investment in energy transition reached $2.083 trillion in 2024, marking the first time it has surpassed the $2 trillion threshold. In terms of industry segments, electrified transportation, renewable energy, and grid development were the primary drivers of investment growth last year, with all three sectors reaching record highs.

Regionally, the Asia-Pacific region was a standout, with energy transition investment growing by 21.3% year-on-year, returning to a high-growth trajectory and exceeding $1 trillion for the first time. Jon Moore emphasized that China played an active leading role, with its investment scale being more than double that of any other economy.

Bloomberg’s data shows that China retained its position as the largest investor in energy transition, with total investments reaching $818 billion last year, a 20% increase from 2023, surpassing the combined investments of the United States, the United Kingdom, and the European Union. In contrast, the United States saw stagnant investment growth at approximately $338 billion, while the EU and the UK experienced declines, with investments falling to $381 billion and $65 billion, respectively.

It is noteworthy that investment in climate technology companies through private and public markets fell for the third consecutive year, totaling $50.7 billion, a 40% decrease from 2023. The most active financing was seen in clean power and transportation companies, which raised a total of $31.8 billion.

Despite setting a new record for energy transition investment last year, the growth rate did not match the previous three years’ average annual growth of 24% to 29%. Given the varying “investment gaps” across regions and technology sectors, there is an urgent need to diversify financing channels for energy transition, as relying solely on public funds will not achieve a successful transition.

Bloomberg New Energy Finance indicates that to achieve the net-zero emissions target by 2050, global annual investments in energy transition need to reach $5.6 trillion between 2025 and 2030, whereas current investment levels account for only 37% of what is required to meet the 2050 net-zero emissions goal.

Global Energy Transition Enters a Critical Phase

Regarding the progress of China’s energy transition, Bloomberg New Energy Finance shared its insights with China Energy News, stating that from 2025 to 2030, China’s energy transition will undergo a transformation from quantity to quality. On one hand, the focus will shift from capacity expansion to improving system efficiency, addressing challenges such as consumption absorption, market mechanisms, and inter-regional coordination. On the other hand, policy emphasis will shift towards “dual control of carbon emissions.” Factors such as the accelerated adoption of electric vehicles and stricter constraints on high-carbon industries will further differentiate emission reduction pressures.

China and the United States are the two leading players in the energy transition bond market, both of which saw growth in issuance last year. Globally, energy transition bond issuance is expected to reach $1 trillion in 2024, a 3% increase from 2023. Corporate bonds represent the largest share, benefiting from a 5% increase due to global interest rate cuts, while project bonds saw a decline, and government energy transition bonds remained stable year-on-year.

In the long term, China’s energy transition will benefit from low-carbon trends and cost advantages, with renewable energy, particularly solar and wind, continuing to play a significant role. According to Thomas Tsang, head of China research at Bloomberg New Energy Finance, China achieved its 2030 target of 1,200 GW of installed solar and wind power capacity six years ahead of schedule, driving rapid growth in renewable energy generation. The installation growth rate is far exceeding expectations, especially with significant advancements from 2023 to 2024. Additionally, the penetration of electric vehicles is rising rapidly, with electric vehicles expected to account for half of new car sales by 2024, projected to increase to 80% by 2030 and nearly 100% by 2050.

Challenges Ahead as Energy Transition Enters a Critical Stage

Albert Cheung, Deputy CEO of Bloomberg New Energy Finance, noted, “The energy transition will inevitably face increased challenges as the ‘low-hanging fruit’ has mostly been picked.” In the solar photovoltaic sector, future growth engines will shift to emerging markets, with countries like India, Pakistan, Turkey, Saudi Arabia, and Romania witnessing over 50% growth in solar installations last year. However, many emerging markets still lack the institutional environment necessary for scalable development.

China’s Hydrogen Industry Takes Center Stage

It is important to recognize the significant disparity in investment between mature and emerging sectors within the clean energy economy. Technologies such as renewable energy, energy storage, electric vehicles, and grids, which have been validated and exhibit commercial scalability with established business models, accounted for the vast majority of last year’s investments, totaling $1.93 trillion, with a year-on-year growth of 14.7%. In contrast, investments in emerging technologies such as electrified heating, hydrogen energy, carbon capture and storage (CCS), and clean industrial processes amounted to only $155 billion, reflecting a year-on-year decline of 23%. Factors hindering investments in these areas include affordability, technological maturity, and commercial scalability. Both the public and private sectors need to provide more tangible solutions to promote the scalable development of these fields; otherwise, they are unlikely to contribute positively to emission reductions before 2030.

Albert Cheung stated, “Over the past few years, despite facing policy uncertainty and high interest rates, the energy transition has still achieved considerable growth. However, much remains to be done globally to meet net-zero emission goals, particularly in emerging fields like industrial decarbonization, hydrogen energy, and CCS technologies. Establishing genuine cooperation between the public and private sectors is the only way to unlock the potential of these technologies.”

As we enter a new phase, new challenges must be addressed. Albert Cheung pointed out that in mature markets, unlocking storage and flexibility is essential to enhance penetration rates; in markets with weak institutions, nurturing renewable energy and improving charging networks are crucial to support mass markets and commercial electrification. Simultaneously, accelerating clean energy demand in hard-to-decarbonize sectors such as aviation, shipping, and heavy industry is vital. Overcoming these bottlenecks is necessary to initiate a new growth cycle.

In the hydrogen sector, China will play a leading and exemplary role. Gao Xitong, a hydrogen energy research expert at Bloomberg New Energy Finance, emphasized that China possesses significant cost advantages and global competitiveness in its hydrogen industry, particularly in green hydrogen, green ammonia, and green methanol, which will drive the growth of the global hydrogen economy. However, the hydrogen sector still faces challenges such as policy uncertainty, insufficient infrastructure, and regional mismatches in supply and demand, necessitating support through policy backing, technological innovation, and market-driven strategies.

Gao Xitong remarked, “Last year, global investment in the hydrogen sector slowed down, but China’s hydrogen development remained relatively stable. We anticipate that about 20% of China’s planned hydrogen production capacity will enter the bidding or construction phase this year. Currently, China’s electrolyzer hydrogen production costs and green ammonia production costs are the lowest in the world, and by around 2050, green hydrogen is expected to reach cost parity with gray hydrogen, making China one of the few markets with this potential.”