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China is leading the way in the electrification of its economy thanks to deliberate policy choices and relatively low power prices, recent analyses show.
The context: In 2024, electricity made up 28% of China’s total final energy consumption — a metric that includes things like fuel burned by cars and heating appliances — up from 27% the prior year, according to the International Energy Agency (IEA). That’s comfortably ahead of the US (22%) and the EU (21%), who are both falling behind in this critical area of climate action.
If the world is to keep climate change to relatively safe levels, electricity must account for at least half of all energy consumption by 2050, and fossil fuels will need to be largely phased out of power generation by then, according to most estimates.
The latest: China’s electricity consumption has been growing much quicker than its economy (7% versus 5%), according to a new IEA report, which says that trend is expected to remain in place for at least the next three years.
The ongoing surge in power demand is partly due to the electrification of conventional manufacturing facilities, which are ditching coal-burning furnaces in favour of large heat pumps, among other measures. Households and corporate buildings are also adopting electric heat pumps.
This technology is increasingly being deployed in China’s light industries — in areas like textile, food, and electrical product manufacturing — although heavier processes such as chemical production and petrochemical refining are also making the transition.
The shift from coal for both residential and industrial heating is being driven by policies aimed at improving air quality, reducing emissions, and maximising energy efficiency, the IEA says. Carbon pricing and financial incentives for manufacturers, together with support for heat pump makers, are among the measures being used.
While the provision of heat in buildings and industry is still responsible for a staggering 40% China’s national carbon dioxide emissions and coal use, this share has fallen by more than 5% over the past decade, the IEA says.
The agency notes that China’s electricity consumption is also being spurred by rapid growth in the electricity-intensive manufacturing of electric vehicles, solar panels, and batteries. And the country’s brisk move to electric mobility, increased uptake of air-conditioners amid worsening heatwaves, and mass build-out of data centres and 5G networks are all contributing as well.
Another driver of electrification, according to US-based research group RMI, is low electricity costs.
The province of Zhejiang, which is a major global producer of solar panels and batteries, is the world leader in swapping combustion for electrons. It’s reached an electrification rate of 51%.
This can be largely explained by province’s low electricity tariffs, according to RMI. “There are no high-electrification territories with high electricity prices.”
As such, Europe and the US will continue to fall behind China in the global electrification race — unless they lower their power prices.
RMI previously said China is rapidly transforming itself into “the first major electrostate”.
