18th October 2024 (9 Topics)
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China's Liquefied Natural Gas (LNG) Imports
Context
In 2024, China has significantly increased its imports of liquefied natural gas (LNG), reaching the highest levels since 2021. This uptick coincides with a record increase in natural gas-fired electricity generation. While these trends suggest a growing reliance on gas for power generation, a deeper analysis reveals that natural gas remains a minor player in China's overall energy mix.
Rising LNG Imports
- China's hunger for liquefied natural gas (LNG) is surging to its highest levels since 2021, outpacing the growth rates of South Korea and Japan. Yet, its push for cleaner energy sources is redefining LNG's role in the national power strategy.
- Current Statistics
- LNG Imports Increase: China’s LNG imports have risen by nearly 15% in 2024 compared to the previous year, reaching almost 80 billion cubic meters.
- Comparative Growth: This growth outpaces other major importers: South Korea (5%) and Japan (2.5%).
- Electricity Generation: Natural gas-fired electricity generation hit a record 188 terawatt hours (TWh) in the first eight months of 2024, a 1.5% increase from the same period in 2023.
- Economic Factors: Despite increased imports, the price of LNG remains high. Power generated from LNG is estimated to be $30-$40 more expensive per megawatt hour than that produced from coal. This price disparity discourages many industrial firms from switching to gas, particularly amidst China's ongoing property crisis and economic slowdown.
- China's pledge to achieve carbon neutrality by 2060 necessitates further increases in clean energy generation, limiting the scope for substantial growth in natural gas consumption.
Limited Role of Natural Gas in Electricity Generation
- Share of Generation Mix
- Gas Generation Decline: Natural gas's share of total electricity generation in China has decreased to 2.8%, the lowest level in seven years, down from 3% in 2023.
- Renewable Energy Dominance: Solar, wind, and hydro power collectively contribute significantly more to the energy mix, with renewables accounting for 38% of total electricity generation so far in 2024.
- Long-Term Trends: Since 2018, the growth in electricity generation from different sources has been:
- Solar: +378%
- Wind: +163%
- Gas: +36%
What does it mean?
- China is walking a line between keeping energy security with traditional methods and pushing for a low-carbon future.
- By adding new coal capacity to replace older plants while expanding renewables, China is ensuring grid stability amid growing power needs. These moves highlight a significant global shift towards diversified energy dependence.
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