This year coincides with the beginning of China's 14th five-year Plan, and it is also the first year of China's journey of "carbon peak and carbon neutralization". Relevant policy arrangements will be introduced intensively, and greener and lower carbon economic development will be the main theme of future development. the realization of the goal of "carbon peak and carbon neutralization" means that more electric energy will replace fossil energy consumption, and the electricity demand of the whole society will be greatly increased. Copper, as a non-ferrous metal with electrical conductivity second only to silver, is an indispensable material for the development of clean energy and terminal electrification, so in the process of achieving the goal of "carbon peak and carbon neutralization", it is bound to increase the demand for copper from both the generator end and the electricity end.
Realize the policy path of "carbon peak and carbon neutralization"
According to IEA data, in the past 30 years, China's total carbon emissions have been rising, and by 2018, China's total carbon emissions reached 9.497 billion tons, of which the electric power and thermal sectors accounted for the highest proportion of carbon emissions, accounting for 52 percent, followed by the industrial sector (28 percent) and the transportation sector (10 percent), while other sectors accounted for 10 percent of the total emissions. It can be seen that the electric power sector is the main source of carbon emissions in China. Deep decarbonization of electric power is the core sector to promote the low-carbon transformation of the whole society. On this basis, it is also necessary to superimpose the electrification of the terminal energy industry to improve the electrification rate in the field of industry and transportation.
Deep decarbonization of electric power is to adjust the structure of China's energy consumption. According to data provided by IEA, coal power generation accounted for 61.8% of China's energy consumption in 2018, natural gas power generation (7.3%) and crude oil (3.2%), while clean energy included hydropower (3%), wind photovoltaic (2.5%), biomass (3.6%) and nuclear power (2.4%). Compared with the energy structure of developed economies such as the United States, Europe and Japan, the proportion of fossil energy consumption in China is too high, and the proportion of coal power generation with the largest carbon emission coefficient of fossil energy is much higher than that of other major economies. In order to achieve the goal of carbon neutralization, the energy structure dominated by fossil energy needs to be adjusted to that of non-fossil energy. the General Secretary mentioned that the consumption of non-fossil energy needs to reach 25% of total energy consumption by 2030. From a planning point of view, the proportion of non-fossil energy consumption needs to reach 80% in 2050, and deep decarbonization in the power sector is a definite direction in the future. For the development of non-fossil energy, biomass and geothermal are relatively small, only the Yalong River and the Nujiang River are left undeveloped, and the hydropower space is also relatively limited. Considering the safety factors, the scale of nuclear power construction is much lower than expected. So in reverse, the future development of non-fossil energy mainly depends on wind power and photovoltaics.
The proportion of electric energy consumption in terminal energy consumption is one of the important indicators to measure the development level of electrification. According to the above IEA data, we can see that the terminal needs to increase decarbonization efforts in the field of industry and transportation. In recent years, the substitution of electric energy in transportation and industrial fields has developed rapidly. In 2019, the proportion of terminal electricity consumption in China has reached 26%, while that of industrial and transportation departments is 25% and 3% respectively. The State Energy Administration's guidance on Energy work in 2020 proposes that electric energy accounts for about 27% of terminal energy consumption. In December 2019, the State Electroweb Company put forward an important judgment to achieve the "two 50 per cent" by 2050, that is, "China's energy cleanliness rate will reach 50 per cent and terminal electrification rate will reach 50 per cent by 2050". The terminal electrification rate is expected to rise to 32 per cent in 2025, 40 per cent in 2035 and 52 per cent in 2050. In the industrial field, by changing the use of coal from industrial boilers and industrial coal kilns to electricity, the proportion of electric energy will gradually increase to 43 percent in 2035 and continue to climb to 52 percent in 2050. The transportation sector is the sector with the fastest growth rate of electrification. Driven by the "New Energy vehicle Industry Development Plan (2021-2035)" policy, China's new energy vehicles will develop rapidly and promote the traffic electrification rate from nearly 3% in 2017 to 13% in 2035 and 35% in 2050.
Carbon peak and carbon neutralization drive copper consumption
The policy path of carbon neutralization is: first, deep decarbonization of electric power, vigorously develop non-fossil energy, mainly wind power and photovoltaic, research shows that the amount of copper needed by renewable energy facilities is several times that of traditional energy facilities; the second is to improve the electrification rate in the terminal field, coal to electricity in the industrial sector, and the development of new energy vehicles in the field of transportation, we can see that these two major policy paths will increase copper consumption.
According to the new energy installation data for 2020 released by the National Energy Administration, the country will install 71.67 million kilowatts of wind power and 48.2 million kilowatts of photovoltaic power in 2020, and the total installed capacity of Fengfeng will be about 120 million kilowatts. The total installed capacity of wind power will be 281 million kilowatts, and the total installed capacity of photovoltaic power will be 253 million kilowatts. The General Secretary has set a cumulative installed capacity of 1.2 billion kilowatts of wind photovoltaic in 2030, while according to the requirement of 25% of non-fossil energy consumption in 2030, According to this, it is estimated that the total amount of non-fossil energy such as wind, hydropower, nuclear and other non-fossil energy in the industry will reach 1.6 billion kilowatts, and the above inferred increment is mainly from wind and solar power, which is expected to reach 1.5 billion million at that time. China Photovoltaic Industry Association predicts that during the 14th five-year Plan period, the average annual installed capacity of photovoltaic in China is generally expected to be 70 million kilowatts, and optimistically estimated to be 90 million kilowatts. At the 2020 Beijing Wind Energy Conference, more than 400 wind power enterprises launched a joint declaration for the first time in history, guaranteeing that more than 50 million kilowatts of wind power will be installed annually. After 2025, the average annual installed capacity of wind power in China should not be less than 60 million kilowatts, and at least 800 million kilowatts by 2030.
According to research data released by the National Copper Association, the average amount of copper used in renewable energy systems is more than 812 times that of traditional power generation systems, of which wind turbines use about 6 tons of copper per megawatt and solar photovoltaic power generation uses about 4 tons of copper per megawatt. According to the above calculation of the installed capacity of wind power and photovoltaic, it is estimated that in 2021-2025, the total copper consumption of wind power and photovoltaic is 1.5 million tons, 1.12 million tons, and the total annual copper consumption of wind power + photovoltaic is 524000 tons. In 2026-2030, the total copper consumption of wind power and photovoltaic is 1.8 million tons, 1.12 million tons of photovoltaic copper, and 584000 tons of total copper consumption of wind power and photovoltaic.
According to statistics, the demand for copper in the industrial sector is about 1.3 million tons, of which 54% is used in transformers and motors, that is, 702000 tons of copper is consumed, and the remaining 46% is in non-mechanical and electrical equipment. In the future, when the industrial sector is electrified, the conversion of coal to electricity will increase the copper consumption in the transformer and motor fields. the current electrification rate in the industrial sector is 25%, and it will reach 43% in 2035. It is estimated that the electrification rate in the industrial sector will increase by 18%. The copper consumption of mechanical and electrical equipment will reach 1.21 million tons by 2035, an increase of about 34000 tons per year.
The copper consumption of new energy vehicles is about 60kg for plug-in vehicles and 83kg for pure electric vehicles, and it is assumed that the plug-in: pure electric vehicle-to-vehicle ratio is 2RB. on this basis, we calculate that the copper consumption of new energy vehicles will be 470000 tons by 2025, and in terms of copper consumption of charging piles, the ratio of vehicles to piles will be 3.2 tons in 2020, and the long-term goal is to achieve 1 vehicle-to-pile ratio. Considering the increment of vehicle-to-pile ratio by 2020, assuming that the ratio of vehicles to piles will reach 1.5 vehicles by 2025, The ratio of vehicle to pile increases at a uniform speed from 2020 to 2025, assuming that the copper consumption of a single charging pile remains unchanged, and that the proportion of household charging pile: public DC charging pile: public AC charging pile remains the same as that in 2020, it is estimated that the copper consumption of electric pile will be 87000 tons by 2025. On the whole, the copper consumption of new energy vehicles + matching charging piles will be 557500 tons in 2025. From 2021 to 2025, the average annual copper consumption of new energy vehicles is 290000 tons.
Under the guidance of the goal of carbon neutralization, China will focus on reducing carbon emissions from two aspects: deep decarbonization of electric power and improving the terminal electrification rate, which will give rise to the vigorous development of wind power and photovoltaic clean energy. on the other hand, increasing the terminal electrification rate will lead to the conversion of energy consumption from coal to electricity in the industrial field and the vigorous development of new energy vehicles in the field of transportation. It is estimated that during the 14th five-year Plan period, the average annual installed capacity of wind power is 50 million kilowatt-hours, driving the average annual consumption of copper is 300000 tons, the average annual installed capacity of photovoltaic is 70 million kilowatt hours, and the average annual consumption of copper is 224000 tons. The annual consumption of copper from coal to electricity in the industrial sector has increased by 34000 tons, and the consumption of new energy vehicles has increased by 290000 tons annually. According to overall estimates, during the 14th five-year Plan period, The carbon neutralization target will increase China's copper consumption by 850000 tons a year.
