China Leads the World in Energy Investment

　　The International Energy Agency released a report stating that global energy investment in 2018 ended three consecutive years of negative growth, reaching a total of US$1.8 trillion. Notably, China's total energy investment amounted to US$381 billion, nearly one-quarter of the global total—and firmly placed it at the top worldwide.

　　Since China has vigorously pushed forward its energy revolution, the country has accelerated its energy transition, with investment emerging as the decisive force driving this transformation. In particular, breakthroughs in key areas of energy development at various stages have become a major "engine" propelling capital formation. The substantial influx of funds has significantly sped up the pace of capital accumulation in the energy sector, making it one of China's most vibrant and eye-catching highlights in the energy landscape.

　　Investment in the oil and gas industry continues to grow.

　　The development of the oil and gas industry has a lasting impact. After international oil prices declined in 2014, domestic investment in the oil and gas sector temporarily dropped. Although domestic oil and gas investments aligned with global trends in the industry, this led to a decline in domestic oil and gas production, as well as lower oil-to-gas reserves-to-production ratios and reduced reserve replacement rates—effects that even began to undermine the industry's ability to secure future resource replacements.

　　In 2018, driven by the dual factors of the oil and gas industry's recovery and energy security concerns, the sector gradually found a sustainable development path to navigate persistently low oil prices—after several years of strategic business transformation aimed at coping with this challenging environment. That year, as international oil prices rebounded moderately, growth opportunities in the oil and gas industry expanded significantly. Globally, investment in the oil and gas sector continued its upward trajectory, and China was no exception.

　　Additionally, to ensure national energy security, China has been intensifying its oil and gas exploration and development efforts in recent years. Domestic oil and gas companies have not only stepped up their efforts to unlock the potential of existing oil and gas fields but have also identified new frontiers—such as shale oil and gas, as well as coalbed methane—as key areas for prioritized growth. Oil and gas extraction is a capital-intensive industry, and as exploration and development shift from conventional to unconventional resources, from shallow to deep layers, from mature regions to emerging ones, and from onshore to offshore operations, investment in oil and gas exploration and development has become a major highlight in the broader energy sector.

　　2018 marked the 40th anniversary of China's reform and opening-up policy. In that year, the country introduced a series of policies, further advancing market-oriented reforms and ushering in a new phase of both reform and opening-up. Specifically in the oil and gas sector, the pace of market-oriented reforms in upstream exploration has significantly accelerated, with greater openness toward domestic private enterprises and foreign investors in exploration blocks. As a result, the range of market participants in the upstream segment has become more diverse, fostering a variety of investment opportunities.

　　Carbon emission control becomes a key pivot.

　　Following the global financial crisis, China has firmly committed to pursuing a green and low-carbon development path in line with broader global trends, with increasingly clear targets for controlling carbon emissions. Prior to the Copenhagen Climate Conference, our country set a carbon emission reduction goal: by 2020, CO2 emissions per unit of GDP would be reduced by 40% to 45% compared to 2005 levels. After the Paris Agreement came into effect, China further strengthened its climate ambition, raising the target even higher—to achieve a 60% to 65% reduction in CO2 emissions per unit of GDP by 2030, again relative to 2005 levels.

　　Taking carbon emission control as the starting point, China’s energy reform has swiftly entered a new phase of rapid development. Controlling carbon emissions has become a crucial lever driving capital formation in the energy sector.

　　However, China's energy structure has a unique aspect. Coal has long been the dominant source of energy consumption, which has determined that our country’s energy reforms are both ambitious and rapid. Controlling carbon dioxide emissions first requires reducing coal consumption and promoting cleaner uses of coal.

　　Since coal accounts for a significant share of China's primary energy consumption, phasing out coal will inevitably be accompanied by the growth of other alternative energy sources. Currently, these alternatives primarily include oil and gas, as well as non-fossil fuels—and it is around this central theme that the energy transition is unfolding. Meanwhile, clean coal technologies involve upgrading equipment at production facilities; for instance, promoting and implementing carbon capture and storage systems in the power generation and petrochemical industries has become one of the key areas supporting investment.

　　Overall, due to the intensified efforts to phase out coal, China’s energy transition—and its accelerated push to develop oil & gas as well as non-fossil energy sources—has led to a rapid and substantial increase in investment.

　　Natural gas investment provides broad-scale stimulus.

　　After setting carbon emission targets, China has identified the development of natural gas as the key entry point for its current energy transition, aiming to increase the share of natural gas in primary energy production and consumption. In particular, the implementation of the Blue Sky Defense Campaign Action Plan and the Clean Heating Project for People's Livelihood in Northern China has rapidly boosted natural gas demand in the short term. Meanwhile, fostering natural gas as a dominant energy source and the vigorous promotion of the "coal-to-gas" conversion initiative have spurred significant investment in the natural gas sector.

　　In 2017 and 2018, domestic natural gas demand grew by tens of billions of cubic meters year-on-year, representing an increase of nearly 20%. Specifically, the large-scale implementation of the "coal-to-gas" conversion project spurred a series of investments, particularly in natural gas infrastructure. Among these, the interconnection of pipeline networks, the development of underground gas storage facilities, and the construction of LNG receiving stations have emerged as the three key highlights—and are also major drivers of investment. Looking ahead, the natural gas industry is currently enjoying a golden period of growth. With ample supply from international markets and relatively low gas prices, this favorable environment is expected to boost domestic oil and gas demand while further advancing the "coal-to-gas" initiative, which aligns with the strategy of switching to gas wherever feasible.

　　According to China's oil and gas pipeline development plan, by 2025, the country's natural gas pipeline network will reach 100,000 kilometers in total length, leaving significant room for investment growth in this sector.

　　Electrification and re-electrification investment boost

　　Electrification and re-electrification are steady drivers of energy investment. As China continues to advance industrialization and urbanization, the share of electricity in final energy consumption is steadily rising. Meanwhile, electrification is being accelerated in less-developed regions, while re-electrification efforts are simultaneously underway in more developed areas. In tandem with these developments, investments in power infrastructure and related industries will also continue to keep pace. Notably, as China pushes ahead with its transition to non-fossil energy sources, investments in both power-generation projects and grid infrastructure will remain firmly at the necessary levels.

　　Data shows that currently, non-fossil energy capacity accounts for nearly 40% of China's total installed power generation capacity, while its share of total electricity generation has reached 30%. In recent years, wind and photovoltaic power—both key components of non-fossil energy—have faced the persistent issue of curtailed wind and solar power. To address this challenge, in addition to introducing policies that encourage the consumption of "green electricity," relevant infrastructure upgrades are also being implemented and advanced.

　　Supply and demand growth, coupled with the ongoing energy revolution, continues to drive forward.

　　Apart from natural gas consumption, which grew at a slower pace than in the United States, China's consumption of coal, oil, nuclear energy, and renewable energy all increased at faster rates than those seen in major developed nations and emerging economies such as the U.S., Japan, Europe, and India. Accompanying this surge in energy demand, China's domestic energy production sector has been ramping up its efforts across the board. In 2018, the country's total energy production reached 3.77 billion tons of standard coal equivalent, representing a 5% year-on-year increase—the highest level in seven years.

　　Looking at the medium- to long-term development trends, China's economy still has considerable room for growth. China's urbanization and industrialization are both well underway—currently, the urbanization rate stands at around 60%, which still lags somewhat behind that of developed nations. Meanwhile, China's industrialization is still in its mid-stage and is far from entering the post-industrial era, meaning the resulting surge in energy demand will continue unabated. According to the requirements of the energy revolution, by around 2030, China's energy demand is expected to reach 6 billion tons of standard coal equivalent. At present, however, total consumption remains below 5 billion tons of standard coal equivalent, leaving an additional 1 billion-ton capacity for growth. During this period, energy production driven by supply-side reforms, coupled with improvements in energy efficiency, will undoubtedly serve as key forces propelling energy investment.

　　Under the energy revolution strategy, the energy transition is a long-term, systematic endeavor that spans multiple dimensions—encompassing both fossil and non-fossil energy sources, with numerous focal points and broad coverage, thus creating multi-dimensional momentum. A key feature of the current stage is the growing scale of investment. As new technologies are increasingly adopted and supportive policies gain traction, China’s energy investments and capital formation in the next phase are expected to center around enhancing efficiency and developing flagship projects, further solidifying the country’s influence in the global energy landscape.