Aerial view of Shanghai skyline.

A New Space Race in China

The world’s biggest and most important energy transition

A worldwide race to decarbonize is on, and each country’s performance relies on policy, ingenuity, and smart infrastructure. What does the race look like in China?

China has begun a gigantic energy transition. It is by far the world’s leading emitter of greenhouse gases, and energy is behind 90% of all its emissions. In fact, just two of China’s industries – steel and cement – account for more CO2 emissions that the whole European Union.

 

But despite its size, China can change relatively quickly. In 2021, the Chinese Government committed to passing peak CO2 emissions in this decade and reaching net-zero by 2060. Recent work by the IEA suggests China can meet these targets early, with a peak around 2025, and “carbon neutrality well before 2060”.  

 

“The Government’s strategy provides a clear roadmap which impacts the future of every industry,” says Yue Yu, Head of the SI Digitalization Enablement Center at Siemens in Shanghai. “There will be a greater need for smart infrastructure that can help improve energy efficiency and lower carbon emissions. There will be a continued increase in renewable energy, smart campuses powered by micro-grids, zero-carbon buildings, as well as extensive retrofitting of existing buildings to meet the targets.”

Kid on a kickboard between smart buildings

What is the New Space Race?

A New Space Race is a Siemens Smart Infrastructure thought leadership study about how infrastructure stakeholders view the immediate and longer-term future of our built environment and energy systems.

 

It is based on a survey of 501 senior infrastructure stakeholders from 10 countries as well as in-depth interviews and desk research. The research covered mainly commercial real estate (e.g. office towers, campuses, hospitals, data centers, or factories), public sector assets (e.g. community centers, transport hubs, education assets, or healthcare infrastructure), and energy assets (e.g. electricity grids, gas networks, wind farms, etc). Respondents were involved in infrastructure as owners, developers, or operators.

Leading position in the race for digitalization

In our survey, China respondents suggest the country has started adopting meaningful sustainability targets relatively late, with 82% saying their organization adopted significant low-carbon or net zero targets for the first time within the past five years, far beyond the average of 66%. However, they expect to gain ground quickly, with 68% saying that their organization will become carbon neutral in, or before, 2025.

 

Decarbonizing the energy system is impossible without digitalization, and so China will need to continue its strong progress in this area. Unlike all the other countries we surveyed, China respondents do not believe that digitalization in buildings and power networks has fallen behind corresponding progress in most other industries. Similarly, over half of China respondents (52%) say their organization is making full use of available data – a greater proportion than in any other country we surveyed. “In terms of digital transformation, a lot of Chinese enterprises are in a leading position compared with global peers, including those in buildings and energy,” says Yue.

In terms of digital transformation, a lot of Chinese enterprises are in a leading position compared with global peers.
Yue Yu, Head of the SI Digitalization Enablement Center at Siemens in Shanghai

There is also more expected from blockchain secured data flows, contracts, and transactions. Some 43% of China respondents selected this as one of their top three areas expected to have the biggest impact on infrastructure assets, projects, or investments over the next five years. “There is a lot of interest in blockchain applications in China,” says Yue, “businesses consider it an efficient way to tackle data privacy and security issues, and it is also seen as an important way to improve transparency in key areas like food safety, trade security and carbon tracking.”

 

As China progresses towards its climate targets, advancing digital technologies will only become more important. Modern, digital systems will be essential to the management of more distributed, dynamic electricity systems, to automating energy efficiencies, ensuring stability, and responding to change. Nowhere else on earth will the twin megatrends of decarbonization and digitalization combine at the vast scale expected in China, and nowhere else is it more crucial that they do so successfully.

Top 5 factors influencing future infrastructure development in China

Infrastructure stakeholders in China say these are the most important factors influencing future building and energy infrastructure projects.

Decarbonization perspectives from infrastructure stakeholders in China

Biggest impact technologies over the next five years

China’s energy and building industry leaders rated these areas the most impactful on infrastructure development over the next five years.

We would like to extend a special thank you to the diverse set of industry leaders and experts who shared their ideas and insights with us as part of this study.

This thought leadership study is based on a survey, in-depth interviews and desk research. It is not an academic or scientific research paper. Our goal is not to provide any final answers, but rather to start conversations, stimulate thought, and encourage infrastructure stakeholders to reflect on what today’s megatrends mean for the future of our energy system and built environment.

 

The survey included 501 respondents from 10 countries. The countries involved include those large-scale and/or highly advanced infrastructure assets and ambitions. It was fielded in June and July 2021.

Country                                                                                       
 

USA

20%

UK

16%

China

12%

France

12%

India

10%

Germany

8%

UAE

8%

Singapore

6%

Austria

4%

Sweden

4%

Primary role

 

Leadership, management, strategy

24%

Operations and maintenance

15%

Architecture and design

12%

Information technology, cybersecurity, software development

12%

Engineering or construction specialist

10%

Financial management or investment professional

5%

Sales, marketing, PR

5%

Data science, analytics, AI

4%

Consultant (e.g. management, sustainability, technology)

4%

Risk management, legal or regulatory compliance

3%

Property development

3%

Sustainability and/or efficiency specialist

2%

Industry

 

Architects, developers, construction, engineering

18%

Heavy industry and manufacturing

14%

Retail, hospitality, corporate, residential

12%

Public sector and education

12%

Energy (generation, transmission, distribution)

11%

Light industry (Food/beverage, data centers, transport)

10%

Healthcare and pharma

8%

Property/facility management

8%

Investors (trusts, funds, etc)

6%

Organization size                                                                  

 

50 - 249 employees

20%

250 - 499 employees

20%

500 - 999 employees

25%

1000 - 4999 employees

20%

5000+ employees

15%

Seniority

 

C-suite executive (or equivalent)

32%

I report directly to a C-suite executive

38%

My boss / manager reports directly to a C-suite executive

30%