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China Can Forge Ahead In Developing Renewable Energy

Green power

Michael Richardson – Updated on Oct 03, 2008 – SCMP

The latest tally of greenhouse gas emissions blamed for warming the world shows that China has emerged as the top polluter, ahead of the United States, by an increasingly big margin. Released last week, the scientific findings of the Global Carbon Project show that, last year, more than half the world ‘s emissions came from the high-growth economies of developing countries, led by China and India, and that this share is rising because emissions from developed economies are growing less fast.

The project’s Australia-based executive director, Pep Canadell, said that China alone accounted for 60 per cent of the emissions growth last year. This was due to its heavy reliance on coal for generating electricity and oil for transport fuel. Yet the world’s most populous nation is also a global leader in harnessing renewable energy, particularly hydro, wind, solar and biomass power.

As recession and the credit crisis in the west crimp lending and investment in relatively expensive alternative energy, can China seize the initiative and keep funding its drive to become less dependent on fossil fuels? This assumes, of course, that China’s banking system will remain immune from the contagion afflicting the US and Europe. If normal lending continues and business can take advantage of incentives put in place by the government, China could forge ahead of competitors in developing renewable power. This would strengthen its energy security and international efforts to prevent disastrous climate change.

China invested more than US$10 billion in new renewable energy capacity last year, second only to Germany, according to the Worldwatch Institute in Washington. Most of the money was for small hydropower projects, solar hot water and wind power. Meanwhile, annual investment in large hydropower schemes continues at a somewhat lower level. A renewable energy law, effective from the start of 2006, requires power grid operators in China to buy electricity from registered producers of renewable energy. It also offers tax incentives and subsidies to promote investment in the sector.

China gets 8 per cent of its energy and 17 per cent of its electricity from renewables – shares that will rise to 15 per cent and 21 per cent, respectively, by 2020, if the government’s target is met. The European Union, which wants to be the world’s pace-setter in combating climate change, is aiming for a somewhat more ambitious target of getting 20 per cent of its energy from renewable sources by 2020.

China is not alone in the developing world in seeking a more sustainable energy future. As a group, developing countries have more than 40 per cent of the world’s renewable power capacity, over 70 per cent of solar hot-water capacity and 45 per cent of biofuels production.

In China, wind power is the fastest-expanding technology for generating electricity. With many onshore turbines working, the first offshore wind farm started in November.

China is also a manufacturing powerhouse for solar photovoltaic energy, third only to Japan and Germany. It is the world’s largest market for solar hot water, with nearly two-thirds of global capacity. More than 10 per cent of Chinese households rely on the sun to heat their water. When Chinese firms turn to exporting, the lower costs of their units – some seven times less than in Europe – could reshape global supply and demand.

However, Steve Sawyer, secretary general of the Global Wind Energy Council, says Beijing’s efforts to rein in rash lending and curb inflation are hurting financing for wind power projects in China and may prevent it from emerging as the world’s fastest-growing wind energy market.

A report last year from consultants Frost & Sullivan cautioned that China’s wind and biomass industries were not nearly as developed as their western counterparts. As a result, they had “less experience in installing, maintaining and servicing renewable facilities”, wrote analyst Linda Yan. A key restraint on growth of China’s renewable energy markets was a lack of homegrown technology and dependence on imported equipment, she added.

Even if Beijing meets its renewable energy target for 2020, it will rely heavily on fossil fuels. That is a problem not only for China but also for the world – it is expected to overtake the US soon after 2010 as the world’s top energy-consuming nation.

Michael Richardson is an energy and security analyst at the Institute of Southeast Asian Studies in Singapore.

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