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Clean energy takes stage in China as national interests evolve

Energy policy in China has reached a turning point. Clean energy, recent comments and actions suggest, is moving centre stage in response to shifting national interests and global responsibilities.

Last month, President Xi Jinping placed energy efficiency and switching from conventional coal to cleaner coal, oil, gas and new energy at the top of the energy agenda. Xi highlighted two policy drivers with great significance for renewable energy. One, produce more energy within China to increase security. Two, reduce pollution.

Energy pollution includes soot and carbon dioxide. Tackling soot that is choking cities has become part of the national interest. Dealing with carbon is a global responsibility falling most heavily on the largest emitters, including China.

Carbon made headlines last month when He Jiankun, chairman of the Advisory Committee on Climate Change, speaking personally, suggested capping emissions in the 13th five-year plan spanning 2016-2020. Xie Zhenhua , National Development and Reform Commission (NDRC) vice-chairman and a leading climate negotiator, insisted work was ongoing to bring emissions down earlier rather than later.

Renewable energy helps solve security and pollution problems, while creating jobs. Moreover, solar and wind, unlike thirsty coal and gas power plants, do not threaten tenuous water security in China’s dry, populous and grain-producing north. Renewable energy will therefore draw more attention as two deadlines for action loom in 2015.

The next five-year plan is due by the fourth quarter of that year followed by an international decarbonisation deal in December.

To meet the two deadlines, China must prepare measures that balance the national interest with global responsibility.

To stay nimble in international talks may require treading cautiously at home, particularly with regard to coal, which is guarded by a strong lobby. On the other hand, a strong international commitment could help reduce coal use and costs for health, water and ecosystems.

Meanwhile, regulatory action and policy initiatives have targeted the underexploited potential of clean energy offshore and signal bigger moves to come. In June, the NDRC raised tariffs for offshore wind power, suggesting growing concern over lacklustre development of a resource that could supply large volumes of clean power to choking coastal cities.

Offshore, China has 0.4 gigawatts of wind turbines, against 5GW targeted for 2015 and 30GW by 2020. In total, China leads the world with almost 92GW of wind power at the end of last year.

Optimistically, construction might begin on another offshore gigawatt this year. Nevertheless, the targets are ambitious, requiring development each year to exceed, for example, what Britain took a decade to build. Ramping up development will not be plain sailing.

Tariffs are probably still too low to tempt enough investors to take on the risks, especially for an immature industry. Construction bottlenecks could spoil plans. A shortage of ships, for example, hampered development in Britain. Another headache may be finding enough engineers to assure lenders, maintain construction schedules and manage the risks of storms.

Guangdong’s Ming Yang Wind Power Group revealed plans last month to test a German-designed 6MW offshore wind turbine in the Norwegian Sea this year. Larger turbines potentially generate more power at lower cost.

Other marine resources are receiving attention. A week before Ming Yang’s move, China announced plans for three wave and tidal research centres by 2016. Elsewhere, expectations for ocean energy have been dashed by stubbornly high costs. Solar power capacity is also set to soar. In May, the 2017 target was upped to 70GW, against 20GW already operating. Globally, 39GW were installed in 2013. In light of action on solar and offshore wind, an increase in the 2020 onshore wind capacity of 200GW would not be surprising.

China’s growing focus on renewable energy, reflecting greater appreciation of carbon energy’s true costs, has global implications. Other countries may take inspiration.

Developers worldwide may benefit from lower costs as Chinese firms increase production. Opportunities for foreign investment might emerge, as Premier Li Keqiang suggested late last year. On the other hand, manufacturers overseas should prepare for another wave of Chinese competition.

Just how far and how fast China moves on renewable energy as the two deadlines loom will change China, with global echoes for trade, development and climate.

This article was originally posted onĀ South China Morning Post.

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