Top: The wind power generation system in Shanghai. China has become a global leading market for wind energy. Above: Miners work on equipment for transporting coal at a mine in Shaanxi province. Despite China's dependence on fossil fuels, continued improvements in power generation efficiency are in place. AFP

A worker examines a solar panel in Xinjiang, northwest China. Chinese firms have become major players, supplying over half the world's solar panels. AFP

China surges ahead in efforts to secure a green future

It is perhaps ironic that China has some of the world's most polluted cities but has also overtaken the United States as the world's leader in clean-energy investment and technology development.

Xie Zhenhua, deputy director of the National Development and Reform Commission, said on June 30 that China's spending on renewable energy during the current 12th Five-Year Plan (2011-15) will reach 1.8 trillion yuan ($294 billion) in addition to a further 2.3 trillion yuan being spent on energy saving and reducing emissions.

"China has carried out a series of policies to cope with climate change and we have achieved some success after several years of effort," Xie told the Caring for Climate China Summit in Beijing recently.

He acknowledged that China's economic development, which heavily depends on high-energy consumption and high levels of emissions, has not changed and the country's emissions per capita are still higher than the global average.

China has told the world that it will reduce its carbon emissions per unit of GDP by about 40 to 45 percent by 2020 from the 2005 level and raise its non-fossil energy consumption percentage to 15 percent of the primary energy mix.

"China will continue to make great efforts to reduce emissions, improve air quality and accelerate sustainable economic development," Xie said.

A report by the Pew Charitable Trusts in the US, Who's Winning the Clean Energy Race?, says the center of gravity in the clean-energy world has shifted from the US and Europe to China.

Last year China advanced its position as the sector's financial epicenter, attracting $65.1 billion in investment, 20 percent more than in 2011 and an unmatched 30 percent of the G20 total, the report says.

"China garnered 25 percent of G20 solar energy investment, setting a one-year record with $31.2 billion and 37 percent of G20 wind-energy investment, with $27.2 billion recorded," the report said.

China also registered 47 percent of G20 investment in the "other renewable energy" category that includes small hydro, geothermal, marine and biomass.

China added 23.1 gigawatts of clean-energy generating capacity last year and has set itself a target for this year for installing what would be a world record 10gW of solar and 18gW of wind, the report said.

Meanwhile, Europe, the Middle East and Africa recorded a fall in investment of 22 percent last year, to $87.6 billion, with investments falling in leading markets such as Britain, Germany, Italy and Spain as governments curtailed incentive programs.

"Investment fell most precipitously in the Americas, with clean-energy financing down 31 percent in 2012, to $50.3 billion," the report says.

Finding ways to tap into energy from the sun, wind, waves and water not only produces clean energy but reduces the amounts of greenhouse gas emissions substantially and helps produce a cleaner environment, analysts say.

China, while still heavily reliant on fossil fuels, continues to adjust its energy mix to include clean energy such as solar, wind and nuclear.

The country, now with the largest installed wind power capacity, has gone from supplying 1 percent to 49 percent of the world's photovoltaic solar panels over the past decade.

But in recent years they have been hit by falling prices, fierce competition and a slowdown in financing for solar projects in Europe and the US, both of which have been among China's largest customers.

The State Council has acknowledged problems in the sector and has reiterated several wide-ranging support measures, including promoting small solar power generators, eliminating outdated production capacity, making subsidies more efficient, allowing access to cheap land and relying on "market forces" to encourage mergers and acquisitions.

"China's solar industry is facing widespread operating difficulties," the State Council said on July 4.

"Currently, global demand for solar power has slowed, product exports are facing heavy resistance and the growth of the solar industry is uncoordinated," it said, adding that there were "severe overcapacity issues".

In an effort to give the sector a boost the State Council has set a new target of 35 gW in domestic solar-power generation, more than quadrupling its generating capacity of 8 gW.

If met, the increase in solar-power generation would benefit not only domestic panel producers, such as Suntech Power Holdings and LDK Solar, but also manufacturers globally who have struggled against a flood of cheap Chinese exports, a report by Reuters said.

Watson Liu, senior partner at global strategy consultants Roland Berger, says there is no question that China has become "both the regional and global leading market for wind energy".

"Wind is the second leading renewable source for power generation, and China surpassed the US in 2010 to become the world's largest wind power producer, after almost doubling its capacity in both 2008 and 2009," he says.

Liu says extensive regions in northern and western China hold particularly large potential for wind energy, specifically in Gansu province, Inner Mongolia autonomous region, Xinjiang Uygur autonomous region and Tibet autonomous region.

There are now six 10 gW wind power stations being built in Jiuquan (Gansu), eastern Inner Mongolia, western Inner Mongolia, Hebei, Jilin and Hami (Xinjiang), as well as a 10 gW marine power base along the Jiangsu coast.

China put its nuclear power program on hold and ordered a nationwide review of safety at all its nuclear plants after the 2011 earthquake and tsunami off Japan that trigged a meltdown at the Fukushima nuclear power plant.

Last October the State Council gave its approval for 25 nuclear power plants to proceed more than any country. Despite its ambitious plans for nuclear power, these plants will contribute less than 10 percent to the country's electricity mix.

However, some analysts are skeptical, citing a lack of funding for solar subsidies and the absence of infrastructure required to harness intermittent renewable energy.

"I think China can boost capacity to 21 gW but it would be very difficult to reach 35 gW," Jason Cai, chief analyst at Shanghai-based consultancy Solarzoom, told Reuters.

Not only is China receiving billions in clean-energy investment but Chinese companies are also taking their technologies overseas.

Research by the World Resources Institute in the US said Chinese companies have made at least 124 investments in solar and wind industries in 33 countries over the past decade, more than half of them in 2010 and 2011.

Yingzhen Zhao and Clifford Polycarp, analysts with the institute, said most of the investments were in developed countries.

"A huge amount went to the US, as well as Germany, Italy and Australia. A handful of developing countries, including South Africa, Pakistan, and Ethiopia, also attracted multiple investments," they said in a research note.

Both wind turbine and solar photovoltaic manufacturing industries have grown substantially in China, with four Chinese companies from each industry ranked among the world's top 10 manufacturers for wind turbine and solar PV respectively, the analysts said.

"However, their market bases are quite different as China's wind industry relies on its vast yet oversupplied domestic market, whereas the solar industry relies on the international market for 95 percent of its sales."

Both industries need to boost sales in international markets, which has not always been easy, they said.

"Chinese wind companies are relatively new entrants to the international markets. Declining subsidies in the European solar market have decreased demand for Chinese solar products. As a result, direct investments overseas are seen as a way of retaining and expanding market share, typically through creating demand for the export of products."

If current trends and drivers are any indication, the analysts said, China's renewable energy investments will continue to grow over the coming years. If accelerated and scaled, these investments can substantially contribute to building a global, low-carbon economy.

karlwilson@chinadailyapac.com

(China Daily European Weekly 08/30/2013 page14)