Thursday, July 17, 2008

China's commitment to clean energy

China needs lots of energy to fuel its aggressive economic development agenda. Right now coal is the primary source of that energy. It is estimated that four new coal plants a month are being built in China. Earlier this year China surpassed the United States as the world's number one emitter of greenhouse gases. That's the bad news. The good news is that China is blessed with abundant renewable energy resources -- particularly solar, wind and hydro. There also appears to be a strong and sincere commitment on the part of the Chinese government to develop and deploy clean energy technologies.

The not-so-good news is Coal will still figure prominently in China's plans for the foreseeable future. With India about to unleash a similar burst of economic growth, it's clear that developed countries like the U.S. must be willing to dramatically reduce their greenhouse gas emissions now in order to minimize the impacts of climate change as China and India pull their people out of poverty. (GW)

China's Real Problem

By Ken Silverstein
EnergyBiz Insider
July 18, 2008

The world's eyes will soon be on China. As millions watch the Olympic Games there this August, the nation will also be telling a refreshing story -- one that focuses on how it plans to increase its use of green energy.

China's vibrant economy is blossoming at 10 percent annually. But the paradox is that it must expand its energy consumption to feed this growth and in a way that does not contribute to its already poor air quality. The preponderance of the fuel it now consumes is coal, although it wants to make the switch to cleaner burning alternatives. The good news is that the nation is rich in hydropower sources while it is exploring other options such as nuclear, wind, solar, biomass and energy conservation.

In March, China released a plan to increase its renewable energy from 7.5 percent in 2005 to 10 percent in 2010. By 2020, the country says that sustainable power will provide 15 percent of its electricity and by 2050 green fuels will supply 30 percent. China, meanwhile, is also working to cut its energy consumption by using new conservation tools. Within 15 years, the country says that it must attract more than $200 billion, most of which will come from foreign capital that is demanding internal market reforms.

"I think China will be number one in less than three years in every renewable energy market in the world," says Chris Flavin, president of Worldwatch Institute, during the presentation of the group's annual State of the World. "I am becoming increasingly confident in the case of China in particular that there is going to be an ability to make the transition to being at the forefront of innovation."

The organization, which focuses on sustainability issues, goes on to say that China is about to surpass the United States in terms of global greenhouse gas emissions that are tied to global warming. But it also says that the nation is an "innovator" in the field of renewable energy. Its government, for example, enacted policies in 2006 that mandate green energy programs. Along those lines, hydropower now provides 25 percent of all power generated in China while the country produces low-energy light bulbs that the rest of the world will buy.

China and other developing nations are not required to meet the targets set forth by the Kyoto Protocol to reduce greenhouse gas emissions by 5 percent from 1990 levels by 2012. But the country has set a goal to cut all pollutants by 4 percent a year for the next five years -- a promise made in response to a proclamation by global scientists that global air temperatures could rise by 3-7 degrees Fahrenheit by 2100 and bring with it more droughts, heat waves and rising sea levels.

"Although there are some great success stories in Europe in terms of renewable energy, I don't think anyone can compare with China in terms of the speed with which new markets have been created and in the comprehensiveness and effectiveness of new laws," says Worldwatch's Flavin.

Shine On

To be sure, China relies on coal to supply about 70 percent of electricity mix. Because it is abundant and domestically available, the U.S. Energy Information Administration is predicting that that coal consumption there will grow annually by 3.5 percent. While the nation is investing in new clean coal technologies to curb the level of harmful emissions, the World Bank is reporting that China is home to the most polluted cities in the world while other observers note that few of its cities could pass air quality tests in Europe.

To compound matters, rolling blackouts are prevalent. To keep up, power plant construction in China rivals that of Western Europe. The government there is approving all kinds of projects, most of which are to be fueled with coal. But the country recognizes that it must quickly diversify its energy mix if its economic dream is to continue to flourish well into the future.

Wind will figure into that blueprint. Right now, its installed wind capacity stands at about 6,000 megawatts (MW) -- well behind Germany, Spain and the United States. The country, nevertheless, is persevering and plans to have 20,000 MW installed by 2010. Three Gorges Dam, meantime, is underway there and will be completed in 2009. The hydropower facility is the biggest power project now taking place in the country.

Altogether, the plan is to have 120,000 megawatts of total renewable energy capacity, or 15 percent of the nation's total generation, by 2020. Attracting foreign capital is therefore essential. While policymakers are easing restrictions, much of China's economy is controlled by inefficient government enterprises. That's affected foreign direct investment, which now accounts for about 10 percent of all capital in the country's power sector -- not enough to meet the expected future demand.

The Chinese government is trying to make its utility industry appealing to private investors. To achieve that objective, it has been restructuring its electricity sector to allow investors to earn respectable annual returns of 8-10 percent. Toward that end, subsidies must be gradually reduced so that consumers have more exposure to true market forces. If done right, investors will not only help finance China's boom but they will also do so with modern energy technologies.

The 2008 Summer Olympic Games will give China a chance to shine. But, over the long haul, the country cannot afford to let its progress dissipate. To retain its gleam, China realizes that clean energy initiatives are vital to its economic expansion.

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