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China on road to low carbon technologies

By Hai Yuan (China Daily)
Updated: 2009-09-10 08:40

Despite the global economic downturn, China is fast becoming the world leader in the race to develop and commercialize low carbon technologies, amid the efforts to slow down the global warming, a new report by the London-based Climate Group has found.

New energy and renewable energy will account for 45 percent of the total energy consumption in China by 2050. A newly-built coastal wind farm in Cixi City, Zhejiang Province. [China Daily]

With ambitious government policies and a new breed of entrepreneurs, Chinese businesses are among the top producers of electric vehicles, wind turbines, solar panels and energy efficient appliances, the report found.

Last year, the downturn hurt China's exports of renewable and low-carbon technologies and provided new impetus for expanding its domestic markets.

The Chinese government's 4-trillion-yuan (US$ 585 billion) stimulus package puts strong emphasis on clean development and is backed by many new regulations and policies focused on increasing the uptake of low carbon technologies.

Low carbon vehicles, energy efficiency in industry, renewable energy and low carbon buildings and urban design are the four key areas of China's low carbon economy. And, each of the four areas witnessed solid progress, the report found.

With car sales in China surpassing that in the US for the first time in January 2009, the country is now both the world's largest auto market and the third largest producer, but most vehicles are still powered by gasoline and diesel.

Rapid demand growth creates an urgent imperative to accelerate the development of electric vehicles (EVs), fuel-cell vehicles and other forms of low carbon transport. Thirteen Chinese cities have signed up to a government scheme to purchase a total of 13,000 EVs this year. China aim's to manufacture half a million EVs in 2011.

The energy intensity of the Chinese economy has already fallen by over 60 percent since 1980, and the government has set a goal of reducing it by a further 20 percent between 2005 and 2010. Although fossil fuels, notably coal, still provide the bulk of China's power, an aggressive push is underway to replace inefficient power stations with efficient super-critical technology. China is already one of the world's largest users of supercritical and ultra-supercritical generation technology, with 150 of these units already in operation.

Government policies including fiscal incentives and credit support are helping to shape an energy-saving market that could already be worth 800 billion yuan and which is expected to grow substantially over the next decade, the report estimated.

China has also raised its mid- and long-term targets for renewable energy, to meet the rapid development of the green industries.

By 2020, new energy is expected to constitute 17 percent of the country's power supply - to the tune of 290 million kilowatts. Of this, 86 million kilowatts will come from nuclear power, 150 million from wind, 20 million from solar power, and 30 million from bio-energy.

The growth of installed wind turbines in China is faster than anywhere else, with wind power generation capacity topping 12 million kW in 2008 - a figure that is doubling each year. China is also the world's largest producer and consumer of solar water heaters, accounting for 65 percent of installations; and, 95 percent of core technology patents on solar water heaters were developed by Chinese companies. Penetration of photovoltaic (PV) solar power has also shown rapid growth, as have geothermal energy and bio-fuels.

The government has also set ambitious energy conservation targets for new buildings, promoting low carbon building materials and renewable energy, especially solar.

Many successful low carbon buildings, for residential, commercial and public use have been completed, with several entire 'eco-cities' in advanced stages of planning. The government has also announced a large-scale promotion project for energy efficient lighting, with the aim of distributing 100 million subsidized bulbs in 2009.

The report also pointed out the barriers for China to realize its low carbon economy. China is struggling hard to catch up with international peers and to move from lower-end to higher-end technology, but gaps still exist.

Creative, market-based financing mechanisms are also required. It is estimated that China will need to invest 1.8 trillion yuan every year to meet its energy conservation and emissions reduction goals.

"It's a 70-30 situation. We have 70 percent of the solutions today, but they are not all proven technologies and none are of the scale we need. Thirty percent of the solutions will be found in the future. Therefore we still need foreign investment to drive the revolution." Said Wu Changhua, Greater China Director at The Climate Group.

As both a major emitter and provider of solutions to climate change, China's role at the heart of the international climate negotiations is essential to their success and their ability to accelerate the transition to a prosperous low carbon global economy.

Avoid "green bubble"

Some entrepreneurs and policy makers have also warned of the risks of a "green bubble."

At the end of last month, China's State Council, the Cabinet, has warned of overcapacity in emerging sectors such as wind power. The country would move to "guide" development troubled by overcapacity and redundant projects, said the statement issued by an executive meeting presided over by Premier Wen Jiabao.

Yang Lei, chairman of Vantage Point Venture Partners, a private equity focusing on renewable energies, also observed overheated investment in green sectors.

"The global economic crisis has shifted their investment plan, and now investors believe that it is safe to put money in the green sectors. But too much money has resulted in an intensified competition, which is not good for a burgeoning industry," said Yang.

And, the country's power grid development plan is falling behind that of the renewable energy, becoming a major stumbling block for the smooth growth of the industry, according to Wang Guangtao, director of the NPC's environment and resource protection committee.

For instance, areas rich in wind power resources are mainly concentrated in the remote northwest, northeast and southeast, where the power transmission network is poorly constructed, Wang said.

But the scale of renewable energies is over-expanding in some areas despite the lack of necessary infrastructure to collect the electricity.

More than 20 percent of the country's wind power machines did not generate any electricity last year because the equipment was not yet connected to the grid, according to officials from the China Wind Energy Association.

Zhang Yue, chairman of Broad Air Conditioning, also said that the investors should pour the money into real "green" sectors. "We need to decide what are the real low-carbon products, the assessment should be based on the whole life cycle," he said.