Revolutionary energy transition needed

With the world's largest population and the second-largest, and still-growing economy, China's energy development roadmap is a global concern. China accounts for almost half the world's annual coal consumption, so an energy development roadmap that reduces China's coal consumption is critical to keeping the average global temperature rise below two degrees Celsius, as enshrined in the Copenhagen Accord.

Yet the conventional wisdom in China is coal is indispensable. Mainstream energy experts tend to use "rich in coal, short in oil and gas" to depict China's resource landscape and argue that China can only rely on coal for its energy.

Wrong, wrong, wrong. The rich in coal, short in oil and gas narrative was developed half a century ago, when renewable energy choices were limited and fossil fuels were the primary options to support large-scale industrialization and urbanization. In addition, it was never expected back then that China's total energy consumption would soar so fast, and that it would suffer so much as a result of burning fossil fuels.

If we included in China's energy landscape the fact that China has extensively abundant resources of clean renewable energy, would coal still be regarded as indispensable?

The WWF's recent report "China's Future Generation" shows that by adopting enhanced nationwide energy saving and efficiency measures, and demonstrating the political courage to stop building new coal-fired power plants from 2020 and then to ban coal power from 2040, current proven technologies of renewable energy could support more than 80 percent of China's growing power demand towards 2050, while reducing emissions from the power sector by 90 percent. This could be achieved with even greater economic efficiency and without increasing fossil fuel imports and compromising energy security.

Coal supporters and their vested interests will be opposed to this, and they will seek to block the renewable energy road with climate change skepticism. But China's mainstream coal narrative is wrong, considering that China already leads the world in the manufacture of renewable energy solutions, wind and solar in particular. And this manufacturing advantage will be increasingly enhanced with growing technological know-how and expertise. China is already home to the most installed renewable electricity generation capacity in the world. For four years running, China has invested more in renewable energy than any other country. For example, China has constantly increased its solar photovoltaic installation since the start of the 12th Five-Year Plan (2010-15), and it is on course for seven times more than its original goal of 5GW by 2015.

The central government is playing a crucial role in directing China's energy roadmap toward a renewable energy revolution. China's Renewable Energy Law and its supporting regulatory measures, including concession bidding, feed-in tariffs, the mandatory purchase of renewable power, among other things, have effectively leveraged key stakeholders for the country's ambition to achieve a renewable energy transition.

The prevalence of toxic smog in China, a harmful side effect of China's heavy reliance on coal, has made people more aware that such a transition is both necessary and urgent. To create an Ecological Civilization, as proposed by Chinese leaders to achieve a harmony between humans and nature which is fundamental for the "Chinese Dream", or more concretely "economic prosperity and national renewal", China needs to embark on a clean and low carbon energy transition.

Many governments at the sub-national level are ramping up plans and actions to reduce their reliance on coal. China's comparatively developed economic centers, which have suffered the most from daunting air pollution in recent years, have introduced established groundbreaking targets for reduced coal use. Phasing out coal is not an idealistic vision any more, but a real political practice, and one that needs to be further expanded throughout the country, so that coal consumption can be capped as soon as possible. These efforts should also be accompanied by enhanced ambitions and imperatives for clean renewable energy development, so that the energy roadmap is not directed to options that are intrinsically risky, such as shale gas or even worse coal gasification.

China needs to be even more determined and ambitious in its efforts to reduce coal's role in its energy structure. With coal accounting for about two-thirds of China's total energy consumption at present, an average annual reduction of 1to 2 percent mean that its share could be reduced to one-third by 2050, perhaps less. Challenges lie ahead, of course, but coal consumption has to decrease by around 50 million tons annually.

In order to achieve that, an appropriate resources and environmental pricing mechanism needs to be developed, to level the playing field for all energy options, either implicitly through emissions standards, or explicitly through a tax or an emissions trading scheme. The pricing tools vary in their environmental effectiveness, economic efficiency, social equity, as well as political acceptance, however, WWF's research indicates that a tax of $40 per ton of carbon is the minimum level required to make coal more expensive than other power generating sources by 2025. The true cost of coal, according to WWF, is already as high as US$ 100.8 per ton in as early as 2007, when environmental problems were not that severe like today and climate change cost not even included.

Whatever resource and environmental pricing mechanism is adopted, inappropriate fossil fuel subsidies need to be phased out, with the freed-up public finance injected into clean and renewable energy. These huge financial flows could further boost development of renewable solutions in the short term, while in the long run, and more importantly, they could lay the foundation for truly fair competition among all energy options. Once externalities are appropriately addressed, renewable energy will sure be proven as "good business", and subsidies won't be legitimate or necessary.

With appropriate policies in place, China can move faster toward realizing its renewable energy revolution, and it will be able to not only confidently deliver or even significantly surpass its 15 percent non-fossil fuel target by 2020, but also increasingly lay a solid foundation for further technology breakthroughs and innovations, such as a mature smart grid, energy storage system, and enhanced market penetration by electric vehicles.

The author is an expert with the WWF China Climate and Energy Programme.