October 22, 2007 (WorldChanging.com) – When China unveiled its’ ambitious renewable energy law in 2005, pledging that by 2020 15 percent of the country’s power would be drawn from renewable sources, it attracted more than a few raised eyebrows. Chinese leaders are fond of long-term plans and big targets. But how, exactly, did they plan to hit this target in the face of China’s fast-growing economy and energy consumption?Two years later, this is now becoming clear.
In September, top energy planner Chen Deming said that the government would institute subsidies and tax breaks to encourage investment in renewables. The total price tag for the 15 percent target, he added, would be two trillion yuan — about $265 billion, or one-tenth of China’s 2006 GDP.
Sure enough, last week China National Offshore Oil Corporation (CNOOC), China’s third largest petroleum company (best-known in the U.S. for its botched 2005 bid to buy American oil giant Unocal) announced plans to establish a 1,500 KW off-shore wind farm in Bohai Bay. With Beijing pushing renewables, CNOOC now aims to be “an energy company rather than just an oil company.” As company chairman Fu Chengyu told Xinhua, “[T]he national development mode decides the development of our company.” Strong government backing has Chinese companies convinced they can profit from renewable energy.
The Clean Development Mechanism (CDM) (a facet of the Kyoto Climate Protocol that encourages developed world deals in and technology transfers to the developing world in order to cut carbon emissions) provides another important avenue for green revenue. Despite entering the CDM market relatively late in the game, China has quickly become the world leader in volume of carbon credits (India still leads in number of individual CDM projects). Many early Chinese projects dealt with reductions in industrial gases like HFC-23, a questionable methodology, but the emphasis is now on the renewable sectors: this month, the government list of new registered projects was dominated by wind and hydro.
There is, of course, still room for improvement. For example, why is there so much hydro on the CDM list? China would do well to discourage the construction of more dams and add solar to its priorities. The country leads the world in the use of solar water heaters, and development organizations and select cities are spearheading interesting initiatives at the local level. Clearly, Chinese are keen to use the sun for power. But the government has not yet introduced the subsidies and feed-in tariffs that are necessary for large-scale grid connection.
Last month, Greenpeace, the Worldwide Fund for Nature, and the Chinese Renewable Energy Industries Association issued a report detailing the need for policy changes to get solar PV power onto urban grids. (Li Junfeng, one of the report’s authors and the secretary general of CREIA, is one of China’s great renewable energy crusaders). China now has a dozen PV power systems of up to 1 MW in capacity, the report says, but “no PV power system has as yet been permitted by grid companies to connect to the grid” and “no project has as yet been built by developers for commercial operation.” (See summary here.)
This is a very real concern. But the report, coming as it did ahead of this month’s National People’s Congress, suggests that Li and others at least take the government targets seriously.
Even the skeptics now have to admit that China intends to meet its goals. Worldwatch Institute’s Yingling Liu recently told the Agency France Presse news service that China could soon become a world leader in renewable energy. “Changes are happening in the right directions towards cleaner and more sustainable energy sources,” she said, “and the trends will likely be accelerated.” And if China can fulfill its pledge even as it develops, it would have implications for the rest of the world.