The Green Leap Forward 绿跃进

Yesterday on March 4, my colleagues and I finally released this long-awaited report “Out of the Running?  How Germany, Spain, and China Are Seizing the Energy Opportunity and Why the United States Risks Getting Left Behind” (picture of the report cover, pictured right).   As the title implies, it is a survey of how three countries with very different political economies are each adopting comprehensive policies to develop their clean energy sector in a way that the United States isn’t.  The table of page 5 of the report really sums it all up.  Germany, Spain and China have comprehensive and coherent and long-term approaches to developing their clean energy industries, while all the United States has for the most part are state-by-state and temporary policies.  The result?  The United States ranks only 19th in the world in clean energy product sales as a proportion of GDP compared to Germany at third, Spain at fourth, and China at sixth.

The report was launched at a major event co-sponsored by the Center for American Progress and Apollo Alliance on March 4th (conference agenda here) in which I spoke on a panel, walking through the main elements of the report.  The report was picked up by the New York Times.com, which featured a few nice quotes from me.

I re-post the chapter on China below (look at the full report for an equally thorough examination of Germany’s and Spain’s policies).  The first part of the chapter looks at China’s accomplishments thus far across the clean energy value chain of innovation, manufacturing, deployment, exports and job creation.  The second part takes a closer look at the policy tools, using the three-pillar framework of market creation, financing and infrastructure that I have previously articulated in a conference at RETECH 2010 last month (but also take note in that lecture that I point out that the fourth and fifth pillars of information transparency and international collaboration will be important for China’s future development of its clean energy economy).   Here’s the China section: More »

March 5th, 2010 | Tags: China, energy, environment, finance, infrastructure, policy | Category: capital and finance, policy, uncategorized | Leave a comment

I had the opportunity to answer this question as a member of a panel discussion at the Center for Strategic & International Studies, a Washington DC foreign policy think tank, two weeks ago.   The event was held on February 17 to mark the one year anniversary of the American Recovery and Reinvestment Act, and sought to explore the effectiveness economic stimulus packages in the US and globally in catalyzing green investments.  My remarks begin at about 24′21 into the video below:

My simple answer?  There is no simple answer.  The lack of transparency of what exactly is being allocated, how those allocations are being spent, and how the uncertainty around the lesser known story of bank lending (or monetary policy), that is separate from the fiscal stimulus figures into clean energy investments makes it nearly impossible to know just how much money is hitting the clean energy road in China.

The following is the prepared outline on which I based my remarks on, in case you find it onerous to sit through the video presentation:

I.                    Basic Facts - first thing to highlight is the opacity of it all.

a.       Central vs provincial contributions:  Of 4 trillion yuan ($586 bill) total, 1.18 is from central government while the rest is from sub-national govt and private sector.  OECD says 600 bn yuan is from sub-national govt while rest is from private sector (and most of this is from bank loans to private sector).  This is last bit is significant as we shall discuss in a bit.

b.      Change in allocations: from Nov ‘08 to March ‘09 - not clear what implications are for “green”

i.      Sustainable development share decreases from 350 bn yuan (9%) to 210 bn yuan (5%)

ii.      Infrastructure decreases from 1.8 tr yuan (45%) to 1.5 tr yuan (38%)

iii.      Technology advances and industry restructuring increases from 160 bn yuan (4%) to 370 bn yuan (9%).

c.       How much new versus repackaged is also a source of uncertainty.

II.                 There have been bullish estimates of the “greenness” of China’s stimulus package.

a.       What do we know? More »

March 3rd, 2010 | Tags: capital and finance, China, energy, environment, policy, stimulus package | Category: capital and finance, policy | Comments (4)

Last week, at the Renewable Energy Technology Conference & Exhibition (RETECH 2010) in Washington D.C., I gave a presentation on the comprehensive approach of China’s clean energy policies across the clean energy value chain–from innovation to manufacturing to deployment/exports. I argued that China has created a long-term, sustaining strategy to develop its clean energy economy through a three-pillar framework of (1) developing markets through demand creation, (2) financing of research, development and deployment, and (3) building physical and economic infrastructure. These are lessons for any other country to envy.   This three-pillar approach is something that my colleagues at the Center for American Progress have developed.  But for all its supposed success, coal still accounts for an overwhelming majority–almost 70 percent–of China’s primary energy, so to say China has reached the promised land of the low-carbon economy would be a stretch.  To get to the promised land, I argue that at least two more pillars are needed–information transparency, and international collaboration.  I managed to get my hands on a a full video recording of my 15 minute shtick in full, and am thus over-delivering on my promise in my last blog post to put up merely an outline of my remarks:

Julian L. Wong RETECH 2010 Presentation from Julian L. Wong on Vimeo.

This speech in fact serves as a preview of an upcoming report by my colleagues and I that takes this three pillar approach to analyze the clean energy policies of More »

February 13th, 2010 | Tags: China, energy, environment, policy | Category: policy | Comments (3)

Earlier this week I appeared on Minnesota Public Radio with Georgetown University’s Joanna Lewis for 45 minutes of conversation on how China is taking the clean energy challenge by its neck and running with it.  Here’s the full audio to the discussion:

The show was clearly motivated by the recent New York Times front page story by Keith Bradsher on the same topic, and to a lesser extent, the series of op-eds by New York Times columnist Tom Friedman (see here, here and here).  But really, this has been the story of this blog for the two over years of its existence.  China is serious about green technologies, but more importantly, as I point out in my interview, what distinguishes China from the United States is its long-term planning, with the Medium and Long Term Development Plan for Renewable Energy, with national targets for each renewable energy technology type for 2010 and 2020, being a case-in-point.  Such national targets send clear signals to the market that the government is committed to this new low-carbon industry for the long haul, thus stimulating private and provincial investment.

This discussion dove tails nicely with More »

February 11th, 2010 | Category: uncategorized | Leave a comment

Updated Feb 9

The “new energy super ministry” announced last week is neither new, nor a super ministry.  Let’s discuss.

First, the raw facts.

On January 22, the State Council announced the formation of the National Energy Commission, whose purpose would be to:

To study and formulate national energy development strategy, to consider the major issues of energy security and energy development, to coordinate domestic energy development and important matters of international cooperation. (”负责研究拟订国家能源发展战略，审议能源安全和能源发展中的重大问题，统筹协调国内能源开发和能源国际合作的重大事项。”)

The NEC consists of 23 members made up of:

Director: Premier Wen Jiabao
Vice-Director: Li Keqiang, Vice Premier of the State Council
Members:
You Quan, Deputy Secretary-General of the State Council
Zhu Zhixin, Director of the Central Finance Office
Yang Jiechi, Minister of Foreign Affairs
Zhang Ping, Director of National Development and Reform Commission
Wan Gang, Minister of Science and Technology
Li Yizhong, Minister of Industrial and Information Technology
Geng Huichang, Minister of Security
Xie Xuren, Minister of FinanceXu Shaoshi , Minister of Land and Resources
Zhou Shengxian, Minister of Environmental Protection
Li Shenglin, Minister of Transport Minister
Chen Lei, Minister of Water Resources Minister
Chen Deming, Minister of Commerce
Zhou Xiaochuan, Governor of the People’s Bank of China
Li Rongrong, Director of SASAC
Xiao Jie, Secretary of the State Administration of Taxation
Luo Lin, Secretary of the Safety Supervision Bureau
Liu Mingkang, Chairman of China Banking Regulatory Commission
Wang Xudong, Chairman of State Electricity Regulatory Commission
Zhang Qinsheng, Deputy Chief of General Staff
Zhang Guobao, Deputy Director of the National Development and Reform Commission, and Director of the National Energy Administration (NEA).

While Premier Wen Jiabao and Vice Premier Li Keqiang are titular leaders of the NEC, Zhang Ping, Director of the NDRC, will be in charge of the day-to-day management of the NEC, with Zhang Guobao, Zhang Ping’s deputy at the NDRC and director of the NEA, second-in-charge.

Now, let’s really discuss.

Is the NEC new?  When I fist saw the announcement, I had to More »

February 4th, 2010 | Tags: China, energy, environment, governance, National Energy Administration, National Energy Commission, NDRC | Category: governance | Comments (2)

Its been a while since we’ve had an extensive discussion of China’s solar market.   Here, we catch up with some of the major the developments in this space over the past half year or so.  A new US-China dynamic highlighted by two-large scale projects, policy action by provincial-level governments, and lots of activity by Chinese solar poster child Suntech, and more!

Let’s kick off with this pretty cool video created by ClimateWorks:

Now, onto recent developments:

Going Big with the Stars and Stripes

Google-backed eSolar, a three-year old Californian solar start-up, has signed an agreement to provide technology and assistance to Penglai  Electric, a privately-owned Chinese electrical power equipment manufacturer, to  build a series of solar thermal power plants totaling at least 2 gigawatts over the next 10 years (see pictured right example of an eSolar installation).   The first project, a 92-megawatt solar power plant, will be built this year and located in the 66-square-mile Shaanxi New Energy and Industrial Park in Yulin city, Shaanxi province of Northern China. The region has become a hot spot for renewable energy, with the 2,000-megawatt First Solar project planned 60 miles to the north in Inner Mongolia.  China Huadian Engineering Co. will lead the construction process.  At completion, China Shaanxi Yulin Huayang New Energy Co. will own and operate the first 92 MW plant.   According to Todd Woody, eSolar already manufactures its heliostat arrays in China, and under the terms of the agreement with Penglai it will also build its power plant receivers there.  The solar thermal power plants, using technology distinct from photovoltaics which currently dominate China’s solar power market, will consist of mirrors and lenses to concentrate the sun rays to power a steam turbine.  eSolar’s technologies, in particular,  boasts ease of transportation and installment, modularity, scalability, redundancy, and resilience against wind tear.

This announcement mark the first large-scale commercial effort to develop CSP in China, something that has been on somewhat of a slow track for two main reasons; (1) Limits of water availability: How eSolar and its Chinese partners deal with the issue of the water-energy nexus (I precisely highlighted concentrated solar thermal as a technology that would run up to limits of water availability in a previous post, “Charting China’s Water Future: Closing China’s water availbility gap results in $21 billion in net savings“) since t More »

January 21st, 2010 | Tags: China, energy, environment, solar | Category: solar | Comments (1)

A look at Lawrence Berkeley National Laboratory’s analysis on the energy conservation programs in China’s current five-year plan.  For those of you in Beijing on Jan 20, you may listen to Dr. Mark Levine present these very findings at the Beijing Energy & Environment Roundtable (open free to public!). Details here.

Last month, I had the unique opportunity to gather with some of the top U.S-based thinkers on Chinese energy and climate policy.  Participants hailed from World Resources Institute’s ChinaFAQs group of experts.  Since it was a closed door session, I can’t spill everything that was discussed, but I did get permission to share what I thought was the most fascinating segment of the day’s programs.  Mark Levine and Lynn Price of Lawrence Berkeley National Labs’ China Energy Group, presented a fascinating array of findings on how China is progressing on its energy conservation goals in its current five-year plan (2006 to 2010).  The study, conducted by LBNL’s China Energy Group (in collaboration with Tsinghua University and McKinsey) analyzed China’s efforts in seven energy conservation programs–the Ten Key Projects, Enforcement of New Buildings Energy Standards, Building Retrofits, Top-1000 Energy-Consuming Enterprises, Structural Adjustments, Small Plant Closures, and Appliance Standards.  A recent article in Science Daily also covered LBNL’s work in this study.

Lynn explained in an exclusive interview with The Green Leap Forward, the motivations for conducting such a study:

LBNL’s China Energy Group focuses on end-use energy demand, so we are always interested to learn more about the details behind the overall numbers. During this Five-Year Plan, China has been reporting remarkable progress in reducing energy use per unit of economic growth, but the question in our minds was how were they achieving this? With this project, we set out to really understand the end-use policies and programs that China established and how they were or were not contributing to the overall reduction in energy intensity.

The following slides, which are informative and comprehensive, were what was used in Mark and Lynn’s presentation.  I highly recommend going through them in entirety.

LBNL’s findings is summed up best by Mark, lead author of the study and founder of the China Energy Group, who told The Green Leap Forward , also in an exclusive interview: More »

January 18th, 2010 | Tags: China, energy, energy conservation, energy efficiency, environment, Lawrence Berkeley National Labs, Lynn Price, Mark Levine, policy | Category: energy efficiency, government, policy | Comments (1)

A look at a new report by McKinsey that analyzes the economics of water solutions in developing countries.  It finds that in China, 55 different solutions exist to close its imminent water availability gap that actually results in a net savings, rather than expenditure, of $21 billion by 2020.

There has been a wave of water price hikes across various cities and regions across China over the past year.  Most recently, Beijing raised residential water rates by 8 percent, as we blogged about yesterday.  But there have also been proposed or implemented water price increases earlier this year in Shanghai, Lanzhou (Gansu province) and certain cities in Heilongjiang, and others, despite fears of inflation.   Getting the prices right, many seem to agree, is an important ingredient in managing scarcity so that water is allocated to their higher value use.   And as we noted yesterday as well, higher water rates encourages new investment in water supply and treatment infrastructure.  But how one goes about getting these prices right is a topic of debate because a pure-economics approach is either met with the concern that the lower-income folks are disproportionately affected, or opposed by those who take the absolute position that is a public good.   Differential pricing–where users who use less water pay a lower rate, any heavier users pay a higher rate–is generally considered fair, but such a tiered water pricing structure has been slow to catch on because of the practical difficulty of drawing the boundaries of price levels that would be considered fair by the general public (I suspect thought that with electricity price reforms recently announced that will adopt such progressive tiered pricing structures, we should see more of this in water in the future).

McKinsey, by now almost everyone’s favorite climate number cruncher, released a report last month called Charting Our Water Future: Economic Frameworks to Inform Decision-Making, in which it unveiled its Water Availability Cost Curve, analogous to its not famous carbon abatement cost curve.  The report focuses on the four ‘BASIC’ countries (Brazil, South Africa, India and China) and aims to accomplish three things:  First, to paint the supply-demand picture for water from now till 2020; second to present its economic analysis of a menu of options to enhance water availability to make up for water supply deficit; and third to explore the implementation challenges of sustainable water management policy through the lenses of institutions and stakeholders.  The report is a very interesting read, but thick.  The Green Leap Forward has reviewed it and if you are specifically interested in the China bits, you are in luck, because that it is just those bits that rest of this blog post will summarize…

China’s Water Supply Deficit

Simply put, China’s water demand will outgrow supply in the next two decades.  By 2030, China will experience a water supply deficit of 25 percent (see chart below).

Click image to enlarge.  Source:  Charting Our Water Future, McKinsey

China’s Water Demand

• Agriculture will remain the dominant sector for water demand,   Agriculture accounts for 65% of More »

  

  January 6th, 2010 | Tags: China, energy, enery-water nexus, environment, water, watergy | Category: water | Comments (1)

A news round up of energy and environment news in China over the past 4 weeks or so, sans analysis.

Avalanche

Northern China was swept with a harsh cold snap that over northern China over the weekend.  Beijing, for its part, experienced its largest snowfall in six decades, a lowest temperatures in four decades (at minus 16 degrees Centigrade!!!).  The cold surge has created an unwelcome spike in energy demand at a time where energy demand is already taking on an upward trend as the national economy shows signs of recovering lost ground.  The heavy snow has also disrupted food transportation logistics, creating a squeeze in vegetable supply in urban centers and upward pressure on food prices.  The only consolation out of this white mess is that Beijing meteorological authorities have publicly acknowledged that climate change may be the cause of such extreme weather events, providing further testimony that the Chinese bureaucracy really “gets it” when it comes to the urgency of the climate issue.

Renewables

The Standing Committee of the National People’s Congress has approved an amendment to the Renewable Energy Law of 2006 that clarifies rules, already in existence in the original 2006 law, that require grid companies to purchase all the power produced by renewable energy generators. Power enterprises refusing to buy power produced by renewable energy generators would be fined up to an amount double that of the economic loss of the renewable energy company. The amended law also clarifies how renewable energy projects will be financed by requiring the government to set up a special fund to be managed by the State Council for renewable energy research, financing of rural clean energy projects, building of independent power systems in remote areas and islands, and building of information networks to exploit renewable energy.  A good Chinese piece that elaborates on the nuances of the amendments can be found here.  The full text of the amended renewable energy law in Chinese is available here.

The National Development and Reform Commission (NDRC) has released a detailed list of renewable energy projects receiving government subsidies in the first half of 2009.

China has climbed up the wind installation rankings one position surpassing Spain.  After adding about 8 GW of installed capacity in 2009, its approximately 20 GW now ranks it third in the world (Chinese only) behind the United States and Germany. More »

January 6th, 2010 | Tags: automotive, biofuels, China, coal, energy, environment, forestry, green hops, grid, LNG, rail, renewable energy, smart grid, transportation, water, wind | Category: automotive, biofuels, coal, green hops, smart grid, transportation, water, wind | Comments (1)