Top Stories: Cash for renewables; China may raise fuel economy standards; Pledges smart grid by 2020; Beijing water price hike
I’m not one for sensationalism, but my gosh, when multiple news sources are reporting that the much anticipated renewable energy stimulus package will is going to be for the massive amount of 3 trillion yuan ($440 billion), its hard to resist. The amount is startling, considering that is is three quarters the size the economy-wide stimulus plan announced last November. No details have been given about the allocation of these funds; the news reports are saying a focus on wind, given the recent tripling of wind energy targets in 2020 to 20 GW installed capacity.
But given the size of the funds, one must really wonder if this is going to be a big handout to the nuclear industry, which itself benefited from a national target boost to 70 GW installed capacity by 2020, or big hydro for that matter. Unlike the November stimulus package, which was meant to be a short term boost for industry, this renewable energy package seems to be more far-sighted money, meant to be deployed over time from now till 2020. $440 billion is still quite a large sum considering that National Energy Bureau division chief Liang Zhiping was recently quoted as saying that a sum of $190 billion was needed to realize China’s 2020 renewable energy targets, but more consistent than the forecast by New Energy Finance last year that $398 billion (or $268 billion excluding big hydro) is needed. Then again, we also don’t to what extent nuclear, big hydro and grid infrastructure figure into the $440 billion on $190 billion numbers (they do not in NEF’s $268 billion forecast), so its all very hard to say.
Another Chinese report suggests that the package will actually be 4.5 trillion yuan ($660 billion) and tied to higher national targets than most reports are suggesting (150 GW for wind, 20 GW for solar, 80 GW for nuclear). Although most reports I’ve seen is consistent with the 3 trillion yuan amount, more than one personal contacts in China tell me that they’ve heard it will be closer to 4.5 trillion. Indeed, this China Daily article suggests that 3 trillion would be invested in 3 years, and that more money will be needed to sustain development till 2020. The plan’s details will presumably be released once State Council approval on the plan is given, which officials have indicated will be “very soon.” This is all good news, but will there be room in that budget for energy efficiency? If not, that would be a missed opportunity indeed.
Cars and Fuel
The New York Times reports that Chinese regulators are considering a plan that will raise auto fuel efficiency standards by 18% by 2015. Because China measures fuel efficiency differently from the U.S., a true apple-to-apples comparison is difficult (see text to graphic on right). However, one expert “estimated that the average new car, minivan or sport utility vehicle in China already gets the equivalent of 35.8 miles a gallon this year based on the American measurement system of corporate averages and will be required to get 42.2 miles a gallon in 2015.” In contrast, the fuel efficiency standards in the U.S. were raised by President Obama two weeks ago to achieve 35.5 miles a gallon by 2016. The NYT opines that such a regulatory move will favor domestic car makers, who are already producing more efficient cars, than the multinationals.
Meanwhile, as global crude oil prices climb about $60 per barrel, the NDRC has raised fuel prices, marking the third price adjustment this year (in China, gasoline and diesel prices are fixed by regulators, but regulators are embarking on much needed price reform to loosely link domestic prices loosely to global crude prices). As of June 1, the benchmark retail price for gasoline will increase by 7% and the price of diesel by 8%.
Why have crude oil prices risen sharply again amidst the global economic slump? Some suggest that China’s agressive oil storage policies are contributing to the upward pressure in oil prices.
Consolidation in China’s auto sector is taking foot as three auto parts makers merge to create an industrial conglomerate in Shandong province with sales projected to exceed 100 billion yuan by 2012. Separately in Chongqing, Chang An Auto is leading a newly formed consortium of 30 automakers, components producers and research institutes, the alliance is aimed at building the largest new energy vehicle research and development, manufacturing and application base.
China’s global ambitions for its auto sector, as if it wasn’t already clear, just stepped up a notch with news that beleaguered General Motor’s Hummer brand might be bought over by little-known Sichuan Tengzhong Heavy Industrial Machinery Co., Ltd. As odd as this sounds, it could be a real oportunity to green-up the Hummer. Tengzhong’s CEO Yang Yi is quoted in a statement:
We will be investing in the Hummer brand and its research and development capabilities, which will allow Hummer to better meet demand for new products such as more fuel-efficient vehicles in the U.S.
Manwhile, Shanghai has released details of subsidies it will offer for “new energy vehicles” under the 13 city new energy car subsidy program.
China is poised to become the world’s largest market for urban rail transit construction. The NDRC has approved a new wave of mass urban rail transit plans for 19 cities that will see a total of 2,100 km of rail lines laid by 2015. The projects will cumulatively require an investment of 800 billion yuan ($117 billion). At present, ten cities – Beijing, Shanghai, Guangzhou, Tianjin, Chongqing, Nanjing, Wuhan, Changchun, Shenzhen and Dalian – have 29 urban rail routes, totaling 778 km, in operation. Currently in construction is 1,212 km of rail lines across 14 cities are building 46 urban rail lines. In addition, 9 other cities have submitted plans that are pending approval. A case in point is Tianjin, which has just one line stretching 70 km. By 2020, it plans to have 11 lines stretching 470 km.
On high-speed long distance rail, tracks for the first high-speed passenger line in its western region have been laid for a 500-km line linking Xi’an in northwestern Shaanxi Province with Zhengzhou in central Henan. Runningup to a speed of 350 km/h, the line that will ultimately shorten trips between the ancient capital of Xi’an and Beijing to four hours from the current 11.
A subsidiary of China South Locomotive and Rolling Stock Corporation Limited (CSR) has obtained contract to supply for subway vehicles in Singapore, my hometown.
Grid and Power (and CCS band-aid)
Huaneng, one of the Big Five utility companies, has received the nod by NDRC for its second wind project, a proposed 199.5 MW wind farm in northern Gansu at the projected cost of 2.037 billion yuan ($298.5 million). Meanwhile, Siemens breaks ground on a turbine-manufacturing facility in Shanghai.
In solar, feed-in tariffs may be on the way! In other news, China’s Yingli Green Energy (NYSE:YGE), Amtech Systems (Nasdaq:ASYS) and the Energy Research Centre of the Netherlands will collaborate on developing next-generation high efficiency solar cells. The joint project is intended to help develop and implement high efficiency N-type solar cells, codenamed “Panda” by the three, at Yingli’s pilot production line in Baoding, Hebei province.
China State Grid has stated their intentions to build a “massive smart grid project” by 2020. Details are sparse, but is is already known that the State Grid is investing 300 million yuan through($44 billion) 2012 and 600 million yuan through 2020 to deploy ultra high voltage (UHV) transmission wires, which significantly reduce line losses compared to conventional transmission wires.
Is China rushing too much to double its current hydropower capacity to 300 GW by 2020? A U.N report blows caution to China’s dam-building spree along the Mekong for its environmental and social impacts. Elsehwere, Premier Wen Jiabao has again suspended construction on the Liuku power station on the Nu River, reportedly only one of two rivers in China that have yet to be dammed, until after a thorough study of the hydroelectric dam’s potential environmental impact. Human safety is another dimension of hydropower (especially for rural dams built earlier) that is problematic, as this piece shows.
The World Bank approved a loan of $80 million to help China increase the development and utilization of coal bed methane and coal mine methane. Good timing, since new large coal deposits were just found in Xinjiang.
Taiwan may start a carbon capture and storage pilot project next year. CPC Corp., Taiwan’s state-owned oil refiner, is choosing from 20 potential areas for a site to inject 40 metric tons of carbon dioxide underground a day.
This is huge and really deserves its own post, so maybe I’ll try to get a guest writer on this–water prices in Beijing may go up to promote conservation, the fifth price hike since 2001.
One year into the nationwide ban on free plastic bags (note that it is a ban on giving out free plastic bags, not a blanket ban on plastic bags), plastic bag use has reportedly dropped by as much as 75% in supermarkets. A separate survey suggests that the nationwide decline is 66%, translating to the avoid use of some 40 million bags, but it is noteworthy that the the regulation seems to have had limited impact in rural areas. Over time, savings of such scale will certainly adds up to big reductions in the consumption of petroleum, of which plastic is a derivative product of. It is reported that one of the unintended consequences of the ban, however, is an increased demand for trash bags, and that the authorities are currently trying to write up standards for trash bags. Its a puzzling effect because I am not sure that there is a practice of handing out free trash bags to begin with. In any case, Hong Kong is going to take the Mainland’s lead by requiring registered retailed to charge a minimum of 0.5 HK dollars (0.06 U.S. dollars) for each shopping bag from July 7.
Beijing experience 25 “blue sky days” in May, the clearest May in nine years. Let’s see, 9 years ago was 2000. When did China joint WTO? 2001? Just saying.
Down south in the special autonomous region of Macau, a new bureau responsible for environmental promotion and protection will be established. Can’t argue with capacity building.