New energy vehicles are one of China’s seven strategic emerging industries. Unlike its other “new energy” counterpart industries, NEVs, and electric vehicles in particular, are still waiting for commercial breakthrough.
China’s clean energy targets are usually just temporary placeholders. Targets for wind and solar power installed have been met, surpassed, and updated numerous times. New research from Bloomberg New Energy Finance (BNEF), however, suggests that China’s 2015 and 2020 targets for electric vehicle (EV) rollout will not be met due to “weak capability throughout the supply chain.” China has become a dominant force globally in wind and solar manufacturing and deployment; their supply chains are capable albeit recently consolidated with wavering demand in an oversupplied market. So why is that EV’s may not find similar success? Read the full story
Haven’t done a Green Hops for a long time, so there are lots of developments over the past weeks to catch up on!
Ten-Year New Energy Development Plan Closed to being Unveiled
State media is reporting that the National Energy Administration has finalized a 10-year new energy development plan that will require a cumulative investment of 5 trillion yuan ($740 billion) to realize. The plan, which is a strategy to help China realize its goals to achieve 15 percent of its primary energy mix from non-fossil sources and also to reduce its carbon intensity by 40 to 45 percent by 2020, will be sent to the State Council for approval.
This plan seems to be the long-awaited new energy stimulus plan that GLF blogged about more than a year ago with baited breath, and in fact seems to provide almost double the investment dollars. I would, however, strongly caution against assuming that this investment estimate will translate to direct funding by the central government. Most likely, just like the economic stimulus package of 2008, this amount represents a total investment amount that will be provided by a combination of central, provincial and local governments in addition to the private sector (see my presentation at CSIS earlier this year).
That said, the details released so far are still impressive. Important to note is the comprehensive breadth of sectors that fall under the “new energy” concept-its not just renewables such as wind, solar and biomass, but also energy efficiency, nuclear, smart (and strong) grid, transportation, unconventional natural gas, and more efficient use of fossil fuels.
A notable winner of this plan is natural gas, a hitherto minor energy resource for China (see picture). The NEA estimates that natural gas will account for 8 percent of China’s energy needs by 2015 at 260 billion cubic meters, compared to just 4 percent of a smaller energy supply base today at around 100 bcm. As the Financial Times blog recognizes, this strategic push for natural gas represents an economic opportunity for foreign firms with the right expertise.
New Energy Car Subsidies
In June, new subsidies for the private purchase of “new energy cars” came into effect ona pilot basis in five cities-Shanghai, Changchun, Shenzhen, Hangzhou and Hefei. The scheme provides up 3,000 yuan ($440) for fuel-efficient cars below 1.6 liters in engine capacity, and up to 50,000 yuan ($7,400) for plug-in hybrids and 60,000 yuan ($8,900) for pure electric vehicles for private consumers. This new program is different from the 13-city new energy vehicle subsidy a few years ago which targeted public fleets (this will be expanded to 20 cities).
Beijing was a notable omission from this new 5-city pilot program, and according to my conversations Read the full story
A news round up of energy and environment news in China over the past 4 weeks or so, sans analysis.
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.
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. Read the full story
I was on Worldfocus radio last night with Rashid Kang of Greenpeace China for a general discussion moderated by Martin Savidge on China’s ambitions to green its economy (the other shade of green). Listen here:
Rashid and I explored the following issues:
- how China is greening rapidly and developing many alternative energy programs — from the world’s most efficient coal power plants to vast wind power fields and solar water heating technology
- implications of China’s growing automobile market
- why nuclear power could be the wrong alternative energy solution for China
- how food security affects China’s alternative energy strategy
- what is potentially, as I called it, “the holy grail of renewables” — energy storage
- and, why there are no climate change skeptics in China, but why China can’t go green overnight
Lesson to budding radio interviewees…always be cognizant of Read the full story
As expected, the U.S.-China presidential summit in Beijing yielded an agreement on clean energy and climate change that focused on collaboration rather than emissions target setting (see my comments in Time.com and China Daily). Here’s a run-down on what this cooperation entails, in a piece published simultaneously at Climate Progress with my colleague Andrew Light.
“Very exciting day here in Beijing. There’s enormous interest in both governments in working together to fight climate change. The package announced today is far-reaching and can make a real difference in cutting emissions.” - David Sandalow, Assistant Secretary of Energy for Policy and International Affairs
Today, a comprehensive plan for U.S.-China cooperation on clean energy and climate change was announced in Beijing by President Barack Obama and President Hu Jintao. The overall plan is much more ambitious in scope and depth than we had anticipated and contains directives to create various institutions and programs addressing a wide array of cooperation on clean-energy technologies and capacity building, including very important efforts on helping China build a robust, transparent and accurate inventory of their greenhouse gas emissions.
These efforts include cooperation in the following areas:
1. Greenhouse Gas Inventory. A memorandum of cooperation between the U.S. Environmental Protection Agency and China’s National Development and Reform Commission sets out avenues for collaboration on capacity building in climate change, with an initial focus on helping China to develop a robust, transparent and accurate greenhouse gas emissions inventory.
2. Joint Clean Energy Research Center. Originally announced this July, more details were provided on the joint center that will “facilitate joint research and development of clean energy technologies by teams of scientists and engineers from the United States and China, as well as serve as a clearinghouse to help researchers in each country.” Financial support from public and private sources of at least $150 million over five years, split evenly between the two countries, will be provided. The Center’s research will initially focus on building energy efficiency, clean coal including carbon capture and storage, and clean vehicles. (Factsheet)
3. Electric Vehicles. Those initiative will “include joint standards development, demon Read the full story
A common refrain from climate action naysayers is that, “China is building two coal-fired power plants a week!” They insist that the United States should wait until this major emitter takes on binding commitments to climate change mitigation before it decides to adopt global warming pollution reduction policies in the American Climate and Energy Security Act (H.R. 2454). They further claim that if such a bill became law, the United States would be transferring its jobs to countries such as China and India that are doing nothing to curb emissions. But that thinking is exactly wrong.
Critics fairly point to the fact that 80 percent of China’s power is derived from dirty coal, and that China recently surpassed the United States as the word’s largest emitter of carbon dioxide. Yet China’s per capita emissions remain a fifth that of the United States, and its historical cumulative per capita emissions from 1960 to 2005 are less than one-tenth that of the United States.
Still, the Chinese have recognized that it’s climate inaction—not climate legislation—that will lead to its own economic undoing. As the U.S. Congress debates the merits of enacting renewable electricity and energy efficiency standards, China has already forged ahead with building its own low-carbon economy, laying the foundation for clean-energy jobs and innovation.
China ranked second in the world in 2007 in terms of the absolute dollar amount invested in renewable energy, according to the Climate Group. It spent $12 billion, which put it just behind Germany’s $14 billion. These investments have placed China among the world leaders in solar, wind, electric vehicle, rail, and grid technologies. And now approximately 9 percent of China’s $586 billion economic stimulus package will go toward sustainable development (excluding rail and grid) projects.
China is expected to unveil in the coming weeks another extensive and unprecedented stimulus package—reported to be in the range of $440 billion to $660 billion—dedicated solely to new energy development over the next decade, including generous investments in wind, solar, and hydropower. If those expectations are fulfilled, China could emerge as the unquestioned global leader in clean-energy production, significantly increasing its chances to wean its energy appetite off coal, and at the same time ushering in an era of sustainable economic growth by exporting these clean-energy technologies to the world.
The bottom line: China is not there yet, but it is beginning to transition to a clean-energy economy through a wide range of actions. The United States should recognize China’s efforts and encourage China to expand upon them. We have sketched this claim before, but let’s run though the numbers in more detail. Read the full story
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.
Editor’s Note: This edition of Green Hops contains an inexplicably frequent number of references to Guangzhou and Guangdong. We wonder why that might be…
Water issues continue to dominate China’s environmental agenda thanks to the recent World Water Forum in Turkey. The forum ended pathetically, failing to recognize water as a basic human right. But in more positive news, Guangzhou (capital city of southeastern Guangdong province) received the “Compromiso Mexico” water prize, which rewards “the best local public policies that have had a positive impact on the drinking water, sewerage and sanitation services in the communities they interact with.” According to Xinhua:
Since 1997, the government launched a number of water initiatives, which greatly improved the once heavily polluted inlets of the city’s Pearl River. The government is expected to allocate 48.6 billion yuan (some 7.11 billion U.S. dollars) for water management in 2009 and 2010, which accounts for one third of its financial budget.
This edition of Green Hops is dedicated to Andrew Symon, a Singapore-based journalist specializing in energy and whom I have had the pleasure and honor of making an acquaintance of as a result of his writings at Asia Times Online. He passed away unexpectedly on February 24, 2009. Andrew’s generosity, sense of mission and powerful intellect will be sorely missed.
Energy intensity (energy consumption per unit of GDP) last year was reduced by a further 4.59%, bringing the three year total in energy efficiency gains in 2006 through 2008 to 10.08%. This means that to reach its 20% energy intensity reduction target over the five year period for 2006 through 2010, it will have to reduce almost another 10% in energy intensity over 2005 levels. Even if it seems difficult to achieve, such efforts much press on. To sobering reality is that China’s annual greenhouse gas emissions surged 45% from 2002 to 2005 alone due to a combination of structural changes in industrial activities and increased consumption. Half of that increase, apparently, was driven by manufactured exports. But the Chinese authorities say that exports in general are declining (25% year on year) and that the amount of “high-energy-consuming products” exported in 2008 declined 16.2% from the previous year. Read the full story