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
In this post, originally published in Harvard Asia Quarterly. I draw the connections among food, water and energy systems in China and make the case for the urgent need for more integrated approaches to resource management.
China’s rapidly growing economy is very quickly testing the limits of its resource constraints. While China is home to a quarter of the world’s population, it is endowed with disproportionately less arable land, oil and water.
Such natural resources are vital to any nation’s ability to be self-sufficient, but China’s predicament is especially dire not only because of its large population, but also its rapid urbanization and climate change, both of which will exert more intensive demands on food, energy and water supply. Yet, other than recognizing that water is essential for agriculture, the discussion of each resource constraint is often conducted in isolation, without paying heed to the inter-linkages of food, energy and water systems.
The Example of the Yangtze River
China’s Yangtze River (pictured right) is the third longest in the world and stretches over 6,000 kilometers from the Qinghai Plateau in the west towards the East China Sea at Shanghai. Throughout China’s history, it has played a central role culturally, socially, and economically. It is the unofficial dividing line between China’s north and south, flows through deep gorges in Yunnan Province that have been designated as a UNESCO World Heritage Site, and serves as the lifeblood upon which much of China’s agricultural and industrial activity has depended on to the present day. All told, the Yangtze River system produces 40 percent of the nation’s grain, a third of its cotton, 48 percent of its freshwater fish and 40 percent of its total industrial output value.
The Yangtze has now become a victim of its own success. With China’s rapid economic industrialization over the past three decades, the Yangtze has evolved from a source of life and prosperity to a symptom of the limits of China’s unabated economic pursuits. It has become a depository for 60 percent of the country’s pollution, making it the single largest source of pollution in the Pacific Ocean. The Yangtze is also home to two massive and highly controversial hydraulic projects—the Three Gorges Dam, the world’s largest hydro-electric power facility, and the South-North Water Diversification (SNWD) project (see map illustration below), an unprecedented, multi-decade effort to channel water from the water-rich south to the arid north—each a symptom of a larger ill. The former project points to China’s struggles to maintain energy security and desire to use cleaner sources of energy in a carbon-constrained world, while the latter points to its sheer desperation to address a gross imbalance in the distribution and use of water resources across the Chinese sub-continent.
Neither project comes on the cheap; the Three Gorges Dam bore a price tag of US$30 billion and the SNWD project is projected to cost twice that. Both projects have caused, or will continue to cause, the dislocation of hundreds of thousands of citizens and the significant alteration of landscapes, including the destruction of arable land. Needless to say, both projects have required, or will require, massive inputs of concrete, steel and energy. Together, Three Gorges and SNWD point to a fragile interrelationship between energy, water and food. Beyond the Yangtze, the “food–water–energy trilemma” represents a looming and complex threat to China’s economic stability and national security.
Climate change now stands front and center of energy and environmental agendas around the world. In virtually every case, Read the full story
Hydropwer accounts for the overwhelming share of China’s alternative energy mix, but is perhaps also the one of the more controversial alternative energy options due to the ecological and social impacts of dam construction. This guest post by Peter Bosshard, policy director of International Rivers Network, examines China’s growing pains in its increasing role as an exporter of hydropower technology and expertise.
A few years ago, Chinese dam builders and financiers appeared on the global hydropower market with a bang. China Exim Bank and companies such as Sinohydro started to take on large, destructive projects in countries like Burma and Sudan, which had before been shunned by the international community. Their emergence threatened to roll back progress regarding human rights and the environment which civil society had achieved over many years. However, new evidence suggests that Chinese dam builders and financiers are trying to become good corporate citizens rather than rogue players on the global market. Here is a progress report.
In December 2003, China Exim Bank approved $519 million in loans for the Merowe Dam in Sudan (pictured right). It thus helped kick off a project which would displace more than 50,000 people from the fertile Nile Valley into desert locations, and for which the Sudanese government had failed to attract funders for many years. China Exim Bank also provided support to projects in Burma which no other funder was prepared to touch. “The Bank specializes in financing projects that no other financial institutions would fund”, International Rivers and Friends of the Earth warned in July 2004.
Chinese dam builders wasted no time rolling up the international market. Low costs, access to cheap loans and a big portfolio of domestic projects make them attractive partners for clients around the world. We are currently aware of at least 216 dam projects in 49 countries which have some form of Chinese involvement – and counting. The president of Sinohydro recently estimated that his company controls half the 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.
Today’s Green Hops, focusing on energy supply, is a continuation of yesterday’s.
Two important macro-policy documents are in the works. CELB reports that the comprehensive Energy Law may be passed in 2010 (though this Chinese clipping suggests it may be as early as this year), and that the 12th Five-Year Plan for Energy (2011-2015) is in draft mode. Nuclear, wind and hydro seem to bet the alternative energy sources of choice. This alternative energy review by China Daily, in its “Mixed Energy Forecast” seems to similarly suggest the short shrift given to solar. How unimaginative. I’m sure the solar industry would have something to say about that. In fact, it has (see solar section below).
Before turning to the knitty-gritty of the green and brown energy news developments over the past weeks, I would like to highlight a sage piece of advice from CELB, that recognizes that China is still in many ways, but especially economic development, very much a “Rule by Plan” rather than “Rule of Law” society: Read the full story
In the wake of more bad (good if you are for green) news in China’s auto sales trends, GLF is observing an increasingly resonant cacophony of green washing in the auto sector…
Haifei Automobile Group joins the electric vehicle race and sets its sights on launching the Haifei Saibo electric vehicle in the U.S. markets later this year. Lithium-phosphate battery maker China BAK is getting government support for R&D. GreentechMedia debates if the U.S. will move from Arab oil dependence to Asian car battery dependence. Another angle is if both the U.S. and Asia moves towards South American lithium dependence.
Beiqi Foton Motor (SHSE: 600166) established China’s first manufacturing and R&D base for new energy vehicles in Beijing. The base covers an area of 1,000 mu (around 66.67 hectares), with a total investment of Read the full story
We’ve gone more than a month without a “Green Hops” update…what a crime! We atone for that oversight here…
Climate Change and International Cooperation
A “high level” summit in Beijing on international technology transfer and climate change held on November 7 and 8 provided a preview of the international climate change negotiations that have kicked off in Poznan, Poland today. A blogger’s review of the Beijing summit can be found at China Green Space (the young author of which is a personal friend and has been getting some recognition lately). Basically, it is more of the same–China wants free capital and free technology from developed countries. This is the same position as what can be found in the recently released China Climate Change White Paper, which Read the full story