Green Hops: It's Been a While! (And the next may be for a while)
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
High-Tech Transportation for a Growing Nation
A Look Under the Hood at China’s High-Speed Rail Investments, originally published here.
We took the high-speed CRH3 train that runs between Beijing and Tianjin. Technology for the CRH3, assembled in China, was originally derived from Siemens’ Valero line of train technologies.
President Dwight D. Eisenhower put a down payment on the U.S. economy in 1956 by signing the National Interstate and Defense Highways Act. This wise investment in a modern, transformative transportation infrastructure—in the form of 41,000 miles of interstate highways—enabled the rapid movement of people and goods across the nation and was vital to our astounding economic progress for the next 50 years.
Today, it is China that is leading the world in a key next-generation transportation technology: high-speed rail. China has already built 4,000 miles of rail featuring trains with average speeds of 120 miles per hour or greater, and the country plans to build an additional 10,000 miles of high-speed rail connecting all of China’s major cities by 2020.
CAP experts experienced the high-speed rail firsthand during our recent fact-finding mission to China. We took the train from Beijing to Tianjin, reaching a top speed of 205 mph and covering the 73-mile journey—roughly the distance between New York and Philadelphia—in less than 30 minutes. Stepping off the rail platform, it was hard not to get the feeling that China is racing ahead in investing in mass public transit infrastructure while the United States is lagging behind in the race to develop clean energy industries.
China’s $300 billion investment in high-speed rail
China already boasts a rail network that, including both standard and high-speed rail, is more than 53,000 miles long. And China plans for that network to reach 68,000 in 2012 and 75,000 by 2020. All of China’s provincial capitals have been connected by rail since the 1960s, and unlike the United States, rail is already a major mode of intercity passenger transportation.
Inside the train operator’s cockpit of the CRH3. In its less-than-30-minute journey from Beijing to Tianjin, the train has a maximum speed of 330 kilometers per hour (205 miles per hour).
The country began planning its nationwide network of high-speed rail in the early 1990s. And China began implementing a series of six “speed-up” campaigns in the late 1990s to modernize its existing rail infrastructure by increasing the speed and capacity of its lines. It also plans to build new passenger-dedicated high-speed rail lines. Indeed, the centerpiece of China’s Medium- to Long-Term Railway Network Plan is a new national high-speed rail grid overlaid onto the existing rail network. The new grid would consist of four north-to-south corridors, four east-to-west corridors, and two additional Read the full story
Green Hops: Cold Snap, Renewables Boost, Water Woes
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. Read the full story
Radio Interview on China balancing both shades of Green
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
Green Hops: 3 trillion reasons to stop what you are doing now and do a little dance
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 Read the full story
Green Hops: New Renewable Energy Targets, More Carbon Tax Chatter, Singapore-Nanjing Eco-city Announced
China’s energy intensity was down 2.9% in the first quarter of this year, reports the National Bureau of Statistics. The decrease is based on a 6.1% growth in GDP measured against a 3.04% increase in energy consumption. So remember this–despite and increased movement towards “decoupling”, energy consumption still rises as long as GDP rises. Power consumption in the first quarter also dipped (by 4%), but the decrease in March (2%) was less than in January an Februrary (5.2%), suggesting that the economy may be starting to bottom out.
Fuels from Heaven
- Wind to hit 100 to 150 GW by 2020
- Solar to hit 10 to 20 GW by 2020
- Renewable power to constitute 40% of electricty geneation by 2050
Wind targets to triple, may even quintiple! Anticipation is building up for the soon to be announced stimulus for renewable energy. Analysts have their eyes peeled for the possibility of a revision in China’s long term renewable energy targets. For wind and solar power, this stands at 30 GW and 1.8 GW, respectively. But at current rates of development, 100 GW of wind by 2020 is probably achievable, and indications are 100 GW will be the new 2020 target. Installed wind capacity is expected to grow 64% this year to hit 20 GW. If China adds 8 GW a year from now till 2020, 100 GW will be surpassed, leading this report to speculate that the 2020 target may be raised to as much as 150 GW.
Northern central China will be the destination of many wind farms. Meanwhile, Tianjin may be manufacturing hub that helps China’s wind industry lead that charge towards triple digit gigawattage as it boasts what is shaping up to be the world’s leading wind manufacturing industry cluster. Vestas, which has a manufacturing presence in Tianjin, has launched a turbine model specifically for Chinese wind conditions. The Danish company has begun sales of its V60-850 kW turbine, which has blade designs and temperature control systems to adapt to the tough winters in Inner Mongolia. The turbine is most effective in low and medium winds, which make up 75 percent of China’s unutilized onshore wind potential.
Solar to hit 20 GW by 2020?! As for solar, recent solar policy developments may have set China on course for 10 GW, or even 20 GW by 2020, remarks Wang Zhongying, assistant director at the NDRC’s Energy Research Institute and head of its Renewable Energy Development Centre. As projected in my recent solar policy paper, polysilicon production is ramping up domestically. This means lower PV panels prices and a steady march towards grid parity.
40% Renewable Electricity Standard by 2050? This was only mentioned in passing, and I have not seen this anywhere else, but it seems that 40% may be set as a long term target (i.e. 2050) for the proportion of renewable sources making up total electricity generation. Sounds encouraging, but far off the 60+% that the Tyndall Center sees as necessary to stabilize the climate (see previous post). Read the full story
Green Hops: Water Forum, Gasoline Price Hikes, Guangdong LED
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.
Green Hops: Drought, Cars and International Partnerships
Its been a busy few weeks since our last Green Hops, so GLF is gonna pack in the updates over two posts consecutive posts.
Drought
The “worst drought in half a century” affecting eight northern and central provinces dominated the past week’s news. A 90 percent drop in average rainfall since last November will affect 11 million hectares of wheat crops and create a drinking water shortage for 4.4 million people and 2.2. million livestock. RMB 187 billion of emergency funds have been earmarked. As stop-gap measures, authorities are diverting water from the Yangtze and Yellow River to drought-ridden areas, as well as shelling the sky with pellets to induce rain, Beijing Olympics-style. The water diversion measure has been able to get half of the wheat lands irrigated, but is rather ironic given that a recent study shows that 82% of China’s whopping 3.57 million square kilometers of degraded lands (equivalent to the size of 10 Germanys!) exists in the Yangtze River and Yellow River valleys. The water scarcity woes of northern China have been well described on this blog by Christine Boyle. The World Bank also chimes in with its own comprehensive list of policy recommendation to address water scarcity. Read the full story
Green Hops: Green Car Washing; Pearl River Delta; Solarizing Qaidam Basin
Mobility
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…
“Small is beautiful” seems to be the message by industry analysts to Chinese auto makers. The government agrees, as evidenced by the new tax breaks given to cars with smaller engines.
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
More Petroleum Price Reforms: Move towards the Market and Higher Fuel Tax
The auto industry is front and center of the current financial-energy tsunami. Detroit is in big trouble, and in need of a life-line. Chinese automakers are faring better (and some have them tipped to be Detroit’s white knights), but the shakeout in China has played itself out in petroleum price reforms.
On Friday (Dec 5), the NDRC announced further proposals for energy price reform in the petroleum sector that would come into effect January 1 by indirectly linking domestic fuel prices to international crude oil prices as well as substantially increasing fuel taxes. The NDRC curiously maintains that the moves will not impact prices at the pump (see FAQ by NDRC, in Chinese only), however, the feeling is that more details to the proposal needs to be released for this claim to be assessed. Ostensibly, the fuel tax hike will be offset by the recent pullback in crude oil prices, resulting in minimal increases in pump prices in the near term.
The Proposal
In order to align retail fuel prices, Read the full story
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