CHINA BUILDING NEW ENERGY WITH BOTH HANDS

China to Focus on Renewable Energy
Kari Cameron, 1 May 2009 (Voice of America)

SUMMARY
In response to severe, health-threatening air pollution and rising costs for imported energy, especially oil, China has set aggressive goals for New Energy and nuclear energy.

In 2007, China set a variety of New Energy capacity goals for 2020 including a wind power capacity goal of 30 gigawatts.

There has, as yet, been no significant improvement in greenhouse gas emissions (GhGs), air pollution or respiratory health problems and China has neither found new domestic petroleum supplies or found entirely safe and reliable sources of imported oil.

click thru to "The Green Leap Forward"

China is also feeling pressure from the international community to get a handle on its GhGs. The U.S. government under President Obama seems intent on joining the international community’s fight against global climate change by committing itself to emissions reductions. Secretary of State Hillary Clinton recently expressed the administration's determination to bring China and India along.

At the same time, China’s wind power capacity is rapidly expanding and its domestic wind manufacturing industry is quickly growing. The central government, therefore, just raised its wind capacity goal for 2020 to 100 gigawatts. It also raised the solar power capacity goal for 2020 to 10 gigawatts.

China presently gets 8% of its electricity from New Energy but intends to get 15% by 2020 aqnd 40% by mid-century.

From the 11th 5-year plan. (click thru for more of the 11th 5-year plan)

In response to the global economic downturn, the Chinese central government quickly enacted a nearly $585 billion economic stimulus plan that contains spending initiatives for the development of New Energy and crucial new transmission infrastructure.

Indicators of China’s new, bigger commitment to wind: Hong Kong-based wind developer CWE Renewables, which builds wind installations in Inner Mongolia, has seen no loss of interest from Chinese investors or localities despite the global economic and financial crisis. CWE Renewables principals believe the New Energy expansion in China will be long-term and widespread. New start-ups and multinational giants like GE are positioning themselves to get in on the coming boom.

The 2007 standard. (click to enlarge)

COMMENTARY
China’s commitment to spending on New Energy, Energy Efficiency and transmission infrastructure suggests a sense of these things as necessities, not indulgences. This is more than a case of thinking globally and acting locally. China’s leaders are thinking locally: Air pollution and high energy prices generate social unrest and threaten political stability.

A tale of 2 governments:

China’s New Energy commitment goes back to its 2005 Renewable Energy Law. Revised upward in 2007, it called for 190 gigawatts of hydro power, 5.5 gigawatts of biopower, 5 gigawatts of wind power and 0.5 gigawatts of solar power capacity by 2010. For 2020, the 2007 law set capacity goals of 330 gigawatts of hydro power, 30 gigawatts of biopower, 30 gigawatts of wind power and 1.8 gigawatts of solar power. The 2009 standards are, reportedly, for 100 gigawatts of wind power and 10 gigawatts of solar energy.

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China's 2007 Renewable Energy Law also instituted – and continues to provide - incentives in the form of fixed rate tariffs and carbon credits to New Energy developers. Importantly, the law required the remote provinces to comply with the goals.

As a result, Chinese New Energy entrepreneurs have been continuously busy since the law was passed.

Meanwhile, the U.S. New Energy sector is significantly more mature than China’s but has suffered through boom and bust cycles due to the federal government’s inconsistent and limited policy support.

Legislators in Washington who back New Energy tried for some time prior to 2007/08 to get a national Renewable Electricity Standard (RES) that would put a requirement on U.S. utilities to obtain a specific portion of their power from New Energy sources by a date certain.

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In 2007, the House of Representatives passed a standard requiring 15% New Energy by 2020 as part of the energy bill but the Senate rejected it.

At present, the push is on to pass President Obama’s proposed RES of 10% New Energy in 2012 and 25% in 2025. A House version would require the latter goal but start at 6% in 2012 and ramp up. The Senate is working on a 3rd version that would require 21% New Energy by 2025.

China’s Renewable Energy Law resulted in a doubling of China's wind energy capacity every year since the law was put in place. Total capacity at present is 12 gigawatts. Wind is the fastest growing Chinese New Energy. It has jumped 60% since 2005.

U.S. wind capacity has grown through boom and bust cycles caused by incentives that have remained short term and were, on 3 occasions in the last decade, temporarily curtailed. Passage of an RES would likely put the U.S. wind industry on track to stay competitive with Chinese growth. Without stable, long-term, supportive policy, U.S. wind development could stagnate, with devlopers moving to China and Europe.

The good news about China: Every megawatt of wind power means 1 less megawatt of coal-generated electricity and tons less greenhouse gas emissions.

The bad news about China: The Renewable Energy law also seems aimed at developing nuclear energy capacity and stimulus spending is earmarked toward that end.

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QUOTES
- Steve Lyons, director, CWE Renewables: "There are provinces that have good wind resources, no wind capacity, and have asked us to help them put in place what needs to be put in place for a wind developer to come in…"
- Adrian Ho, director, CWE Renewables: "There is a high chance that I believe China will go to 25 percent some day and that 25 percent will keep expanding…"
- Chris Flavin, President, Worldwatch Institute (WWI): "The Chinese government, I guess in part of the fact that it does not have some of the kind of democratic complexities that Western countries do, is able to do things quicker and without the kind of resistance from narrow economic interests that might make it more difficult…"

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- Flavin, WWI: "The main driving force is that China is not rich in any fossil fuel except for coal and coal is a heck of a lousy way to fuel an economy…"
- Flavin: WWI: "If you look at where we are today and compare with what anybody might have expected or even hoped for five years ago, I think it's really extraordinarily encouraging what they've accomplished…"