What role does renewable energy play in the world's fastest growing economy? We have all heard about China's prowess as an economic power, but not what its growth means for the country's energy needs in the coming decades. China's burgeoning consumption rate, its increase in heavy industry exports and a construction boom that has led the Chinese to nominate the "crane" as their national bird have fuelled a massive and increasing appetite for energy -- intensified by the government's balancing act of not imposing energy constraints while also seeking more energy sources.
Some predict that China will need up to US$3.7 trillion in investments to fuel this growth. Its energy use grew by 8.4% in 2007 compared to overall world demand growth of 2.4%. Clearly, exploring alternative energy sources is not a luxury based on environmental concerns, but an absolute necessity to simply provide enough energy for China. According to Yang Fu Qiang of the Energy Foundation, if China uses only traditional energy sources, "it simply will not have enough energy capacity for its population."
Renewable energy in China, therefore, is not an alternative to traditional fuels, but rather an additional supplement. China has fed its growing energy demands for years through coal and oil, and it will certainly continue using those sources at similar levels. Given that coal currently makes up 76% of China's primary energy production, oil makes up 13%, and renewable energy only 8%, the government's plan is to increase renewable energy's percentage contribution so that the absolute amount of energy generated can continue to rise.
So what has the Chinese government done to encourage renewable energy development? Chinese leaders -- from those in the central government to those at local levels -- have worked for years to address China's rising energy needs. This initiative is particularly challenging given that power generation from renewable sources is expensive to implement and cannot yet produce at levels high enough to replace traditional energy sources. Despite these difficulties, the Chinese government has made a strong statement in its intention to integrate renewable energy into China's national energy plans for the 21st century, most notably in the Renewable Energy Law of 2006. The government's goals have been ambitious -- one provision in the law requires 15% of all energy consumed in China to be renewable by the year 2020.
Given that target, which groups in China are ultimately going to lead the charge in developing renewable energy? In terms of funding and investments, the public and private sectors will both play a role. However, the extent to which the Chinese government is driving investments for renewable energy is astonishing. Because of profitability challenges, private investment is currently more focused on specific areas within renewable energy technology -- for example, equipment manufacturing rather than energy production. As a result, China's renewable energy sector is being driven primarily by public-sector spending to meet the goals set by the central government.
NOTE: Having consulted for clients in the renewable energy sector, I am very much aware of the latest renewable energy trends and technology. China has been using renewable energy for years including hydro, wind and solar. Unlike the U.S., China subsidizes many industry sectors, giving Chinese companies a real competitive advantage in competing against the rest of the World.
Most of my experience has been in wind and solar powered LED lighting for use in traffic signals, street lights, warehouses, landscaping, exterior building lights, parking lots, you name it. I have developed contacts with several US companies with strategic partnerships in the solar and wind power generating sector in mainland China and can help introduce you with suppliers through these back channels. They all speak excellent English and very successful in several startups. Just let me know. Tommy Toy, PBT Consulting .
Courtesy of an article written by members of the Wharton Lauder class of 2010
appearing in http://knowledge.wharton.upenn.edu/article.cfm?articleid=2214 (Click To View Entire Post) on April 20, 2009
Comments