China’s Renewable Energy Opportunity

CHINA

Renewable energy could improve the quality of China’s air, and its international image. 

By Arthur Guschin

April 03, 2014

Look at overseas coverage of China over the past six months and you would be forgiven for thinking that the only topics of note are its slowing economy, a looming maritime showdown with the U.S., ongoing corruption investigations, and periodic spats with Japan. Little of the reporting is kind to Beijing.

Chinese soft power has not yet developed the ability to consistently offset the harsh spotlight of Western media, principally because the message it seeks to send is at odds with the interests of its targeted audience. Meanwhile, economic challenges and corruption revelations have sparked public outcry and triggered social instability and unrest (with 180,000 mass incidents in 2010) at home. Abroad, reports of maritime incidents or PLA training to capture disputed islands contradict the official narrative of a “peaceful rise.”

Clearly, China could benefit from an image makeover.

It may seem somewhat counterintuitive and certainly some heavy PR would be required, but the environment represents an opportunity for Beijing to transform its public diplomacy. Chinese are worried about air and water quality. According to a poll by Pew Research Center in 2013, 47 percent of Chinese rate air pollution as a “very big” problem (compared with 31 percent in 2008 and 36 percent in 2012). The environment jumped up to fourth place on the list of concerns for Chinese, after rising prices, corruption and wealth inequalities. As China experiences more situations like the one in Harbin in October 2013, when the PM2.5 index topped 1000 (compared to a WHO recommendation of no more than 20), the importance of a clean environment will only rise. In 2013, the U.S. journal Proceedings of the National Academy of Sciences published a report that analyzed the impact of coal burning on life expectancies in cities north of the Huai River, finding that the particulate matter concentration is 55 percent higher there than it is in China’s South, and the average life expectancy of residents is correspondingly 5.5 years shorter.

How is that an opportunity? First, the Chinese government has the ability to respond to these public concerns, winning domestic plaudits and demonstrating internationally that China is a responsible actor. Beijing could show a human face and potentially correlate this new image with its current policies in places like the Arctic, where its interest in energy and marine resources is camouflaged as concern for environmental protection and indigenous interests. A reorientation to public diplomacy that emphasizes the environment would make Beijing’s efforts in the Arctic appear more logical.

Second, a green push would not entail any new guidelines or regulatory acts. In 2006, former President Hu Jintao approved The National Medium- and Long-Term Program for Science and Technology Development (2006-2020), with a particular focus on developing renewable energy industries. Later, in March 2011 the government adopted its Twelfth Five-Year Plan (2011-2015), which focused on seven strategically important spheres: energy-saving and environmental protection, next generation information technology, bio-technology, advanced equipment manufacturing, new energy (solar, wind and biomass power), new materials and new-energy vehicles. The plan calls for non-fossil energy to meet 11.4 percent of China’s energy needs by 2015, and 15 percent by 2020. To achieve that, Beijing is to spend $1.7 trillion between 2011-2015, in the form of investment, assistance for state-owned enterprises, and bank loans.

Third, China has already successfully adopted new technologies to consume wind, solar and biomass energy. According to a BP analysis, China acquired 31.9 million tons of oil equivalent (approximately 26.1 million tons of LNG, or 140 TWh) from these three industries in 2012, second only behind the U.S. (with 50 million tons of oil equivalent). This is more than all of the LNG (14.7 million tons in 2012) China imported as part of its program of substituting gas for coal.

The Chinese market for wind power began to form in 2003 with the launch of a project by the National Development and Reform Commission (NDRC). A strong, and occasionally controversial, government focus on developing the market meant that by the end of 2012 China was generating 75.32 GW from wind power plants, constituting 27 percent of the global market share. Fourteen provinces produce more than 1 GW annually, including Inner Mongolia, Hebei and Gansu. The government’s ambitious plan to reach 200 GW by 2020 looks achievable, provided it can overcome its major challenge: a grid that does not effectively link the major generation centers in the north of the country with the consumption centers in the eastern and southern region. China is placing significant emphasis on developing onshore wind farms, with a goal of generating 5 GW by 2015 and 30 GW by 2030, up from the current 389.6 MW. It also stands to benefit from the jobs created by this effort. According to the China Wind Energy Development Roadmap 2050 prepared by the International Energy Agency and China’s own Energy Research Institute, the country will create an additional 260,000 jobs by 2020 in five sectors from turbine manufacturing to maintenance assuming the pace of investment and development continues. By 2050, that figure could be 720,000.

Meanwhile, the rapid growth of solar power in China over the last three years reflects falling production costs and massive state backing. In 2010, the aggregate capacity of China’s solar power plants was less than 1 GW. Groundbreaking improvements began in 2011 when Beijing raised the total volume of solar energy to 3.3 GW. According to an estimate of the European Photovoltaic Industry Association (EPIA) estimate, in 2012 China already had photovoltaic capacity of 8.3 GW, in 2013 it was 20.3 GW. Even the most pessimistic EPIA scenario has solar power generating 47 GW for China in 2017, while a more optimistic outlook suggests the figure will be 66 GW. A distinct characteristic of solar energy development in China is the new program of installing solar panels on rooftops (up to 8 GW in 2014), which reduces the costs of grid modernization in the remote regions of Gansu, Xinjiang and Qinghai.

The third component of green energy production in China, biomass, consists of several sectors: livestock waste, agriculture and forestry residues, municipal solid waste. Beijing is targeting capacity of 15 GW to 2015 by utilizing waste products, taking into account the country’s size, its economy and its vast farmland. This amount would be equivalent to burning 32 million tons of coal. The next two years will be crucial for biomass energy development, with China planning to build and launch 300 power plants to utilize more than 72 tons and 630 tons of agriculture and livestock waste, respectively, and 138 tons of municipal solid waste. With this aggressive policy, Beijing could produce 30 GW of energy from biomass to 2020, giving farmers additional earnings and create new employment.

These tremendous investments in alternative energy are to be combined with new vehicle standards and the substitution of coal with gas (LNG). Should Beijing add an active and effective PR campaign targeting domestic and international audiences, it could earn both domestic support and a significantly improved international image.

Arthur Guschin holds an MA degree in China studies from Saint-Petersburg State University. His current research focuses on the PRC’s economic integration within Asia-Pacific and Sino-Russian cooperation in the Arctic.