China to become the Global Clean Energy Powerhouse

China is the world leader in renewable energy, with total investment in the sector of $132bn, greater than the U.S. and EU combined.¹ Joining the industry in the late decades of the 20^th century, with the enormous funding, subsidies, policy targets and manufacturing incentives¹, China is already the global “clean energy powerhouse,” and on track to replace its fossil fuel consumption with renewable source^1,2 to ensure its energy security, reduce epidemic air pollution and create more jobs. The Chinese government has attempted to break the monopoly of the industry and move it towards a more market-oriented direction^1,5. Its successful “energy revolution” of transition to renewable energy³ and create a super-grid of clean power^4, will create beneficial social impact not only in mainland China but also in countries joining its Belt and Road Initiative⁴. Altogether, China is expected to play a significant role in leading the whole world away from fossil fuels^1,3,6.

The country begins to experimentally produce energy from renewables in the late 90s of the last century with its eight ambitious and fundamental projects, typically the grid-connected wind farms⁵, according to the World Bank. However, despite decent subsidies and favorable government policies, the generation of clean energy was still at a demonstration scale, typically wind energy with only 57MW electricity generated by the end of 1996⁵. The period also witnessed the efforts of the Chinese government in adopting and implementing a more market-oriented renewable energy development strategy⁵. With the vision that its coal usage to triple in 2020, the expansion of clean energy is urgently needed. Since 1995, the Chinese government received foundational technological support from the World Bank, United Nations Development Program and the Global Environment Facility in a unified effort of energy balance and global environmental substantiability⁵.

Since the beginning of the new millennium, China has witnessed spectacular growth with Chinese generation of renewable energy reached a hefty 378GW¹ as of 2013, mainly from wind energy and hydroelectric. It has surpassed the United States in the last decade, and as of 2015, according to a report of Greenpeace, on average China installed “more than one wind turbine every hour, and covered the equivalent of one soccer field every hour with solar panels”⁶. While renewables energy share constantly grows remarkably, coal consumption fell for the third straight year⁸. The incentives behind this exceptional growth are due to four main reasons. Firstly, the Chinese Communist Party led by President Xi Jinping aims to improve its image by dealing with its air quality crisis⁸ that kills 1.6 million people every year⁷. Secondly, the country hopes to reduce its dependence on fuel imports and increase energy security by producing more of its own energy¹. Thirdly, thanks to Chinese manufacturing advancement, costs in the industries are sinking, making them a competitive alternative to power generated from fossil fuels⁶. Fourth, Chinese “soft power” will be strengthened¹ by its leadership role in the Paris climate agreement, especially under Mr. Trump’s moves of pulling America out of the agreement and abandoning Obama’s climate agenda^6,8. Last year China’s energy agency claimed that the government intends to spend more than $360b⁶ on clean energy. The bold commitments of Chinese government investment, coupled with Mr. Trump’s recent moves, suggests that new jobs in the industry would pour into China instead of the United States. In fact, an additional 13 million jobs in the industry are expected to be created by 2020, according to a forecast by the Chinese government⁶. The major player of the industry is state-owned gigantic companies, bounding within strong alliances or joint ventures with foreign think-tanks and technology providers such as Canada’s Xantrex Technology Inc.⁹ and German’s Bosch Group¹⁰. They are buoyed by a huge domestic market and are already among the world’s dominant players. For example, the world’s biggest solar-panel manufacturer, Jinko Solar is a Shanghai-based newcomer established a decade ago, but its production of mighty 10GW accounts for 10% of global market share⁶. Another example is Envision, also from Shanghai. Last year, the company itself managed more than 100MW of renewable energy assets, which is greater than the entire wind capacity of America⁶. Chinese government policies now focus on promoting a more free, market-oriented industry with support and fundings now mostly goes to R&D centers and early-stage researches¹. Another factor driving this growth is the increasing awareness of climate change in the Communist Party^1,6,8 as well as the public, who “are pushing companies to really think about their environmental impacts².” However, the clean energy industry of China has to face with significant challenges, especially the politically powerful coal industry⁶. Operators of China’s state-owned grid often favor electricity generated from fossil fuels, resulting in a considerable quantity of wind- and solar-generated power that are unable to merge into the national power grid⁶. According to the New York Times, wind power curtailment in China was 19% in 2016, awfully higher than in the United States whose curtailment levels are often negligible⁶.

Electricity production (GWh) in China by source, 2008-2016¹¹

The International Energy Agency expects that by 2040, an average Chinese household will consume nearly twice as much electricity as today. The potential for growth for the renewable energy industry in China is considerably high, with the success of the nation’s effort in master technology and create a market-oriented industry. The country aims to get 60% of its energy from renewable sources by 2040¹¹, with Solar Photovoltaic accounts for 22% of total energy generation as “average solar PV projects in China will become cheaper than gas-fired power plants around 2020 and more affordable than new coal-fired capacity and onshore wind by 2030.” Furthermore, it will eventually finish its ambitious development of an Asian renewable assets network that was intended since the 90s. Its Belt and Road Initiative, China’s ambitious outbound investment strategy which links approximately “65 countries along terrestrial and maritime trade corridors”⁴, will create a foundation for a super-grid of clean power in the area. In fact, the China Development Bank has already granted a hefty of $160bn in loans to member countries of the Initiative and expected to spend about $350bn in future projects⁴. For example, the $1bn Casa-1000 project will enable Tajikistan and Kyrgyzstan to transmit their redundant hydropower capacity during summer to Pakistan and Afghanistan, creating economic opportunity and helping amend political conflicts in Asia countries⁴.

In conclusion, despite some potential risks of internal political pressure, the future of the renewable energy industry in China is still very auspicious and sustainable, with a great combination of advantageous conditions from government policies, technological advancement, cost reduction to public support and international co-operation. As the global “clean energy powerhouse” and an economic locomotive, China is expected to shift its nation into an era of renewable energy and lead the Asian area and the entire world away from fossil fuels, considerably contributing to the international efforts of repelling air pollution and climate change.

Works Cited:

¹ Chiu, Dominic. “China Is Rapidly Developing Its Clean-Energy Technology.”The Economist Special Report, The Economist Newspaper, 15 Mar. 2018, www.economist.com/special-report/2018/03/15/china-is-rapidly-developing-its-clean-energy-technology.

² Mullich, Joe. “China Becomes ‘Clean Energy Powerhouse.’”The Wall Street Journal, Dow Jones & Company, 1 Dec. 2018, www.online.wsj.com/ad/article/chinaenergy-powerhouse.

³ Worland, Justin. “Energy: China Will Lead World Away from Fossil Fuels.” Time Magazine, Time, 14 Nov. 2017, www.time.com/5022606/china-coal-solar-energy.

⁴ Litovsky, Alejandro. “China Plans Super-Grid for Clean Power in Asia.” Financial Times, Financial Times, 5 Dec. 2017, www.ft.com/content/e808a542-d6c6-11e7-8c9a-d9c0a5c8d5c9.

⁵ Taylor, Robert P., and Susan V. Bogach. “China.”China: A Strategy for International Assistance to Accelerate Renewable Energy Development, World Bank Report, World Bank, 1 June 1998, www.elibrary.worldbank.org/doi/abs/10.1596/0-8213-4241-X.

⁶ Forsythe, Michael. “China Aims to Spend at Least $360 Billion on Renewable Energy by 2020.”The New York Times, The New York Times, 7 Aug. 2018, www.nytimes.com/2017/01/05/world/asia/china-renewable-energy-investment.html.

⁷ Davidson, Helen. “China on Track to Lead in Renewables as US Retreats, Report Says.”The Guardian, Guardian News and Media, 10 Jan. 2018, www.theguardian.com/environment/2018/jan/10/china-on-track-to-lead-in-renewables-as-us-retreats-report-says.

⁸ Gardiner, Beth. “Three Reasons to Believe in China’s Renewable Energy Boom.”National Geographic, National Geographic Society, 22 Sept. 2017, www.news.nationalgeographic.com/2017/05/china-renewables-energy-climate-change-pollution-environment.

⁹ “Company Overview of Shanghai Electric Xantrex Power Electronics Co., Ltd.” Bloomberg Business, Bloomberg L.P., 03 Dec. 2018, www.bloomberg.com/research//stocks/private/snapshot.asp?privcapId=38805664.

¹⁰ Lifei, Zheng. “Bosch Rexroth revs up capacity.” China Daily, CDIC, 04 June 2007, www.chinadaily.com.cn/bizchina/2007-04/06/content_844818.htm.

¹¹ “World Energy Outlook 2017: China.” IEA Report, International Energy Agency, 14 Nov. 2017, www.iea.org/weo/china.

¹² Bremmer, Ian. “Solar panels in Rural China.,” Graphic Image, Xieyuliang, https://web.archive.org/web/20191015000000.