Clean energy in China is a rapidly growing industry. China’s 12th Five-Year Plan contains the country’s most ambitious energy-saving, water-conserving, and emissions-reducing targets to date. This fascinating article discusses how plans to heavily invest in clean energy technology could see China become a leader in the renewable energy movement
It appears that China has recognised the unsustainable nature of its current development model and is now taking serious measures to address the issues. The economic rise that China has experienced in recent decades has significantly increased the rate of global resource depletion and pollution production. China is the world’s largest consumer of steel, meat, grain and the second largest consumer of oil, burning more coal than the United States, India and Russia combined. China’s Vice Minister for Environmental Protection, Mr Zhang Lijun admitted at the Fourth Meeting of the 11th National People’s Congress in March that ‘the situation of environmental protection in China is still grave,’ with China producing more traditional pollutants than it can bear.
China’s environmental commitments
Endorsed by the National People’s Congress on 14 March 2011, China’s is showing a commitment to its most ambitious environmental measures to date through its 12th Five-Year Plan (2011-2015). Detailing the country’s economic and social development initiatives, the Plan’s commitments sit alongside China’s pledges made at the 2009 United Nations Climate Change Conference in Copenhagen. In addition to outlining China’s most ambitious energy-saving, water-conserving, and emissions-reducing targets to date, the current Plan is also the first to mention climate change.
The 2009 United Nations Climate Change Summit
At the 2009 Copenhagen Summit, China pledged commitments to:
- reduce carbon dioxide emissions per unit of GDP by 40% to 45% from 2005 levels
- source 15% of its energy from non-fossil fuels, and
- increase forest cover by 40 million hectares and forest stock volume by 1.3 billion cubic meters from 2005 levels.
China’s 12th Five-Year Plan
The targets set in the Plan are critical steps toward implementing China’s 40% to 45% carbon intensity reduction goal announced at the Summit.
Table 1. China’s 12th Five-Year Plan targets
|Category||Target (based on 2010 levels)|
|Reduced energy use per unit of GDP||16%|
|Reduced water use per unit of value-added industrial output||30%|
|Reduced chemical oxygen demand||8 – 10%|
|Reduced sulphur dioxide||8 – 10%|
|Reduced carbon emission per unit of GDP||17%|
|Percentage of primary energy consumption from non-fossil fuels||11.4%|
|Reduced nitrogen from ammonia||10%|
|Reduced nitrogen exides||10%|
|GDP from strategic emerging industries (see description below)||8% (not mandatory)|
|Annual energy consumption||4 billion TCE (not mandatory)|
Note: The above are primarily mitigation targets. The 12th Plan essentially does not address climate adaptation.
The major factors driving China’s shift towards developing the economy with environmental considerations are:
- Resource security: Much of China’s development has been driven by antiquated, highly inefficient industrial methods. China hopes to use resource inputs (including oil, coal, water and land) more efficiently to reduce the rate of domestic resources depletion and reliance on importation. If China does not significantly increase its efficiency in resource use, its development will be hindered by a lack of affordable resources.
- Environmental sustainability: Prior to the 11th Plan, which commenced in 2006, China paid little attention to environmental protection. Pollution generated by industries and their widespread environmentally damaging practices have, over the past 30 years, led to the rapid depletion of arable land, useable water and bio-diversity. Alarmingly, the numbers of reported unnatural illnesses are on also the rise. China hopes to reverse some of these trends so that its natural habitat can better support the country’s population and economic activities.
- Industrial upgrade and innovation: China wishes to resolve its energy security and environmental sustainability problems through indigenous innovation. The process of innovation, such as the use of clean technologies, is intended to upgrade China from a low-end, low-skilled, export-oriented manufacturing economy to a domestic-innovation led economy, fuelled by a healthy services and consumer sector. Indigenous innovation is emphasised over imported innovation as it has potential to not only generate high value export revenue, but also because China’s expanding consumer market is demanding tailored solutions. China hopes to shift from ‘made in China’ to ‘created in China’ and ‘created for China.’
- Affordability: Throughout its 30 years of development, China has accumulated significant export revenue which is now being used to invest in infrastructure, research and development. Unlike the European Union and the United States, China is not short on funds to invest in the clean energy sector.
China’s investment in clean energy
To realise its environmental commitments, China is heavily investing in the clean technology sector. In 2010, China became the clear leader in the global renewables market as the world’s largest investor in clean technology, as reported in the Renewable Energy Country Attractiveness Index by Ernst & Young. China’s spending on its wind industry at the end of 2010 represented nearly half of all funds invested in new wind projects around the world. Mr Shi Dinguan, Senior Adviser of China’s State Council, publicly announced that by 2020, the Chinese government will have invested RMB300 trillion (approximately US$45 trillion) in clean technology.
Working with the world on China’s clean energy projects
In addition to investing in clean technology, China also wishes to increase its involvement with the international community on technology transfer. In Premier Wen Jiabao’s March 2011 Work Report, he expressed the need for Chinese companies to intensify overseas mergers and acquisitions to acquire technology. Technology transfer is essential for China to meet targets in the Plan. China lacks 70 per cent of the core technologies that were demonstrated by the United Nations Development Program to be necessary for achieving a low carbon future.
In the last Plan, China demonstrated its determination and capability to introduce large scale, sector-wide changes to ensure targets were achieved. Between 2006 and 2010, China reorganised its energy industry by closing down 70 gigawatts of inefficient power plants. To put this in perspective, this is equivalent to closing down all power plants in the United Kingdom. Promotions, salaries and the award of honorary titles for local governments have also been tied to achievement in the energy intensity targets allotted to the respective regions. In many cases in the past, local governments resorted to the disruptive method of randomly closing high polluting, unsafe or energy inefficient power plants that supplied electricity to households, businesses and hospitals to achieve their targets. The central government publicly criticised these extreme measures and urged local governments to find more reasonable methods of achieving their targets. Throughout the period of the current Plan, the same determination to achieve the goals without such extreme measures could be expected.
China’s desire to be at the forefront of clean energy technology could generate environmental benefits on a global scale. For this goal to be realised, policy makers must ensure a number of measures are improved and successfully implemented. To begin with, local governments must be transparent and accountable for their actions. As China’s current environmental measurement and verification methods are mostly unavailable for public scrutiny, robust monitoring, reporting and enforcement mechanisms should be created. Appropriate community engagement and education programs would also work to improve public awareness and engagement.
Some questions still remain on China’s capacity to achieve these goals. China’s top-down directed approach to fostering domestic innovation contrasts with the successful bottom-up approach found in most regions around the world. Additionally, whether foreign organisations would be willing to transfer their technologies to a country with loose Intellectual Property Rights may be up for debate. These questions make it difficult to predict the extent to which China will achieve the measures as outlined in the current Plan. If China is able to rise to these challenges, solid outcomes could help to further legitimise its position as one of the most powerful and influential nations on the world stage.