China "leads the world" on clean energy policy

Published by MAC on 2010-11-16
Source: Worldwatch Institute, Interfax China, China Dialy

But implementation lags behind government intent

How and why China leads the world on renewable energy

Summary of new report from the WorldWatch Institute

28 October 2010

Over the past few years, China has emerged as a global leader in clean energy, topping the world in production of compact fluorescent light bulbs, solar water heaters, solar photovoltaic (PV) cells, and wind turbines.

The remarkable rise of China's clean energy sector reflects a strong and growing commitment by the government to diversify its energy economy, reduce environmental problems, and stave off massive increases in energy imports. Around the world, governments and industries now find themselves struggling to keep pace with the new pacesetter in global clean energy development.

Chinese efforts to develop renewable energy technologies have accelerated in recent years as the government has recognized energy as a strategic sector. China has adopted a host of new policies and regulations aimed at encouraging energy efficiency and expanding renewable energy deployment.

Taking lessons from its own experience as well as the experiences of countries around the world, China has built its clean energy sector in synergy with its unique economic system and institutions of governance. At a time when many countries still struggle with the aftermath of a devastating financial crisis, the Chinese government has used its strong financial position to direct tens of billions of dollars into clean energy- increasing the lead that Chinese companies have in many sectors.

Among other initiatives, the Chinese government has taken strong action to promote renewable energy, establish national energy conservation targets, and delegate energysaving responsibilities to regions. Key legislative actions include the national Renewable Energy Law, which entered into force in January 2006, the national Medium and Long-Term Development Plan for Renewable Energy, launched in September 2007, and the Medium and Long-Term Energy Conservation Plan, launched in November 2004.

Although per capita energy use in China remains below the international average, it is growing very rapidly, spurred recently by the infrastructure-intensive government stimulus program launched in late 2008. Even with efficiency advances, demand for energy is expected to continue to rise in the coming decades.

Chinese energy consumption is currently dominated by coal, and the major energy-consuming sector is industry. Improving the efficiency of energy use and enhancing energy conservation will be critical to ease energy supply constraints, boost energy security, reduce environmental pollution, "green" the economy, and tackle the climate challenge.

Since 2005, the Chinese government has elevated its energy conservation and energy efficiency efforts to basic state policy. The 11th Five-Year Plan (2006-10) set an energy-savings target of 20 percent, and the country has adopted administrative, legal, and economic measures to achieve this goal.

During the first three years of the plan, China's energy intensity- its energy consumption per unit of GDP-fell by just over 10 percent, saving 290 million tons of coal equivalent (tce) and reducing the country's greenhouse gas emissions by 750 million tons of carbon dioxide-equivalent. This pace of energy conservation has rarely been achieved by the rest of the world.

According to China's Medium and Long-Term Energy Conservation Plan, the energy consumption per unit of major industrial products should "reach or be close to the international advanced level of the 1990s by 2010, and reach or be close to the international upto- date level by 2020."Although China is working hard on this target and has recently accelerated its pace of energy savings, especially in the industry sector, a gap remains. Challenges that impede progress in energy savings include low fossil energy prices due in part to energy and fuel subsidies, an incomplete market-drivers policy, and the lack of capacity building for energy saving.

China's success in the renewable energy arena has been more dramatic. Renewables use in China totaled some 250 million tce in 2008 (excluding traditional biomass energy). Renewables accounted for 9 percent of the country's total primary energy use that year, up from 7.5 percent in 2005. Hydropower dominated China's renewable energy usage, at 180 million tce, followed by solar, wind, and modern biomass, which together comprised 70 million tce of renewables consumption.

Hydropower and wind power accounted for the bulk of China's total installed renewable energy capacity in 2009, reaching 197 gigawatts (GW) and 26 GWrespectively. Cumulative wind installations more than doubled that year, and new wind installations increased more than 100 percent, allowing China to surpass the United States to become the largest market for wind power-housing nearly one-third of the world's total installed capacity in 2009.

Total installation of solar PV reached 310 megawatts (MW) in 2009,more than double the 150 MWin place in 2008 but leaving China with still only 2 percent of the global installed capacity. China installed 42 million square meters of solar water heaters in 2009 and increased the total installed capacity by 31 percent, to 135 million square meters, with the central government providing strong incentives for rural installations. China has accounted for 70-80 percent of the global market for solar hot water systems in recent years.

China's rapid rise to global leadership in clean energy is rooted in an unusual level of cooperation between government and industry, with the government providing a broad range of incentives that have led to the creation of renewable energy industrial bases nationwide. China's past two decades of investment in science and technology, focused in large part on the energy sector, has been stepped up in recent years, with the aim of making the country an innovator as well as a low-cost manufacturer of cutting-edge technologies.

These dramatic developments have implications that go well beyond China. As the country's skills in efficient, low-cost manufacturing are brought to clean energy industries, this could widen the energy options for the world as a whole. Already, Chinese companies have become a strong presence in clean energy markets in Europe and North America.

Renewables in China will almost certainly see continued strong growth in the years ahead as new policy incentives are enforced, including a regional feed-in tariff scheme for wind power, a plan to build seven large-scale windbases in six provinces, and the new Golden Sun program aimed at accelerating the domestic solar market.

Across China, provincial and city governments are working with industry to create industrial parks dedicated to clean energy and are providing a range of subsidies and infrastructure investments to support the creation of new companies, jobs, and revenues for local governments.

Meanwhile, China's renewable energy products and equipment manufacturing capacity are maturing rapidly. The domestic wind turbine industry has mastered technology at the megawatt scale and beyond and now has an annual manufacturing capacity of 10 GW.

China has become the world's largest solar PV producer, and domestic manufacturers are now offering complete production lines, from raw materials to solar modules. The annual capacity to produce solar water heaters is more than 40 million square meters. Domestic industry players are paying attention to both technological advancement and quality, aiming to improve the reliability of products while also preparing for an impending expansion of the renewables market.

Many Chinese renewable energy companies rely heavily on export markets to fuel their growth. This is particularly true in the case of solar PV, where most production is exported, but both the wind and solar hot water industries are now expanding their exports rapidly. This has led to growing tensions with European and North American companies that are losing market share. Analysts attribute this trend in part to the unusually strong state support that Chinese companies receive.

Renewable energy is positioned strategically in China's energy structure and is one of the most important instruments for boosting energy security and tackling climate change. The country has set national targets for a 10 percent renewables share in the country's overall energy mix by 2010 and a 15 percent share by 2020. Forecasts suggest that this share might reach 28-32 percent by 2030 and 30-45 percent by 2050,moving renewable energy closer to becoming a mainstream energy resource.

This report is designed to provide an independent review of China's achievements in promoting renewable energy and reducing the energy intensity of its economy. The key drivers behind China's efforts in these areas are the needs to boost energy security, tackle climate change, ease the pressure of environmental pollution, and improve energy supply in rural areas. The goal of this report is to facilitate international cooperation that can help China further improve its energy efficiency and deploy renewables more widely.

Download the report from:- http://www.worldwatch.org/renewables-and-efficiency-in-china

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China's steel industry to focus on structural adjustments over the next 5 years

Interfax China Metals and Mining

28 October 2010

The Chinese steel industry's twelfth Five-Year Plan (2011-2015) will concentrate on structural adjustments and energy conservation, state media reported Oct. 25.

According to a 21st Century Business Herald report, Vice Chairman Luo Bingsheng of the China Iron and Steel Association (CISA), which represents major Chinese steel mills, also said at a recent conference that the new iron ore pricing mechanism will not be included in the plan, which is expected to be released by the end of the year.

Li Shijun, Vice Secretary General at CISA, previously said that to shift the domestic steel industry from a period of extensive development to one of intensive development is crucial in achieving the goals laid out in the twelfth Five-Year Plan, the report noted.

Meanwhile, an Oct. 25 announcement from WISDRI Engineering & Research Inc. Ltd., a hi-tech enterprise jointly invested by China Metallurgical Group Corp., Wuhan Iron and Steel (Group) Corp. (WISCO) and Angang Steel Co. Ltd., reported that during a recent tour at the company, Premier Wen Jiabao said overcapacity is a major challenge facing the domestic industry. The industry must therefore enhance its level of concentration and modernize through adjustments to its structure, Wen noted.

He added that the domestic steel industry needs to be more energy-efficient and environmentally friendly, the report said.

Interfax commentary: China's 2011-2015 development plan pledges government support for such newly emerging industries as alternative energy, new materials, and biological and medical industries.

Given Beijing's focus on clean, emerging industries, the government may issue regulations to eliminate outdated and excess steel capacity in the energy-intensive industry.

Already, the government has moved to consolidate the steel industry, and will likely encourage players to upgrade to more advanced technologies. With the plain steel market having reached its peak, specialty steel such as high strength sheet metal for use in the auto industry are viewed as a profitable niche sector for industry development.

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Completing disposal of chemical waste by year end

China Daily

27 October 2010

Millions of tons of chromium residue from chemical manufacturing has been deposited across the nation, posing a grave threat to farmland and groundwater.

About 20 cities in the country are reported to have 6 million tons of chromium slag. The toxic waste is a by-product from chemical plants, which mushroomed in the 1950s. After the pollution came to light, the central government ordered more than half of them to close in the 1990s.

Although production ended, the chromium residue remains. Chromium can lead to cancer in the lungs, liver and kidneys. A dose of five grams can kill a person, according to the National Institute of Occupational Health and Poison Control under the Chinese Center for Disease Control and Prevention.

"The residue was sealed in cement and has never leaked. We also supervise changes in the surrounding environment every year," Dong Yuanhui, deputy director of Gongyi environmental protection bureau, said last week.

In response to the potential harm chromium residue posed to people and the environment, in 2005 the State Council ordered local governments to deal with the disposal of the chemical waste within five years.

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Urumqi to bid farewell to polluting factories

China Daily

27 October 2010

Forty-seven high-polluting factories will close in Urumqi, capital of Xinjiang Uygur autonomous region, as the municipal government plans to move the air polluters out of the city.

The listed 47 air polluters, mostly chemical plants and factories that process building materials, have agreed to leave the city before 2014, the Urumqi Environmental Protection Bureau said in a statement on Tuesday.

The removal will cost the government more than 3.5 billion yuan ($533 million), it said. Urumqi has a severe air pollution problem, mainly caused by its industrial activities and heating supply.

The city emitted 12.8 tons of sulfur dioxide and 6.1 tons of soot in 2009, which made it one of the worst polluted cities in China, said the statement. "The air conditions are especially bad in winter -- if you view Urumqi from a distance, it looks as if the entire city is covered by a black pot," said a local resident surnamed Qi.

Many citizens said they welcomed the departure of the polluting factories, but much work remained to be done in reducing the city's pollution. "Every winter, much coal is burned to provide heating, which causes a lot of pollution," said a local student surnamed Li. "The government also needs to improve the efficiency of the heating system." (Xinhua, October 28)

Work safety situation still looks grim

The country's top work safety watchdog said on Thursday it will extend a crackdown on illegal operations in mines, transport, construction and hazardous chemicals by one month, because of the success it has had so far in reducing industrial accidents. About half of the major work safety accidents in the past two months resulted from illegal operations, although the number was down from the 75 percent in the April-to-June period, according to the State Administration of Work Safety (SAWS), which reported the latest figures on Thursday.

A State Council order in July called for SAWS to cooperate with the Public Security and Transport ministries and other central departments in cracking down on unlicensed activities in mines, transport and construction work, hazardous chemicals and metallurgy, from Aug 1 to Oct 30. Luo Lin, the head of SAWS, said the crackdown will run until the end of November.

He reported this at a national conference on Thursday, explaining that the crackdown on problematic companies has helped curb illegal production activities at the local level.

According to SAWS figures for August and September, they dealt with 612,600 cases of illegal operations. As a result, they told 62,500 organizations and companies to halt production and shut down 8,687 unlicensed organizations and companies.