China—the green dragon
Coal is on its way out as Beijing oversees a shift towards clean energy
In the Hebei region, one of the big three provinces in the so-called "Jing-Jin-Ji" grand industrial plan that also involves Beijing and Tianjin, the government has ordered the automotive industry to boost its production of "new-energy" vehicles (EVs) to 0.5m a year. Simultaneously, the local administration has set a target of installing 1,000 electric charging stations by 2020, covering highway-service areas, airports and other busy locations.
It's all being done under the grandly titled Hebei New-Energy Automotive Industry 135 Development Plan, a vital element of the overall Jing-Jin-Ji project to slash the proportion of coal used in total energy consumption to below 50%. In these new-energy goals, EVs, wind and solar are in the forefront, allied to the broader use of natural gas.
China's commitment to cleaner air and rivers is ushering in a landmark era in energy as the nation progressively turns its back on coal. To make it happen, Beijing has handed down much of the job to local governments such as Hebei. The current national plan calls for the proportion of non-fossil fuel sources in the provision of primary energy to reach 15% by 2020, and at least 20% by 2030.
By any standards this is ambitious. Currently lying at just 4% of total power generation, the share of wind and solar photovoltaic in non-fossil power, for example, is supposed to double to 8% by 2020 and 17% by 2030.
Yet the rate of progress so far suggests these goals are achievable. According to a definitive Greenpeace study conducted in collaboration with five Chinese institutions, almost from a standing start wind installations were delivering 129 gigawatts and solar PV as much as 43.18 GW by the end of 2015 and the momentum has been maintained since. Other studies generally confirm these numbers.
"China now ranks first globally in terms of new wind and solar-PV installations, as well as cumulative wind and solar-PV installation," the study reported in April. According to the researchers, who include the Chinese Wind Energy Association, the Energy Research Institute National Development and Reform Commission, the Institute of Energy, Environment and Economy of Tsinghua University, the Department of Earth System Science of Tsinghua University and Draworld Environment Research Center in Beijing, wind and solar PV had replaced nearly 60m tonnes of standard coal in 2015.
No 2016 figures are available, but at the current rate of progress these two sources of power alone will reduce the consumption of fossil fuels by nearly 300m tonnes of standard coal by 2030. That's an amount roughly equal to France's total primary energy consumption.
Capex ramp up
China has also earmarked the budget to get the job done. About $58.8bn had been invested in wind and solar by the end of 2015 (the latest available figures), and a total $103bn in all renewables including biomass and ocean power. That was two and a half times what the US spent in that year, and five times the UK's investment. Simultaneously, China has been snapping up renewables assets abroad in a long-term goal of becoming the world's innovator in energy. In just one example, in 2016 State Grid Corporation paid $13bn for Brazil's CPFL Energia, an electricity generation and distribution company.
And that's just the start. According to the Greenpeace study, by 2030 China will have pumped at least $0.79 trillion into wind and solar-PV installations. Confident that the government will follow through on its ambitions, the private sector has jumped on the band wagon. Five of the six largest manufacturers of solar panels are based in China, and five of the 10 biggest wind-turbine makers. Not all their production is intended for domestic use—China has been exporting solar panels at such knock-down prices that it's lead to accusations of dumping, especially in Europe.
But the returns could justify these massive investments. Between 2015 and 2030, wind and solar-PV power is estimated to contribute $2.1 trillion to China's GDP, a sum roughly equivalent to seven times Beijing's current figure. By then, estimates a study in online journal Nature Energy, wind power could be generating between a quarter and a third of China's.
China's much-trumpeted rush into renewables was bedevilled by a variety of structural and administrative difficulties that Beijing is only now beginning to remedy, as a study by the OECD released in May points out.
For a start, some of the environmental data had been manipulated by local governments anxious to make the situation look better than it was. Only since late last year did Beijing begin to monitor the information more tightly.
Further, although China's total renewable capacity was growing rapidly, it was not necessarily reflected in increased consumption. This was because the use of renewables-generated electricity was hindered by the lack of a connecting grid, resulting "in large amounts of idle capacity". In the same vein, many of the new wind-power farms suffered from connection problems because the planning of local power grids was "not sufficiently integrated". Also, there aren't enough channels for privately owned generators to sell surplus energy. The National Energy Agency and National Development and Reform Commission (NDRC) are tackling the problem by setting guaranteed minimum hours for using renewables—an attempt to meet production targets. Still, as the OECD reports, grid companies tend to look unfavourably on some sources: "Even where there is grid connection, grid companies prefer thermal or hydropower-generated electricity as the on-grid tariff for wind power is higher than for thermal or hydropower."
And although China boasts the world's biggest market for green bonds, it makes better use of them as a form of financing the reduction of carbon emissions, the OECD believes.
But China has faith in renewables. Beijing has just extended to the whole country a year-old pilot programme allowing small-scale individual generators of solar power to sell their surplus electricity.