ALTERNATIVE ENERGY AND GREEN TECHNOLOGY IN CHINA AND GOVERNMENTSUPPORT OF THEM

ALTERNATIVE ENERGY IN CHINA

China has said it plans to get 10 percent of its energy from renewable sources such as solar, wind, biomass and small hydroelectric dams---as a means of reducing pollution and its reliance on coal and oil---by 2010 and 15 percent by 2020, with wind power showing the greatest potential as this juncture. To boost production the government has passed a nationwide renewable energy law that mandates targets for increased power generation using alternative energies and provides tax incentives for those who use them. In 2005 Beijing said it would spend $192 billion by 2020 to boost the use of solar, wind and biomass energy.

China also surpassed the rest of the world as the biggest investor in wind turbines and other clean energy technology. And it has dictated tough new energy standards for lighting and gas mileage for cars. In 2010, according to a list complied by accounting firm Ernst & Young, China beat out the United States for the first time as No. 1 in the world for renewable energy projects, meaning that it is the most attractive place for investments in solar and wind power and other alterative energies.

A new law announced in December 2009 requires China’s utilities to buy all the power produced by wind farms and other renewable energy sources as part of China’s effort to promote alternative energies and reduce its reliance on coal.

With China’s sheer size and the extraordinary pace of its economic growth, the energy provided by alternative sources are only a drop in the bucket for all the energy that is consumed in the country. A big deal was made about the Zhuhai Wonder Wind Power farm, with 21 wind turbines, near Macao. But it turns all the power produced by those turbines in a month would only keep the nearby Venetian Hotel in Macao going for a couple of hours.

China’s Energy Policy

In 2001, Chinese officials abruptly expanded its program to develop energy technology. Evan Osnos wrote in The New Yorker, “The reasons were clear. Once the largest oil exporter in East Asia, China was now adding more than two thousand cars a day and importing millions of barrels; its energy security hinged on a flotilla of tankers stretched across distant seas. Meanwhile, China was getting nearly eighty per cent of its electricity from coal, which was rendering the air in much of the country unbreathable and hastening climate changes that could undermine China’s future stability. Rising sea levels were on pace to create more refugees in China than in any other country, even Bangladesh. When Hu Jintao called on China to adopt a “scientific concept of development,” in 2003, he was making a point: China’s history of development at all costs had run its course. And, in ways that were easy to overlook, China had embarked on deep changes. [Source: Evan Osnos, The New Yorker, December 21, 2009]

“In the summer of 2005, Edward Cunningham, a Ph.D. student researching energy policy at M.I.T., was travelling in the Chinese countryside when he noticed something peculiar: the government was allowing the price of coal to rise sharply, after decades of controls. “I said, ‘How the hell’ he recalled. ‘That can’t be right.’ Maybe this is just some freak anecdotal evidence. It was in fact a pivotal change: Manipulating the price of coal had always insured that Chinese utilities would produce ever more electricity, but the unhappy side effect was that utilities needed to build nothing more efficient than the cheapest, dirtiest plants. Coal prices had begun to rise, however, and that would leave power plants no choice but to install cleaner, more efficient equipment. Cunningham, now a postdoctoral fellow at Harvard, said that the effect had broad consequences. “We are going to see a huge amount of learning that we have not seen in the U.S.” [Ibid]

“In 2006, Chinese leaders redoubled their commitment to new energy technology; they boosted funding for research and set targets for installing wind turbines, solar panels, hydroelectric dams, and other renewable sources of energy that were higher than goals in the United States. China doubled its wind-power capacity that year, then doubled it again the next year, and the year after. The country had virtually no solar industry in 2003; five years later, it was manufacturing more solar cells than any other country, winning customers from foreign companies that had invented the technology in the first place. As President Hu Jintao...put it in October of this year, China must “seize preëmptive opportunities in the new round of the global energy revolution.” [Ibid]

Even though “many factories are churning out cheap, unreliable turbines, because the government lacks sufficient technical standards....the grid problem is probably temporary. China is already buying and installing the world’s most efficient transmission lines---an area where China has actually moved ahead of the U.S.,” according to Deborah Seligsohn, a senior fellow at the World Resources Institute. In the next decade, China plans to install wind-power equipment capable of generating nearly five times the power of the Three Gorges Dam, the world’s largest producer.

Green Energy and Clean Technology in China

In 2009 China invested $34 billion in clean technology, compared to $18 billion by the United States. Jonathan Watts wrote in The Guardian: “The contrast which shocked many in Washington is partly explained by different political systems, vested interests and stages of development. While the US is dominated by big oil and big money, China is run by big hydro and big brother a dictatorship of engineers.”

A report issued by Australia’s Climate Institute in October 2010 ranked China as a leader in the pursuit of clean energy. It ranked only second behind Britain in incentives offered to pollution created from electricity generation. David Sandalow, the U.S. Assistant Secretary of Energy for Policy and International Affairs, told The New Yorker, “China’s investment in clean energy is extraordinary.”

Jonathan Watts wrote in The Guardian: “Even as coal use rises, Beijing will blaze further along the trail towards a low-carbon economy. Its wind power generating capacity has doubled annually for four years and in 2010 became yet another field in which China surpassed the U.S, to become number one. Seven of the planet's top 10 solar panel makers are now Chinese.” [Source: Jonathan Watts, The Guardian, February 4, 2011]

“The focus in future is likely to be nuclear energy, forecast to increase tenfold over the next 10 years, and hydroelectric power. In January 2011, the National Energy Agency said China plans to build an additional 140 gigawatts of hydropower capacity in the next five years, though this will have a dire impact on ecologically crucial sites.”

“The country's high-speed rail network  non-existent in 2008  will be bigger than the rest of the world combined within two years. According to one domestic carmaker, China will soon unveil plans for 10m electric car charge-and-park places by 2020. In these and other fields, such as eco-city development and public transport construction, the five-year plan is likely to set ambitious spending targets. “

Protectionism, Subsidies and China’s Energy Policy

Evan Osnos wrote in The New Yorker: “China has made up so much ground on clean tech in part through protectionism---until recently, wind farms were required to use turbines with locally manufactured parts. The requirement went into effect in 2003; by the time it was lifted, six years later, Chinese turbines dominated the local market. In fact, the policy worked too well: China’s wind farms have grown so fast that, according to estimates, between twenty and thirty per cent aren’t actually generating electricity. A surplus of factories was only part of the problem: local bureaucrats, it turned out, were being rewarded not for how much electricity they generated but for how much equipment they installed---a blunder that is often cited by skeptics of China’s efforts.[Source: Evan Osnos, The New Yorker, December 21, 2009]

In October 2010, the United States announced it would launch an investigation into charges that the Chinese government has handed billion of dollars in illegal subsidies in an effort to dominate the green technology sector. The investigation was prompted by charges from the United Steelworkers that Chinese businesses can sell wind and solar equipment on the international market at cheap prices because they get subsidies from the Chinese government. That are prohibited global trade rules.

Biofuel, Biomass and Other Types of Alternative Energy in China

China is the No. 3 producer of bioethanol after Brazil and the United States. China National Petroleum is raising Barbados nuts, yams and other crops that can be turned into fuels used in cars. Barbados nuts planted in local feedlots produces biodisel and yams produce ethanol. Cnooc has a deal with a Malaysian company to make biodiesel from palm oil.

China is also embracing biofuels as an alternative to gasoline but rather than use sugar- or corn-based ethanol as is the case in Brazil and the United States, it is turning to methanol, a clean, colorless liquid also known as wood alcohol that is more versatile than ethanol. Used in factories and vehicles methanol can be made from natural gas, coal, industrial garbage and even recycled carbon dioxide. It produces less energy than ethanol, which can only be made from agricultural products such as sugar cane and corn, but is less corrosive and easier to produce in bulk.

There has also been some discussion of converted farmland used to produce food into land that produces biofuels---namely ethanol from maize and sugar cane, two crops which need a lot of water. There are serious concerns that such a move could result in serious food and water shortages. Environmentalist have suggested that China should instead raise sweet sorghum for ethanol and jatropha bushes and pongamta trees for biodeisel---all of which use less water. Regulations announced in December 2006, give food priority and restrict companies from going into agricultural areas and using the land to produce fuels.

China has mined methane hydrate is the seabed of the South China Sea. Samples collected in the northern part of the sea indicate there is volume of methane hydrate is the energy equivalent of 10 billion tons of oil.

China is planing to grow jatropha on a 32,000-hectare plantation in Sichuan as a biofuel.

Alternative Energy Investments in China

In 2009, China invested about $34 billion in solar panels, wind turbines and other alternative energy technologies, nearly twice as much as the United States. China aims to get 15 percent of its power from renewable energy sources, including hydroelectric dams, by 2020, up from about 9 percent now. But increased consumption of coal---used to generate about two-thirds of electricity in China---will offset any gains.

In December 2010, according to Reuters, official media reported that China will invest 5 trillion yuan (about $850 billion) in renewable energy projects over the next decade. The money spent on the seven industries in the up to 10 trillion yuan initiative could, to a certain extent, overlap with that. The plans could also encounter opposition from some quarters of government. Xu Jian, an economist with China International Capital Corp in Beijing, questioned whether the seven targeted sectors could handle such an influx of cash. "They are still in their initial stage of development. They are unlike conventional manufacturing industries, which are big in scale. So in terms of that, this investment may be too big," he said. [Source: Reuters, December 3, 2010]

China's "Torch" program fast-tracks industries, attracting entrepreneurs with offers of cheap land for factories, export tax breaks and even a free apartment for three years. Some enterprises have been beneficiaries low-interest loans that didn’t need to be repaid in full.

Although there is clearly money to be made in new-energy technology, there is skepticism among some experts about its effect on the environment. Wang Yanjia, a professor at Tsinghua University's Institute of Energy, Environment and Economy, said the manufacturing of solar devices helps local economies but won't break or even dent China's reliance on carbon-rich fossil fuels. In Dezhou last year, municipal authorities spent more than $10 million to install solar lighting along miles of road. They also put up posters cheering low-carbon living on billboards once devoted to political slogans. During that period, though, residents bought 60,000 new cars, an increase of 114 percent over 2008. [Source: Andrew Higgins, Washington Post, May 17, 2010]

Chinese Government Support of Alternative Energies

Chinese has earmarked $738 billion to invest in developing clean energy between 2010 and 2020.

China doubled consumer subsidies for renewable power generation in the second half of 2009 to $545 million. In the second quarter of 2010 it attracted $11.5 billion in asset-financing for clean technologies, more than Europe and the United States combined.

Mark Bachman, an analyst with Auriga USA, told Bloomberg, “China is rapidly developing a market that supports its own manufacturers. In the U.S. it’s almost impossible to get 50 states to agree on renewable energy policy and it’s likely to be so watered down as to be ineffective.”

China is supporting the construction of a wind farm in Texas while an American company is building a solar-powered electric utility in China.

Chinese Alternative Energy Industry

Renewable energy industries here are adding jobs rapidly, reaching 1.12 million in 2008 and climbing by 100,000 a year, according to the government-backed Chinese Renewable Energy Industries Association.

Yet renewable energy may be doing more for China’s economy than for the environment. Total power generation in China is on track to pass the United States in 2012---and most of the added capacity will still be from coal.

China’s Dominance of the Alternative Energy Industry

China is quickly becoming the world’s No.1 maker of alternative energy technology. It already the No.1 maker of solar panels and wind turbines. makes “Most of the energy equipment will carry a brass plate, “Made in China,” K. K. Chan, the chief executive of Nature Elements Capital, a private equity fund in Beijing that focuses on renewable energy, told the New York Times.” [Source: Keith Bradsher, New York Times]

Keith Bradsher of the New York Times wrote: “These efforts to dominate renewable energy technologies raise the prospect that the West may someday trade its dependence on oil from the Mideast for areliance on solar panels, wind turbines and other gear manufactured in China.” President Obama, in his State of the Union speech in January 2010, sounded an alarm that the United States was falling behind other countries, especially China, on energy. [Ibid]

The United States and other countries are offering incentives to develop their own renewable energy industries, and Obama called for redoubling American efforts. Yet many Western and Chinese executives expect China to prevail in the energy-technology race. [Ibid]

Columnist Thomas L. Friedman wrote in the New York Times: “China is increasingly finding that it has to go green out of necessity because in too many places, its people can’t breathe, fish, swim, drive or even see because of pollution and climate change. Well, there is one thing we know about necessity: it is the mother of invention...And that is what China is doing, innovating more and more energy efficiency and clean power systems. And when China starts to do that in a big way---when it starts to develop solar, wind, batteries, nuclear and energy efficiency technologies on its low-cost platform---watch out. You won’t just be buying your toys from China. You’ll be buying your energy future from China.” [Source: Thomas L. Friedman New York Times, July 4, 2009]

Multinational corporations are responding to the rapid growth of China’s market by building big, state-of-the-art factories in China.Vestas of Denmark has just erected the world’s biggest wind turbine manufacturing complex here in northeastern China, and transferred the technology to build the latest electronic controls and generators. You have to move fast with the market, said Jens Tommerup, the president of Vestas China. Nobody has ever seen such fast development in a wind market. [Ibid]

20080312-biomass, env news.jpg
Biomass processing

863 Program’s Clean Energy Policy

Evan Osnos wrote in The New Yorker: “On March 3, 1986, four of China’s top weapons scientists---each a veteran of the missile and space programs’sent a private letter to Deng Xiaoping, the leader of the country. Their letter was a warning: Decades of relentless focus on militarization had crippled the country’s civilian scientific establishment; China must join the world’s xin jishu geming , the “new technological revolution,” they said, or it would be left behind. They called for an élite project devoted to technology ranging from biotech to space research. Deng agreed, and scribbled on the letter, “Action must be taken on this now.” This was China’s “sputnik moment,” and the project was code-named the 863 Program, for the year and month of its birth. In the years that followed, the government pumped billions of dollars into labs and universities and enterprises, on projects ranging from cloning to underwater robots. [Source: Evan Osnos, The New Yorker, December 21, 2009]

“In 2001, the 863 Program launched a “clean coal” project, and Yao Qiang, a professor of thermal engineering at Beijing’s Tsinghua University, was appointed to the committee in charge. He said that its purpose is simple: to spur innovation of ideas so risky and expensive that no private company will attempt them alone. The government is not trying to ordain which technologies will prevail; the notion of attempting to pick “winners and losers” is as unpopular among Chinese technologists as it is in Silicon Valley. Rather, Yao sees his role as trying to insure that promising ideas have a chance to contend at all. “If the government does nothing, the technology is doomed to fail,” he said.” [Ibid]

“Grants from the 863 Program flowed to places like the Thermal Power Research Institute, based in the ancient city of Xi’an, in the center of China’s coal country. “The impact was huge,” Xu Shisen, the chief engineer at the institute, told me over lunch recently. “Take our project, for example,” he said, referring to an experimental power plant that, if successful, will produce very low emissions. “Without 863, the technology would have been delayed for years.” [Ibid]

The 863 Program took much of its shape from the American research system used by the National Institutes of Health and the Department of Defense: the government appointed panels of experts, who drew up research priorities, called for bids, and awarded contracts. In 1987, the government gave it an initial budget of around two hundred million dollars a year. That figure was small by Western standards, but the sum went far in China, according to Evan Feigenbaum, an Asia specialist at the Council on Foreign Relations, who studied the program. When I mentioned to Xu Shisen, the coal engineer in Xi’an, that American scientists are dubious of top-down efforts to drive innovation, he suggested that the system is more competitive than outsiders imagine. “It is very intense---like a Presidential election,” he joked, and he sketched out the system: “Normally, each project will have five to eight contenders’some less, some more---but there is a broad field of innovators. A lot of companies are doing the same thing, so everyone wants to have a breakthrough.” He went on, “It’s not possible to have a flawless system, but it makes relatively few mistakes. It combines the will of the state with mass innovation.” [Ibid]

“Investment in energy research under the 863 Program has grown far faster: between 1991 and 2005, the most recent year on record, the amount increased nearly fifty-fold. In November 2009, I was spending much of my time at Tsinghua University, a center of clean-tech research, seeing a string of new energy projects that might or might not succeed someday. (My favorite, science aside, is a biofuel based on the process of producing Chinese moonshine.)

Osnos wrote in The New Yorker: “In 2004, a group of U.S.-based Chinese scientists accused the 863 Program of cronyism, of funnelling money into pet projects and unworthy labs. (A proverb popular among scientists goes, “Pavilions near the water receive the most moonlight.”) When critics published their complaints in a Chinese-language supplement to the journal Nature, the government banned it. Less than two years later, Chen Jin, a star researcher at Shanghai Jiaotong University, who had received more than ten million dollars in grants to produce a Chinese microchip to rival Intel’s, was discovered to have faked his results. It confirmed what many Chinese scientists said among themselves: the Chinese science system was riddled with plagiarism, falsified data, and conflicts of interest. [Ibid]

“After the Chen Jin scandal, the 863 Program made changes. It began publishing tenders on the Web, to invite broader participation, and, to cut down on conflicts of interest, it started assigning evaluators randomly. But those measures couldn’t solve a larger problem: the system that allowed China to master the production of wind turbines and batteries does not necessarily equip China to invent the energy technology that nobody has yet imagined. “Add as many mail coaches as you please, you will never get a railroad,” the economist Joseph Schumpeter once wrote. Scale is not a substitute for radical invention, and the Chinese bureaucracy chronically discourages risk. In 1999, the government launched a small-business innovation fund, for instance, but its bureaucratic DNA tells it to place only safe bets. “They are concerned that, given that it’s a public fund, if their failure rate is very high the review will not be very good and the public will say, “Hey, you’re wasting money,” Xue Lan, the dean of the school of public policy at Tsinghua University, told me. “But a venture capitalist would say, “It is natural that you’ll have a lot of failures.” Financing is not the only barrier to innovation. As an editorial last year in Nature put it, “An even deeper question is whether a truly vibrant scientific culture is possible without a more widespread societal commitment to free expression.”

China, the United States and Alternative Energy Policy

Evan Osnos wrote in The New Yorker, “Senator Charles Schumer, one of several lawmakers who have begun to cast China’s role in environmental technology as a threat to American jobs, has warned the Obama Administration not to provide stimulus funds to a wind farm in Texas, because many of the turbines would be made in China. (“We should not be giving China a head start in this race at our own country’s expense,” Schumer said in a statement.) Senators John Kerry and Lindsey Graham, in an Op-Ed in the Times, vowed not to “surrender our marketplace to countries that do not accept environmental standards,” and suggested a “border tax” on clean-energy technology. [Source: Evan Osnos, The New Yorker, December 21, 2009]

“The larger fact, however, is that no single nation is likely to dominate the clean-energy economy. Leading alternative energy companies are hybrids of Western design and Chinese production, and no nation has yet mastered both the invention and the low-cost manufacturing of clean technology. It appears increasingly clear that winners in the new-energy economy will exploit the strengths of each side. President Obama seems inclined toward this view. When he visited Beijing in November, he and Hu Jintao cut several deals to share energy technology and know-how which will accelerate progress in both countries. This was hardly a matter of handing technology to China; under one of the deals, for instance, the Missouri-based company Peabody Energy purchased a stake in GreenGen, so that it can obtain data from, and lend expertise to, a cutting-edge Chinese power plant. If GreenGen opens as planned, in 2011, China will have the most high-tech low-emissions coal-fired plant in the world.[Ibid]

Energy Conservation In China

See Energy

Image Sources: Mongabey; Environmental News; Suntech

Text Sources: New York Times, Washington Post, Los Angeles Times, Times of London, National Geographic, The New Yorker, Time, Newsweek, Reuters, AP, Lonely Planet Guides, Compton’s Encyclopedia and various books and other publications.

Last updated July 2011


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