China speeds up renewable energy development

www.chinaview.cn
2006-09-12

BEIJING, Sept. 12 (Xinhua) -- China's National Development & Reform Commission (NDRC) announced on June 30 a plan to raise consumer electricity rates by 2.5 cents per kilowatt hour (KWH). A tiny fraction of the additional charge, 0.1 cent per KWH, will be used to develop renewable energy (RE), a senior NDRC official told Xinhua a few weeks later.

This was unprecedented, the official said. The money would be used to cover the portion of RE development costs that are higher than the average for conventional energies. The practice complies with the principle enshrined in the Renewable Energy Law (REL) that the extra costs of renewable energies should be shared by all end users of electricity across the country.

Earlier, on April 20, at the second gathering of the State Energy Leading Group (SELG), the highest authority in China on energy issues, Premier Wen Jiabao pointed out that renewable energy was strategically important. He urged all government departments concerned to take effective measures to accelerate the development of renewable energies, so as to "lift the share of quality, clean energies in the total energy mix".

China's energy industry has made impressive progress. Statistics show the production of primary energy reached 2.06 billion tons of coal equivalent last year. The figure marked a climb of 238percent over the figures for 1978. At the end of 2005, the country's total installed power generating capacity exceeded 500 million KW.

In the past two decades, growth in production supported a 5.16 percent average annual growth in primary energy consumption. However, GDP went up even faster, at an annual average of 9.6 percent. The result was a supply shortage that short-circuited in 2004, when 24 of the 32 provincial regions suffered power cuts. Last year's coal output, a record high and double the 2000 figure, was still not enough to meet market demand. Meanwhile, China's net imports of crude oil products climbed to 143 million tons, up from76 million tons five years ago.

Domestic energy resources are limited. In per capita terms, China is relatively poor in many energy resources. Its remaining exploitable reserves of petroleum, natural gas and coal equal merely 7.7 percent, 7.1percent and 58.6 percent of the world averages. At the current speed of extraction, experts say, the resources will last just 15, 30 and 80 years, respectively. The corresponding world averages are 45, 61 and 230 years.

The situation prompted the country's economic planners to look for alternative energy sources. Renewable energies were high on the wish list. Water power has a relatively long history in China, where 40,000-plus small hydropower facilities aggregate 34 million KW in capacity, the biggest hydropower park in the world.

Given its grave energy security concerns, China is stepping up efforts to develop renewable energies. According to the NDRC-prepared RE Medium- and Long-Term Development Program, renewable energies are expected to account for 16percent of the country's total energy mix by year 2020. Hydropower capacity will reach 300 million KW, wind power 30 million KW, biomass energy 30 million KW, and solar energy 1.8 million KW.

SELG members examined the Program at the April gathering. After making some modifications, it will be submitted to the State Council for final approval, a Xinhua report said in June.

China has three existing laws pertaining to energy issues: the Electricity Law, the Energy Conservation Law, and the Renewable Energy Law. The almost unanimous endorsement of the REL by the National People's Congress, the Chinese legislature, in February 2005, ahead of schedule, caught many people by surprise. The law became effective on 1 January 2006. A dozen or so implementation methods that accompany the law were made public about a month later. Methods for managing a special state fund for renewable energies and measures for giving RE projects discount loans and preferential tax treatment are reportedly being worked out.

Ma Kai, minister in charge of the NDRC, said in July that a focal point of government work for the period 2006-2010 was to enact an Energy Law and revise the Energy Conservation Law.

Relevant government departments vowed to see through the new legislation within two years. The Energy Law will deal with basic and strategic energy development issues in China. It will rely on economic leverage to regulate the energy sector, making sure that extravagant users of energy pay a higher price, and encourage the prospecting and extraction of energy reserves and the development of renewable and new energies, said sources who were closely involved in the drafting work.

Officials in local governments are enthusiastic about promoting RE projects. Their motives vary, though, from securing a lucrative source of government tax revenues, to building up a "green government" image and gaining plaudits for their personal work performance records. So-called "Green GDP" factors now have a considerable bearing on the government assessment of an official's job performance.

Companies, state-owned or private, domestic or foreign, are also eager to embrace RE projects, for reasons similar to those mentioned above, or out of a belief that the energy sector is a gold mine -- if not "is", surely "will be". And for some companies, state-owned enterprises in particular, the government's wishes are another driver. On a number of public occasions this year, NDRC deputy minister Zhang Guobao said a certain proportion of the products of big energy developers would have to come from renewable sources.

A major barrier that has prevented renewable energies from developing faster is the weakness China has shown in independent technology development. To date, most RE equipment or components used in China for wind power, biomass or solar energy, are imported, leading to high costs.

The problem has been acknowledged. The National Medium- and Long-Term (2006-2020) Program Outline for Scientific and Technological Development, released by the government in February, designated "energy" as the No. 1 area that "needs urgent S&T support". The document mapped out a host of government-supported plans covering key fields of study, cutting-edge technologies, big special programs, as well as basic research.

The push for renewable energies is not entirely driven by energy concerns. Environment factors are also critical. China ratified the Kyoto Protocol in May 1998. Although it was not obliged by the pact to meet a specific emission reduction quota, China is making efforts to show that it is a responsible member of the big global family. International cooperation is necessary in addressing problems such as dust storms because, more often than not, the dust that sweeps through Beijing a dozen times each year comes from abroad, said an official with the Beijing Meteorological Bureau.

And China has a promise to keep with the upcoming Olympic Games. In its bid to host the event years ago, Beijing pledged to stage a Green Olympics which would be more environmentally friendly than any previous Games. The 2008 Beijing Olympic Games is expected to recruit a diverse selection of RE technologies. Its main venue, the Olympic Green, is to have 20percent of its power supplied by wind-sourced electricity.

According to statistics, 38 billion U.S. dollars were invested in RE development worldwide in 2005. China topped the list with a commitment of 6 billion U.S. dollars, which did not include its spending on large hydro projects.