China enacts law to promote renewable energy

www.businessweek.com
December 27, 2009

China's utilities will be required to buy all the power produced by wind farms and other renewable sources under a new law meant to promote the industry and reduce heavy reliance on coal. Legislators approved the measure Saturday as an amendment to China's 2006 renewable energy law, the official Xinhua News Agency reported. Beijing has set ambitious goals for wind, solar and other renewable energy in an effort to clean up its environment and curb surging demand for imported oil and gas, which communist leaders see as a strategic weakness.

The measure also could help Beijing fulfill promises to restrain growth in emissions of carbon dioxide and other gases blamed for changing the climate. "The legislation on improving the consumption of clean energy contributes to the global fight on climate change," said Wang Zhongying, director of the renewable energy development center of the Cabinet's main planning agency, according to Xinhua. Other countries such as Germany and Spain also promote solar, wind and other renewable power sources by requiring utilities to buy it and to pay higher prices than for electricity from coal and other traditional sources.

Xinhua gave no details of pricing but said companies that operate China's power grid could be fined if they refuse to buy renewable power, which suggested the cost might be higher. It said grid operators would be required to improve their technology and capacity to absorb power from renewable sources. China is one of the biggest users of wind energy and the government is trying to promote use of solar by promising to pay up to 70% of the cost of new systems.

China faces the challenge that its windiest areas are far from populous cities, requiring costly transmission lines that in many areas have yet to be built. Wind farm construction has raced ahead so fast that 25% are not connected to the national power grid. Government goals issued in 2005 call for at least 15% of China's power to come from wind, solar and hydropower by 2020, up from 9% now. Officials say that target may be raised to 20% because the industry is developing so fast.

Coal provides two-thirds of China's power and is expected to remain the dominant energy source in coming years. China is the world's biggest emitter of greenhouse bases but is not bound by global agreements on curbing emissions because it is a developing economy. But the Cabinet promised last month to reduce emissions of carbon dioxide for each unit of economic output by 40% to 45% from 2005 levels by 2020.