Saturday, September 12, 2009

How big is China's Green Energy

Source: BoFIT

Although the relative share of electrical power generated by renewable energy systems is still small in China, the country has made remarkable progress in adopting new approaches in recent years. The amount of wind-generated electricity quadrupled between 2006 and 2008, and today China has the world's fourth largest wind power generation capacity after the US, Germany and Spain. Large dam projects have also helped double hydro-power generation since 2002. Solar power use has increased dramatically along with incentives such as direct subsidies to e.g. building owners who install solar panels on their buildings. Moreover, China is planning to construct one of the world's largest solar fields in Inner Mongolia.

The introduction of renewable power technologies has not been without difficulties. Despite state support for construction of wind farms, companies that operate the electricity grid have little incentive bring wind farms, which are often located in remote areas, onto the grid. By some estimates, as much as 20 % of wind power currently generated in China is still off-grid and capacity utilization of wind farms has been lower than expected. There have also been problems with hydro-power projects as China struggles with droughts and uncertainty over the long-term environmental impacts of huge dams.

Despite the rapid rise of sustainable energy systems, they still generate a small share of China's total electricity (see chart). Hydro-power accounts for 16 % of electrical power generation, and wind just 0.4 %. Coal, in contrast is the basis of more that 80 % of China's power generation. China's goal is to raise the share of electricity generated by renewable systems to over 20 % by 2020.

China is the world's largest emitter of carbon dioxide. A substantial amount of these emissions are generated by coal-burning power plants. China's future energy production will continue to rely heavily on coal-fired power plants and China has not committed to Kyoto treaty emission targets. International climate talks will continue in December at the Climate Summit in Copenhagen.

China's CO2 emissions should fall slightly as the country makes gains in energy efficiency and its worst-polluting coal-fired power plants are shut down. A target of the cur-rent five-year plan (2006–2010) is to reduce energy consumption by 20 % relative to China's per capita GDP. Although progress towards this decrease has been achieved, it appears unlikely that the target will be met.
Although the state has passed an energy saving law and launched a raft of energy-saving programs, heavy regulation of electricity prices erodes the incentive to be energy efficient. Moreover, there has not been political enthusiasm for deregulation of energy prices.