China, the New Power House in Green Energy

Posted by Elisa Lai | April 5, 2010

In 2009, China surpassed the United States, for the first time, to become the biggest investor in green energy, including in wind, solar and biomass. According to the L.A. Times newspaper, China’s investment in clean energy jumped from $2.5 billion to a whopping $34.6 billion within 5 years. Compared to China’s investment on clean energy last year ($34.6 billion), U.S.’ investment ($18.6) is around half of China’s total.[1]

Aside from the financial downturn, one reason that the U.S. is not as competitive in the clean energy market is because of the lack of national mandates for renewable energy production. On the other hand, China’s ambitions in clean energy were clearly indicated in its national renewable energy targets in 2007 (Mid and Long Term Development Plan for Renewable Energy):

1. China “will aim” to have 10% of primary energy consumption by 2010 and 15% of primary energy consumption by 2020 come from renewable energy sources;

2. Non-hydro renewable power generation’s share of total power generation in areas covered by large-scale power grids should reach 1% by 2010 and over 3% by 2020; and

3. Power generators that have privately-owned installed capacity of over 5 GW are required to have 3% of their total privately-owned installed capacity come from renewable energy by 2010 and over 8% by 2020.[2]

A clear policy is not the only advantage that China has. Since 2005, China has been ambitiously expanding its clean energy market. Because of geographic advantage, there are two sources of energy are favored by the Chinese government—solar power and wind energy.

China has abundant solar resources, especially in western China. Two-thirds of China is exposed to over 2,200 hours of sunshine annually, which per unit area is capable of producing over 5000 MJ/M2 of electricity. That amount of electricity from one unit area in one year can support a LED light bulb with equivalent brightness of a 60w light bulb for roughly 230 hours.

The ideal place in China to develop wind energy is at the two major “wind belts” in Northern China and Eastern China. It is estimated that onshore capacity from wind belts when combined with offshore wind capacity is equivalent to about 1,000 GW.

In addition to China’s natural advantages in developing a renewable energy market, China has combined its policy with market incentives such as low-interest loans and subsidized land to stimulate the participation of investors and improve the competiveness of renewable energy.

With China as now the biggest investor of green energy in the world, does that mean the U.S. should be worried about falling behind? Tracey Wolstencroft, the head of Environmental Markets at Goldman Sachs said, “This isn’t just a competition against each other.” She went on to add, “We’re in a global race to solve the problem.”[3] I totally agree with this line of argument. The most important message is that we, as humankind, must keep moving toward a more sustainable lifestyle.