China clean energy business

The State Council announced that China is going to reduce the intensity of carbon dioxide emissions per unit of GDP in 2020 by 40 to 45 percent compared with the level of 2005.

This is a "voluntary action" taken by the Chinese government "based on our own national conditions" and "is a major contribution to the global effort in tackling climate change," the State Council said.

In a meeting presided over by Premier Wen Jiabao, the State Council reviewed a national task plan addressing climate change.

A press statement said the index of carbon dioxide emissions cuts, announced for the first time by China, would be "a binding goal" to be incorporated into China’s medium and long-term national social and economic development plans.

New measures would be formulated to audit, monitor and assess its implementation, said the statement.

Wu Changhua, the Greater China director of the Britain-headquartered non-governmental organization Climate Group, deemed it as "a significant and meaningful step" and a quick answer to President Hu Jintao’s promise at the September UN climate summit in New York that China would cut emission intensity by "a notable margin" by 2020 from the 2005 level.

However, Qi Jianguo, an economic and environmental policy researcher at the Chinese Academy of Social Sciences, told Xinhua that the targets would put "great pressure" on China’s development.

"In 2020, the country’s GDP will at least double that of now, so will the emissions of greenhouse gases (GHG). But the required reduction of emissions intensity by 40 to 45 percent in 2020 compared with the level of 2005 means the emissions of GHG in 2020has to be roughly the same as emissions now," he said.

Qi, who studies links between the economy and climate change, said as the world’s largest developing country China would face a great challenge.

In order to achieve the target, more efforts must be made besides strictly abiding by the principle of "energy-saving and emissions reductions," he said.

The government would devote major efforts to developing renewable and nuclear energies to ensure the consumption of non-fossil-fuel power accounted for 15 percent of the country’s total primary energy consumption by 2020, said the State Council statement.

More trees would be planted and the country’s forest area would increase by 40 million hectares and forest volume by 1.3 billion cubic meters from the levels of 2005.

The State Council said that as a responsible developing nation, China advocated global concerted efforts in addressing climate change "through pragmatic and effective international cooperation."

The Chinese cabinet reiterated the principled stand for implementation of the United Nations Framework Convention on Climate Change (UNFCCC) and the Kyoto Protocol.

Both the UNFCCC principle of "common but differentiated responsibilities" and the Bali Roadmap should be observed, the State Council said.

The UNFCCC and the Kyoto Protocol should be carried out in a comprehensive, effective and lasting way, and emissions alleviation, adaptation, technological transfer and financial support should be coordinated in a comprehensive way to help bring about positive results for the upcoming UN Climate Change Conference in December in Copenhagen, the State Council said.

"Appropriate handling of the climate change issue is of vital interest to China’s social and economic development and people’s fundamental interests, as well as the welfare of all the people in the world and the world’s long-term development," the State Council said in the statement.

China faced mounting pressure and difficulties in developing its national economy and improving people’s living standards as the country’s industrialization and urbanization accelerated, said the statement.

Given the country’s huge population, prominent economic structural problems, coal-dominated energy consumption structure, and increasing demand for energy, the government needed to make strenuous efforts to realize those targets, said the statement.

The government was required to take into account both immediate and long-term interests while achieving coordinated development of its economy and the cause of environmental protection, said the statement.

Coping with climate change should be a major strategy for the national economic and social development, said the statement.

More funding would be invested into the research, development and industrialization of technologies for energy saving, and into energy efficiency, clean coal development, renewable energies, advanced nuclear energies, and carbon capture and storage.

Laws, regulations and standards would be formulated and fiscal, taxation, pricing and financial measures would be introduced to manage and monitor the implementation of those laws and regulations, said the statement.

The State Council also said China would expand cooperation with foreign countries in raising its capacity to cope with climate change and import low-carbon and environment-friendly technologies.

The State Council also advocated greater public awareness in addressing global climate change and encouraged low-carbon lifestyles and consumption.

The Kyoto Protocol, which aimed to pool world efforts to combat global warming, has been ratified by 184 parties to the UNFCCC since 1997, but it has not been ratified by the United States.

Under the Protocol, developed countries are required to set clear targets for emissions reductions The European Union, Canada, Japan and Australia, among other developed members, all set respective targets.

Developing countries such as China and India do not need to present any emissions targets.

The Chinese Foreign Ministry has announced that Premier Wen Jiabao would attend the Copenhagen climate summit next month.

This certainly lends some confidence to China’s representatives at the ongoing Copenhagen climate summit, though their country is one of the world’s largest emitters of carbon dioxide.

— Within the last six years, China jumped to become the world’s largest producer of solar energy panels, or solar photovoltaic (PV). Last year, China manufactured over 2,000 megawatts of solar PVs, accounting for more than 30 percent of global production. But in 2003, China’s share was merely one percent.

— At the end of last year, China also had more than 130 million square meters of solar water heaters, accounting for 76 percent of the world’s total.

— Within the last six years, China’s installed wind power capacity jumped to 12,170 MW at the end of 2008, from 470 MWs at the end of 2002. Its annual wind turbine manufacturing capacity soared to 10,000 MW from less than 100 MWs in 2003.

— Within the last six years, China’s once-unknown automaker BYD emerged from global electric car map. It is the world’s second-biggest producer of rechargeable lithium-ion batteries, backed by U.S. billionaire investor Warren Buffett.

These figures look pretty nice. No wonder the FT reported on Nov. 3 that China "has played climate cards beautifully," which was written by its Beijing chief correspondent Geoff Dyer.

On the same day, Dyer’s colleague and FT’s environment reporter in Beijing Fiona Harvey, while chairing a panel discussion of solar power, asked panelists: China took the lead in the solar power industry within just five or six years, why?

Gao Jifan, Chairman and CEO of the Nasdaq-listed Trina Solar, one of China’s largest solar module manufacturers, gave her his answer — survival pressure.

Gao said China had to import the essential raw material polysilicon at high prices for solar PV manufacturing, which forced Chinese companies like Trina Solar to quickly improve technological skills to lower cost.

By now, manufacturing skills among Chinese companies were as good as those western counterparts, if not better, Gao told the panel.

Huang Min, president of Himin Solar Energy, the world’s largest maker of solar water heaters, said it was the strong desire to develop and business sensitivity that had been driving Chinese to quickly seize low-carbon business opportunities since they had been poor for decades before reform and opening-up in 1978.

"Certainly I have the desire, and I want to develop (and get rich). I don’t think we are inferior to foreigners," he told Xinhua.

Last year, his company sold 3 million square meters of solar panels, more than double of the U.S., according to Himin Solar Energy. "Should the Americans be able to sell so many heaters each year, President Barack Obama would be extraordinarily happy."

Huang insisted his success didn’t have much to do with Chinese policies since the government offered no preferential measures for the sales of solar water heaters.

The 51-year-old energetic businessman, however, said the reform and opening-up has indeed created good atmosphere and play field for entrepreneurs.

In the wind energy sector, things seem to be different. Both secretary general of the Global Wind Energy Council Steve Sawyer and vice-president of the China Wind Energy Association Shi Pengfei saw government’s encouragement as the main driver behind the expansion of wind energy.

"Certainly the main driver has been government policy and clearsignals it has sent to the market, and I’m sure the spirit of Chinese entrepreneurs has also contributed to the rate of growth,"Sawyer told Xinhua via email.

Sawyer said the expansion partly resulted from "the close alignment between (wind power) industry and government".

"I think it goes deeper than that and is an artifact of the culture which contributes to the rapid execution of agreed policy in a way which I don’t see in any of our other main markets," he said.

Shi said while government’s policies had been the main driver for wind energy expansion, the market also played a major role in helping foster a strong manufacturing industry of wind turbines.

China’s push for more wind power has helped create huge market demand for wind turbines. As a result, manufacturers propped up and investment flocked into the sector.

According to Shi, China boasts more than 80 wind turbine manufacturers currently, with a combined production capacity of more than 10,000 MW. In 2004, China had only six manufacturers.

"In the last few years, the wind energy sector has never been short of money. As long as you have technologies or projects, investment will come to you very quickly," he told Xinhua.

U.S. Energy Secretary Steven Chu has his own assessment on expansion of China’s clean energy. He said on Nov. 30 in South Carolina that China was spending 9 billion U.S. dollars a month onclean energy and it had passed the United States and Europe in high-tech manufacturing.

But many would say Chu’s assessment sounded too rosy, at least on advanced clean energy technologies.

The UK think-tank Chatham House, in a report released this September, suggested that China lagged far behind developed countries regarding energy innovations and advanced technologies. The report, involving nine months of research across the technologies and over 30 sub-sectors, made analysis of 57,000 patents and the market adoption rates of energy technologies.

Emerging economies such as Brazil, China and India had no companies or organizations in the top 10 positions in any of the sectors and sub-sectors analyzed, it said.

It served to explain why China has repeatedly asked industrialized countries to transfer their clean-energy technologies.

Shi Pengfei said many Chinese wind turbine producers, which hadnever designed and produced a complete wind turbine, bought production licenses from overseas firms and jumped straight to making turbines.

Without the process on basic research and technological accumulation, Chinese manufacturers had been criticized for producing low-quality wind turbines, he said.

In addition, there was also increasing concern of over-capacityin the manufacturing sectors of both wind and solar power, which had recently even caused a dispute between central governmental departments.

Shi believed that overcapacity could probably be a reality in the wind energy sector since China was expected to install 7,000 MWs of wind turbines annually on average in the next 10 years, at least 3,000 MWs less than China’s current manufacturing capacity.

Shi, however, said overcapacity, to some extent, could be a good thing because it would trigger fiercer competition among manufacturers. In the end, only those making good-quality turbinesat lower prices would survive, he added.

BYD Co Ltd, which is China’s largest rechargeable battery maker as well as an electric vehicles marker, is considering entering the U.S. electric car market in Los Angeles.

BYD may set up a base on the West Coast, said Henry Li, a senior director in charge of the company’s auto business outside China. He added that although the company has not yet decided on a location for its U.S. headquarters, Los Angeles remains the leading candidate because it is one of the biggest auto markets in the U.S. and is famous for its acceptance of new technology.

Li said the company will sell its new electric car, the e6, at the price of about US$40,000. After debuting in Los Angeles, the company plans to begin selling in San Francisco, Seattle, Chicago, New York and Boston.

Wang Chuanfu, chairman of BYD, said the company intends to enter the North American market with its advanced model e6.