China’s energy industries have been shifting away from small, inefficient coal-fired power plants toward larger, modern and cleaner units, and, with government support, have been investing in renewable energy sources and industries. The government also is phasing in stringent fuel economy standards to reduce petroleum consumption in transportation.
Through these and other measures, China is working to reduce its economy’s “energy intensity” — the energy consumed per unit of domestic output — by 20 percent between 2005 and the end of 2010. The government also has committed to reducing its carbon intensity — carbon dioxide emissions per unit of the domestic output — by roughly 45 percent from 2005 levels by 2020.
China looks at these goals not only as a challenge but also as an opportunity to build a competitive energy sector for the 21st century, according to Bo Kong, a professor at the School of Advanced International Studies at Johns Hopkins University. The country will not be able to meet its energy demand, which is projected to nearly double by 2030, with clean energy alone, he said. Thus, China is expected to continue to build coal-fired power plants and acquire foreign oil assets.
But China’s leaders believe that, in addition to improving energy security, renewable, nuclear and clean-coal technologies combined with better energy efficiency will help the country improve its natural environment and shift its industries to more value-added exports, Kong said. He and other specialists discussed China’s clean energy issues October 26 at the Center for Strategic and International Studies.
According to a 2009 report from the consulting company McKinsey & Company, China could indeed build a “green economy” and emerge as a global leader in clean energy technologies during the next two decades. In the process, the country could reduce its petroleum imports by up to 40 percent and reduce greenhouse gas emissions by half by 2030, the report says. In 2009, with $34.6 billion spent, China became the leader among major economies in clean energy investment, according to a 2010 study by the Pew Charitable Trust.
Incomplete reforms of energy markets will make China’s achievement of its energy goals more difficult, experts said. A government agency set up to drive these reforms is weak, enforcement of rules lags and powerful oil companies shape energy policies to a large degree, they said.
For China’s trading partners, its green energy push creates both new opportunities and the risk of trade frictions. Chinese companies are among top producers of solar photovoltaic panels and wind turbines. U.S. and European producers of clean energy equipment would like to get a piece of China’s booming clean energy business but say their efforts are often thwarted.
Recently, they complained that overseas producers of wind turbines were excluded from major wind power projects in China and that subsidies provided by the government to Chinese companies put overseas producers at a disadvantage. Chinese officials have rejected the criticism as baseless.
Clean energy subsidies are common across the world, experts say, but market access restrictions are not. Michael Levi of the Council on Foreign Relations said the United States should join forces with the European Union, Brazil, India and other countries affected by the Chinese restrictions to seek free-market access. He said that multilateral pressure has proved more effective in dealing with Beijing than bilateral negotiations. Bilateral efforts should focus on cooperation, Levi said.
Cooperation already is robust, at least in areas where the two countries’ strengths are complementary — areas ranging from wind power to electric vehcicles, according to Julian Wong of the U.S. Energy Department.
A new, joint U.S.-China Clean Energy Research Center promises to bring the cooperation to a higher level, Wong said. At the center, funded in equal parts by the two governments and with facilities in both countries, U.S. and Chinese researchers will work side by side on projects that include building efficiency, clean coal and clean vehicles.