TOKYO, June 8 -- China's decision to step up work in renewable energy may help make solar and wind power as cheap as coal as a fuel generating electricity, executives at a conference in Shanghai said today.
Solar projects in China are bringing closer "grid parity" where clean power costs are similar to those for fossil fuels, said Anil Srivastava, executive president for renewable energy at the French power generator Areva SA. Johnny Kwan, a senior vice president at chemical company BASF SE said China is on the way to being "the most successful low-carbon economy."
"The biggest benefit from China is that it will get us closer to the Holy Grail," Srivastava said at the Bloomberg Businessweek Global Green Business Summit in Shanghai. "The larger the developments that happen across the world, the closer we get to grid parity."
China spent $34.6 billion on clean-fuel projects last year, almost double the $18.6 billion invested by the U.S., Bloomberg New Energy Finance estimates. Those figures and the comments from executives signal China is pushing ahead with clean energy technologies even after Premier Wen Jiabao resisted forming a binding agreement on greenhouse gas emissions at climate talks in Copenhagen last year.
"There's a big difference between the politics of Copenhagen and what's happening in China on the ground," said Bruno Berthon, global managing director for sustainability at Accenture Plc.
Shift From Oil
China's shift to clean energy from fossil fuels stems from an over reliance on imported oil and coal, Han Wenke, director general of the Energy Research Institute at China's National development and Reform Commission said today.
Thirst for energy has led China to sign deals with Kazakhstan, Nigeria, Myanmar, Peru, Venezuela, Chad, Iran, Russia and Oman in recent years, while the International Energy Agency projects oil imports will almost quadruple over the 2006 level by 2030 to fuel the country's economic growth.
Environmental damage has also shifted the government's thinking, Han said. Twenty of the world's 30 most air polluted cities are in China, according to the World Bank.
"The environment is a key issue facing our economic development," Han said. "The problem is quite severe."
The government introduced feed-in tariffs for wind power last year. Companies added 14.1 gigawatts of wind capacity in 2009 compared with 14.1 gigawatts a year earlier, according to New Energy Finance.
In solar energy, the government has introduced incentives for power companies to install panels churned out by companies including Yingli Green Energy Holding Co. that typically were exported to countries like Spain and the U.S.
"It's become clear to us that we needed to change," Wan Bentai, chief engineer at China's Ministry of Environmental Protection, said today. "We need to transform our economic growth from a quantitative growth to a qualitative growth."
China is benefitting from government decisiveness in demanding the diversification of energy and reduction of carbon emissions, Areva's Srivastava said. Providing a cheap source of financing, often in the form of soft loans, ensures projects go ahead, he said.
China aims to produce renewable energy equivalent to about 700 million metric tons of coal, or 15 percent of its power, by 2020. The government wants to cut carbon emissions per unit of gross domestic product by as much as 45 percent of 2005 levels by 2020.
Mandate and Targets
"Developments happen in China faster than in any other part of the world -- faster than in any other part of the world,' Srivastava said. "China has mandated a target and is sticking to that. In the U.S. there are all kinds of debates and many states come out with their own renewable policies and most of them fail to implement."
President Barack Obama has been urging Congress to pass legislation for an emissions cap-and-trade program in which companies buy and sell pollution allowances. The plan passed the House last year and stalled in the Senate. Senators John Kerry and Joseph Lieberman released a revamped bill in May aiming to boost domestic energy production while cutting greenhouse gases 17 percent from their 2005 level by 2020.
Still, China still lags behind in many areas in renewable energy, the Energy Research Institute's Han said. China's 70 wind turbine makers "mostly" use licensed international intellectual property for their core technology, he said. It may take "20 to 30 years" for China to catch up with energy technology development in the U.S., he said.
About 25 percent of China's wind plants also aren't connected to the national power grid, according to a New Energy Finance report published in May.
"China is still a developing economy," Zhu Hongren, chief engineer at the Ministry of Industry and Information Technology, said in a speech today. "We're in the stage of fast industrial development. We are trying to alleviate poverty at the same time that we're trying to manage emissions and increase environmental protection."