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China is now the world's largest economy, and one of the leaders in renewable energy investment and development.


The Pace Of Chinese Development

China is now the world’s largest economy, and one of the leaders in renewable energy investment and development.

Part Two: of the Seven Most Attractive Nations For Renewable Investments

Originally published in the ECOreport

(Part 1 is available here.)

There is no modern parallel for the pace of Chinese development. Economically speaking, China was a Third World nation only decades ago – now it has surpassed the US, and enters 2015 as the world’s leading economy. (It will take at least another generation for this to be possible on a per capita level.) China’s development has two faces: black and green. The world’s largest GHG polluter has also built up the planet’s renewable energy  system, which was producing 378 GW by the end of 2013. Wind, water and solar accounted for around 30% of installed capacity, and close to 20% of generated electricity in 2013. (A little more than 10% of China’s power comes from renewable sources.) The shift towards renewables was most clearly seen in new generation, 58% of which was “green.” As of September 2014, the Renewable Energy Country Attractiveness Index (RECAI) selected it as the #1 choice for renewable investors.


Wind Capacity

China has been the world’s leading producer of wind energy since 2012. Though the final figures for last year have not yet been released, Vice President Ma Jinru , of Xinjiang Goldwind Science & Technology Co., recently told Bloomberg  that it added another 20 GW or so of wind capacity in 2014. If that is true, China has about 110 GW capacity, and is well on its way to reach the goal of 200 GW by 2020.


The World’s Largest Hydroelectric Producer

China is easily the world’s largest hydroelectric producer. It had  281.5 GW of capacity by the end of 2013. Though this year’s figures have yet to be released, they will easily exceed the target for 2015. The next goal is 429 GW by 2020.

The Three Gorges Dam (above) has been called a modern equivalent to the Great Wall, in both scale and cost.  Around 1.5 million citizens are believed to have been displaced by the 22,000 MW project, but it also held back a catastrophic flood in  2010.


China’s Solar Miracle

China has led the world in terms of new solar installations for two years. It is expected to reach 33 GW of capacity by the end of 2014. This is not enough to catch up to Germany, which is still leads the world in terms of installed capacity, but the gap is narrowing.

Peter Varadi traces the origins of China’s solar miracle in his book Sun Above the Horizon, Meteoric Rise of the Solar Industry. Though the industry can be traced back to 1988, production did not exceed 10 MW per year until the Suntech Corporation was started fourteen years later. It was the first of eleven “Chinese” companies trading on the US stock market. At the time of Varadi’s writing, 90% of Trina Solar’s shareholders are Americans. Other recognized names like Yingli, Jinka and Canadian Solar have smaller proportions.

The deluge of inexpensive Chinese solar modules burst upon the world market in 2011. According to an unnamed government energy official cited in Young China’s Business Blog,  Chinese solar panel makers were able to do this because of a 0.9 yuan per kilowatt-hour “subsidy” they receive from the government. Both the EU and America have responded with protectionist measures.

Can China Play By The Rules?

This is not the only sector in which the world’s new #1 economy has been having dispute. China has been accused of dumping, unfair government subsidies, and theft of intellectual property. Some ask, “Can China play by the rules?”

It has been more than a decade since Chinese periodicals like The People’s Daily heralded their acceptance into the World Trade Organization as a  “historic moment in China’s reform and opening-up and the process of modernization.”

Trade was one of the many issues President Obama raised during his visit to China last  November. He told the APEC CEO Summit

I did emphasize the need for a level playing field, so foreign companies can compete fairly, including against Chinese state-owned enterprises.  I stressed the importance of protecting intellectual property as well as trade secrets, especially against cyber-threats.  And we welcome continued progress towards a market-driven exchange rate.

In their joint press release, Chinese President Xi Jinping responded,Citi

China is ready to work with the United States to make efforts in a number of priority areas and putting into effect such principles as non-confrontation, non-conflict, mutual respect, and win-win cooperation.  And with unwavering spirit and unremitting efforts, we will promote new progress in building a new type model of major-country relations between the two countries so as to bring greater benefits to our two peoples and two countries.

Screenshot 2015-01-04 11.41.01

China Will Curtail Emissions

One of the first fruits of that meeting was the announcement of  China will curtail emissions after 2030. It has also committed to derive 20% of its energy from non fossil fuels. This was a historic announcement because the Chinese have not previously made commitments and they are demonstrating a new willingness to co-operate.

The announcement also aligns with their current plans for development. China’s five year plan calls for 15% of its energy to come from non-fossil fuels by 2020. Coal usage is expected is drop to 60%, from 70% currently, by that time.

If China and the US both fulfill their commitments, it will be a major blow to the fossil fuel sector. Citigroup estimates that over the next fifteen years, the oil industry will lose $1.3 trillion is revenues and coal $1.6 trillion. Such losses raise the question of whether technologies meant to clean the industry up – such as carbon capture, dry fracking etc – are financially viable. (In keeping with President Obama’s “All of the Above” strategy, the US has set aside $8 billion to explore avenues for an environmentally friendly fossil fuel sector.)

China’s Green Transportation Sector

A recent study from A T Kearney suggests that China will have difficulty fulfilling its ambition to have 5 million EVs by 2020. The key problems appear to be the price and limited range. Close to 60%  of consumers polled said they wanted a range of at least 250 kilometres. (Thus it is not surprising to learn Chinese residents have filed 4,000 Tesla reservations!)

China’s Green Transportation sector also boasts more than 30 high speed rail routes. The  1,400 mile route from from Beijing to Guangzhou has been open since 2012. A new route, covering the 1,100 miles from from Shanghai to Guangzhou in 7 hours, opened in December

Screenshot 2015-01-03 13.47.18

Foreign Investments

China was the second largest recipient of foreign direct investments in 2013, receiving a total of $117.6 billion. The most prominent sources:

  • $102.5 billion – Asian countries, Hong Kong, Thailand and Singapore
  • $7.2 billion – the EU
  • $3.4 billion  – US

China’s FDI stock (including figures from Hong Kong) was $1,444 billion

China’s outgoing FDI was $107.84 billion. The largest single transaction was in Canada, where China National Offshore Oil Corporation acquired the Nexen Group for $14.8 billion. This is slightly more than the $14 billion (70% of which came from private companies) that China invested the US. The amount of capital sunk into Europe shrank to less than $6 billion, while ventures in Latin America, Oceania, Africa and Asia grew

Renewable Investments

China invests more money into the renewable sector than any other nation. This started in 2012, with $57.9 billion and was followed by another $52.4 billion in 2013.

Since last September, China has been acknowledged as #1 in the RECAI index.

Images Above, in descending Order

  • Photo Credit: Tangshanpeng Wind Farm by Land Rover Our Planetvia via Flickr (CC BY-SA 2.0 license)
  • Photo Credit: Yangtze & Three Gorges by Michael Gwyther-Jones via Flikr (CC BY-SA 2.0 license)
  • Photo Credit: Neighbourhood Solar panel in Shanghai by Photo by Seungho L, Creative Sustainability via Flickr (CC BY-SA 2.0 license)
  • Photo Credit: Beijing smog as seen from the China World Hotel, March 2003, during the SARS outbreak by Kevin Dooley via Flikr (CC BY-SA 2.0 license)
  • Photo Credit: XI Jinping, the President of the People’s Republic of China, during a meeting with LI Yong, the Director General of the United Nations Industrial Development Organization (UNIDO), in Beijing, 10 November 2013. Photo Courtesy Xinhua/Li Xueren, UNIDO via Flickr (CC BY-SA 2.0 license)
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