Global Politics

China looks to renewables to soften coal growth

In part three of her series on China's coal habit, The World's Mary Kay Magistad reports on the country's efforts to slowly wean itself off coal with big investments in renewable energy sources like solar and wind.

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(Dezhou, Shandong Province, China) � At first glance, Dezhou seems like many a scruffy third-tier Chinese city� with its mom-and-pop shops, street vendors and motorized trishaw taxis. But look up at the street lights � they're solar-powered. Look on the rooftops � almost every one has a solar water heater.

Dezhou is trying to reinvent itself as a solar city. One trishaw driver says his solar water heater saves him money, and he'd love to get solar electric panels for his house.

�If the price is right, of course I'd use them! A lot of people would,� he says. �It's just hard to find them in the market.�

Despite the fact that Dezhou has more than 100 solar energy-related companies, almost all the solar panels produced here, and throughout China, are exported abroad. The current system of government subsidies is set up to encourage export rather than domestic use � to the point that the US government has filed an unfair trade practices case against China through the World Trade Organization. The Chinese have in turn protested that they're just doing what makes sense at the moment.

�Some people may think you produce solar panels and you sell to other people, and you take advantage,� says Li Zheng, director of Tsinghua University's Clean Energy Research Center in Beijing. �But actually, we don't think so. Because this industry is very energy-intensive, and there are pollutant emissions. So I think other countries are very smart, to use the solar panels for cleaner air there, but let the solar panels be produced here, to pollute our air.�

But what about China reaping the advantage of using a little more clean solar energy itself? Li Zheng says the view among Chinese policy-makers is that the cost of photovoltaic energy is still too expensive compared to other sources of energy available � even after prices have dropped by 70 percent over the past five years. Once international research and development leads to further cost reductions, better methods of storage and of moving solar energy onto the grid, he says, the government will likely do more to encourage the widespread use of solar panels within China.

Meanwhile, other forms of renewable energy are already taking off. More than 30 million Chinese households use rooftop solar water heaters � more than in any other country in the world. And wind energy capacity within China is now 35 times what it was five years ago.

At the same time, China has, in a few short years, become the world's top producer of both wind turbines and solar panels. Dezhou's biggest solar company, Huangming, best known for its solar water heaters but ramping up photovoltaics � sees a bright future for these technologies within China, and around the world.

�We at the company have our goal,� says Chen Quanmin, an energetic young manager at Huangming. �We want to see 25 percent of the world's energy come from renewable sources by 2025, and 90 percent by 2050. �That's what we hope to do, and everyone is working very hard on it.�

That's an ambitious goal � far beyond the Chinese government's own targets, or what's considered realistically possible. But the government is at least moving in that direction. It has set a goal of getting 15 percent of its energy from renewables by 2020 � that's about twice what it gets from renewables now � and at least 30 percent by 2050. Most of that energy will be hydropower from dams, which are plentiful in China and have their own environmental issues. But wind energy is increasing fast � with white turbines spinning against windswept blue skies in open stretches of western China � in places like Inner Mongolia and Xinjiang.

�The electricity produced by our wind farm is delivered to the grid and distributed to households and industrial customers in Xinjiang,� says Lu Feng, manager of the Tianfeng wind energy company in Xinjiang. �It's like any public power plant.�

Wind farms like Tianfeng's benefit both from getting a direct government subsidy, and having a standard national feed-in tariff, that is, a standard amount wind energy companies will be paid for providing energy to the grid. For a time, local grid operators were reluctant to buy and use renewable energy even when it was available, because it was more expensive. And with wind energy capacity rapidly scaling up, about one-third of it wasn't getting onto the grid. So, a year ago, the central government issued a new regulation, requiring grid operators to buy any renewable energy available, or pay a fine of twice the value of that energy.

All this shows what can be done when the political will is there to do it. Solar energy, by comparison, has not yet been given the same kinds of subsidies within China, nor has a standard feed-in tariff been set. It comes back to the concern that solar energy is still too expensive compared to coal. But when you add up all the costs of using coal � to the environment, to human health, and the sheer cost of getting it out of the ground and transporting it � the numbers change.

Cheng Siwei, former vice-chairman of the standing committee of China's legislature, the National People's Congress, has worked with the Chinese Academy of Sciences to research the real cost of energy in China, focusing as an example on the environmental cost of energy use in 2005.

�We found the environmental cost from low energy efficiency, environmental pollution and also the damage of ecological system equaled 13.5% of our GDP,� Cheng told a World Economic Forum gathering in Tianjin this autumn. �And that year, our GDP only increased by 10.4%. That means we leave an environmental debt to our children and grandchildren.�

Cheng had a receptive audience at the World Economic Forum for his call to look past the immediate bottom line cost of energy, And at least a few deals were done on the side� including one between China and Iceland for a geothermal energy project � one of several promising renewable technologies, along with solar thermal, that have barely been tapped in China.

Back in the aspiring solar city of Dezhou, Huangming's corporate headquarters shows off its own vision of a cleaner energy future. There are solar powered hotels, villas and office buildings. The reception center has a huge arc of solar panels overhead, built to impress. And down the road, Huangming's built a brand new 300-unit apartment complex, called Utopia Garden.

A sales rep shows off solar electric panels on the roof, a solar thermal heating system, energy efficient windows and other green features. She says most of the apartments here have already sold, even at about twice the price of other apartments of comparable size in town. But even this utopian complex can't yet generate enough of its own solar electricity to run all the computers, TVs, gadgets and air conditioners of its residents.

And that's China's problem, writ large, as it quickly urbanizes and grows wealthier, says Jonathan Watts, the Beijing-based environmental correspondent for the British newspaper The Guardian, and author of the new book on China's environment, When a Billion Chinese Jump. He says China outspent the US almost two to one on renewable energy last year. And it's also making big investments in nuclear power, cleaner-burning natural gas power plants, and energy efficiency.

�But even with that, they're saying the dependency on coal will probably go down from 70 percent today to 64 or 65 percent by 2015,� Watts says. �So if you carry on at that pace, it's still going to take 30 or 40 years, at the very quickest, to wean yourself off coal.�

Watts says solar energy could yet come from behind, and become an affordable clean energy option for China.

�Many of China's leading scientists say, in the long term, China's energy demands can be best solved by solar,� he says. �China is cursed, in a sense, that it has so many deserts in the north, but when it comes to solar power it could be a blessing. You have these huge areas where you can put solar panels. It can be done. People want it to be done. But they don't want to move too quickly.�

All that said, China is expected to more than double its solar capacity this year. It's one of many signs that China's leaders are serious about at least taking the edge off of China's coal habit.