Where is China’s clean technology agenda heading?

With certain economists predicting that 90pc of the world’s feasible coal supply will run out by 2070, how is China reacting to the clean-tech revolution that’s already gripping Europe and the US, especially as the Asian country remains the world’s largest emitter of greenhouse gases.

In Durban this week, China and the US remain entangled in the ongoing debacle on whether the two nations can reach agreements on legally binding limits on greenhouse gas emissions.
 
A Reuters article post on Sunday pointed to China’s assertion in Durban last Friday that it may well sign up to a legally binding deal to cut emissions, which could take the future of the Kyoto protocol out of the doldrums.

However, as posted on Reuters, the US remains skeptical about China’s greenhouse gas claims.
 
“I don’t think China is looking to sign up for legal obligations,” an Obama administration official, who did not want to be named, told reporters in Durban on Sunday.

Electricity outlook in China

To coincide with the UN Durban talks, Zpryme Smart Grid Insights has released a new report on China’s electricity outlook.
 
Termed China Electricity Profile, the report evaluates how the shift in China’s electricity mix will impact the US and the rest of the globe, especially as China appears to be now adding renewables at a fast pace to it energy mix, in its efforts to become an economic superpower.
 
With the International Energy Agency’s (IEA) World Energy Outlook 2011 having recently predicted that by 2015 China will overtake the US to take the lead for total electricity generation capacity, it is causing clean-tech companies, espeiclly in the EU and the US, to sit up and take notice, as well as venture capitalists with an eye on green tech.
 
Not only that but the IEA is also anticipating that by 2035 China will consume nearly 70pc more energy than the US.

Clean-tech investments

China, which has been known for its high dependence on coal, appears to be starting to seriously vamp up its renewables portfolio. But what will this mean for Europe and the US, where the clean-tech movement has been a rising star in recent years and one where investors are taking notice?
 
According to the Zpryme report, China is adapting swiftly to renewables such as solar, wind, hydro, and related renewable technology to surpass the US and the rest of the world.
 
The report also points to how China has apparently become the new world leader in wind power, having overtaken the US, with 40.2GW installed.
 
Zpryme points out that, just three years ago, China’s 2020 wind deployment goal was set at 30GW.
 
And what is it now? An enormous 200GW, which Zpryme says is attracting the highest new financial investments for two years in a row with US$49bn in renewables. This translates into about a third of total global investments. But, this does not represent wind installed per capita, however.

Since August 2010 China continues to be the most attractive country for renewable investment, followed by the US, Germany, India and Italy.

_{Figure 1, Credit: Zpryme Smart Grid Insights}
 
The smart grid is also a huge focal point for the Chinese Government.
 
Zpryme is predicting that China’s smart grid market will rise from US$22.3bn in 2011 to US$61.4bn in 2015, which would represent an annual growth rate of 29.1pc over five years (see figure 1).
 
Yet, Zpryme points to how China is experiencing a solar shock, with losses for China’s largest solar manufacturers, including Suntech Power Holdings Co. and JA Solar Holdings Co, which could continue into 2012.
 
Yet, we can’t ignore that China is still the world’s biggest contributor to greenhouse gases. And in its race to take the global economic lead, is China truly concerned about protecting our planet and minimizing its environmental damage?

China’s coal conundrum

China still has an incredibly high reliance on coal. For instance it consumes 3.5 times as much coal as the US.
 
The Zpryme report points out, however, that demand for coal in China could be “muffled” next year as domestic electricity producers may pay higher rates to import the fuel to develop power and net generous year-over-year returns.
 
“Not helping the economic energy situation, power providers in China are struggling to recoup their costs as governments restrict prices to curb inflation, reducing the incentive to boost electricity generation from thermal coal,” according to the report.
 
The China Coal Transport and Distribution Association recently stated that China may have to slow imports of coal next year after increasing shipments by about 10pc this year.
 
And apparently China is now working to build more cleaner-coal-fired power plants.
 
Key points from the report:

• From 2010 to 2015, world total electricity generation capacity is projected to increase by 284GW, from 4,623GW to 4,907GW, respectively. During this time period, China will account for 63pc (179 GW) of the world’s increase in generation capacity.
• By 2015, China will lead the world in the hydro and other renewable electricity generation, accounting for 21pc (248GW) of world capacity. This figure is projected to reach 24pc (581GW) by 2035.

For more tables on Zyprme’s projections for China’s clean energy portfolio, click here.