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Is China’s Energy Transition Dead in the Water?

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China Power

Is China’s Energy Transition Dead in the Water?

Despite some promising developments, Beijing continues to struggle to capitalize on renewables and green tech.

Is China’s Energy Transition Dead in the Water?
Credit: Wikimedia Commons

While sports car manufacturer McLaren has denied rumors that Apple harbors concrete plans to acquire or invest in order to accelerate the Cupertino-based company’s mysterious electric car project, the shift toward developing practical electric cars is clear. And naturally, China is never too far behind.

Le Holdings Co. raised $1.08 billion on September 21 to develop its own “Tesla killer” car, ahead of new rules put forward by the Communist Party of China that aim to increase technology standards, while also reducing the number of manufacturers to ten in order to tackle overcapacity. However, is this a good play by China or is it just another vanity project of the Central Committee to boast Chinese engineering?

To begin with, while the science behind electric cars is sound – their emissions are, on average, 50 percent less than a conventional car’s – the fact that China still generates 69 percent of its electricity from coal offsets the progress being made in consumer carbon footprints. Indeed, as Bloomberg pointed out, “Running on battery power in China was just 15 percent cleaner than a fossil-fuel car last year.” With so much attention given to ensuring the competitiveness of its dirty industries (such as coal or aluminium), it’s no surprise that China’s patchy EV infrastructure has been lagging behind other markets.

However, Beijing is actively working to rectify the situation. China’s Development and Reform Commission (BDRC) plans to establish 435,000 charging spots in support of the estimated 600,000 new EVs that will hit Beijing’s streets by 2020. The government has also provided a number of incentives in the hopes of spurring demand. These range from free license plates (saving drivers 85,000 yuan or $12,800) and free parking places, to subsidies of up to $13,800. This comes on top of a 100 billion yuan ($16 billion) 2014 investment program to radically increase the number of charging facilities for electric vehicles, stimulate demand for clean cars, fight pollution and promote the local EV industry.

At the same time, the government has pledged to spend in excess of $2.5 trillion over the next 15 years on clean energy projects designed to provide a boost to its most capable alternative energy firms. Here as well, Beijing is playing catch-up. 2015 was the first year in which developing economies such as China, India, and Brazil invested a total of $156 billion in renewables, thereby outspending developed countries (which invested $130 billion), according to a UN-sponsored report published by the Frankfurt School of Finance and Management. The report states that a large part of these investments were committed by China, which raised its investment “by 17 percent to $102.9 billion, or 36 percent of the world total.“ These developments indicate that China has recognized that renewables are no longer just a niche product.

While these numbers seem promising, China is still struggling to break away from coal, so much so that it is difficult to ascertain what the country’s real progress is. China’s published statistics are notoriously unreliable, with coal consumption being underreported by at least 14 percent (by some statistics), thereby putting more pressure on Beijing to realize its pledge to reach peak CO2-emissions by 2030. Another serious issue is that of “curtailment,” which means that power grids don’t use renewables even when wind, solar, or hydro plants are readily available. While some technical problems are to blame, the issue of curtailment persists mostly because of overcapacity in the fossil fuel sector, leaving precious little room for other technologies to emerge. Additionally, it is also unclear how the renewable energy integration mandate should be adequately enforced.

In a nutshell, Chinese green energy still has lots of problems such as waste, especially in the wind power sector. Despite boasting a third of global installed wind power capacity, its turbines are generally of lower quality and generate less energy.  But few seem to mind this – after green energy became a political priority for the government, investment has been fast-tracked through policies and regulations designed to encourage energy efficiency and domestic renewable energy deployment. As a consequence, China is rapidly expanding its low-carbon technologies, including nuclear, wind, solar, and hydropower.

At the same time, Beijing is keen to showcase its expertise and open new markets for its products – from cars and turbines to dam-building technology and nuclear power plants. With a flurry of green-themed events over the next 12 months, the Chinese are therefore under pressure to step up to the plate and elbow their way in alongside the most innovative companies in the world. While most of the leading car manufacturers will unveil their latest green cars at the upcoming Paris auto show in October, the Chinese won’t be in attendance – a clear sign of just how much ground Beijing still has to cover despite its best efforts. Similarly, the Chinese are lagging behind in the up-and-coming Formula E Championship dedicated to electric cars, where its Ministry of Sports-financed team is wallowing in the lower part of the rankings.

The 2017 Astana Expo, which will bring together participants and industry leaders from more than a hundred countries under the banner “Future Energy” will be a watershed for Chinese innovation. The three-month long event, to be held between June and September and expected to attract five million visits, is a springboard for green producers to present the latest achievements of non-fossil technology. The success or failure of Chinese producers will ultimately reflect on the government’s polices.

It’s no secret that China will face a rocky road ahead as it tries to relinquish its dependence on coal and accomplish the high-stakes transition to alternative resources. Squeezed from below by demographic pressures to keep employment figures in dirty industries high and criticized from above by the international community for its lackluster progress towards decreasing its total CO2 emissions, Beijing has so far muddled through. But time is running out.

Chris Zhang, originally from China, now works as a New York-based sustainability advisor. He studied international affairs at Fudan University in Shanghai and is a keen observer of political corruption and environmental standards in China.