By Ding Heng
China is undeniably a global leader in green power, and there are signs that it is shoring up this position.
A recent report released by Global Energy Monitor, a San Francisco-based NGO, says China is on course to reach its 2030 targets on wind and solar power five years ahead of time. As of this year’s first quarter, China’s utility-scale solar capacity had reached a level that was more than the combined capacity of the rest of the world. China’s wind capacity has surpassed 310 gigawatts, roughly equivalent to the next top seven countries combined. Earlier this year, the International Energy Agency (IEA) projected that China would contribute nearly 55% of the worldwide increase in renewable power capacity in 2023 and 2024.
China’s leading position didn’t come by chance. Rather, it has been incubated by more than a decade of consistent yet flexible policies.
In terms of policy direction, China has been taking climate change seriously, and there is increasingly real commitment to green transition. China’s 12th Five-Year-Plan (2011-2015) dedicates a whole chapter to climate change. Regarding the non-fossil fuel’s percentage in energy consumption, the 13th Five-Year-Plan sets a target of over 15% by 2020, and the 14th Five-Year-Plan has a goal of 20% by 2025. At an operational level, China has been quick to adjust many specific policies in order to prevent them from straying from national goals.
2005 is arguably a milestone year in China’s renewables development. It is in that year that China passed its Renewable Energy Law, providing a legal basis that placed the green energy sector on an equal ground with other energy sources. In the realm of wind power, China entirely depended on imported wind turbines before 2005. In that year, the central government issued a notice requiring wind farms to purchase at least 70% of their equipment from domestic suppliers. That requirement, which lasted five years, helped attract investment in Chinese wind turbine manufacturing facilities. Today, seven of the world’s top ten wind turbine manufacturers are Chinese companies. Of course, no one would disagree that protecting and promoting domestic industries in the early development stages is a universally justifiable industrial practice.
China’s policy support to renewables has taken place in the form of financial incentives. China overtook the U.S. as the greatest clean energy investor in 2009. In that year, China began to implement a feed-in tariff in the wind power sector, providing producers with an above-market price and long-term contracts that helped finance their investments. In solar power, data from the IEA shows that China has invested over $50 billion in new solar panel manufacturing capacity since 2011, ten times the amount invested in Europe over the same period. It’s interesting to note that Europe was once the world’s biggest solar power manufacturer, producing 30% of all solar panels in 2007. Today, China’s global share in every stage of the solar power supply chain is above 80%.
Another form of China’s policy support is regulations that push regional governments and power generators to meet specific renewables targets. For instance, major power generators – mostly state-owned enterprises – have been required to reach a minimum 9% of power generation from renewables by 2020. In China’s political system, provincial governments tend to mobilize a lot of supporting resources to achieve a regional target that is in line with a national goal set by the central government. They usually hope to outperform others, and no one wants to lag behind. This element of competition is probably why, for instance, all provincial regions except one met their non-hydro renewables electricity utilization targets in 2021, with one province exceeding its goal by 4.4 percentage points.
There is no doubt that the stability in China’s policy support has boosted entrepreneurship and innovation in green energy. The logic here is simple: no business is willing to invest in research and development if there are huge uncertainties in government policies. After all, R&D investment has nothing to do with making quick money.
In one case, silicon solar cells’ conversion efficiency, which refers to their ability to convert solar power into electric energy, is a key indicator of performance in solar technology. Last year, a Chinese firm achieved a new world efficiency record at 26.81%, breaking a 2017 record set by a Japanese company. Most commercial solar panels have an efficiency of 15% to 20%. By comparison, those made in China have an average efficiency of 23.1%, according to data compiled by China’s industry associations.
When a new technology means higher energy conversion efficiency, innovation will certainly play a significant role in bringing down the cost of renewables investments. In turn, declining cost means that the green energy sector can be to a larger extent left to market forces. This is why China abolished subsidies for most new wind and solar projects starting in 2021.
Meanwhile, China’s policy consistency naturally paves the way for creative policymaking. A typical example is a solar energy-based poverty alleviation program that the government implemented from 2015 to 2020. The program has seen solar panels installed in tens of thousands of poverty-stricken villages. Apart from supplying power locally, the program made money for villagers by selling the surplus electricity to the national grid. For places with limited economic resources, the program became a viable option. Official figures show that when the program was fully completed in 2020, it was able to generate annual revenue of nearly $2.5 billion. A total of 41.5 million households have benefited from the program.
China’s development in green power has been a story as fascinating as the country’s broader economic rise over the past few decades. The U.S. and the European Union might be hesitant to admit it, but their current practices in bolstering green investment are in many ways learning from China’s industrial policies. That being said, their efforts to play catch-ups in this regard will likely be an uphill battle. Many of the secrets that have made things happen in China – long-term planning, sustainable policy support, a highly collaborative relationship between central and regional governments – are relatively harder to find in American and European politics.
[The author is a host with CGTN Radio. The opinions expressed in the article are the author’s own. Contact the author: [email protected]]
