BEIJING - China's
top economic planning body, the National
Development and Reform Commission (NDRC),
announced at the end of June a plan to raise
consumer electricity rates by the equivalent of
2.5 US cents per kilowatt-hour. A tiny fraction of
the additional charge, or 0.1 cent per
kilowatt-hour, will be used to develop renewable
energy, a senior NDRC official said weeks later.
This was unprecedented, the official said.
The money would be used to cover the portion of
the costs of renewable-energy
development that are higher
than the average for conventional energies. The
practice complies with the principle enshrined in
the Renewable Energy Law that the extra costs of
renewable energies should be shared by all end
users of electricity across the country.
On April 20, at the second gathering of
the State Energy Leading Group, the highest
authority in China on energy issues, Premier Wen
Jiabao stressed that renewable energy is
strategically important. He urged all government
departments concerned to take effective measures
to accelerate the development of renewable
energies, so as to "lift the share of quality,
clean energies in the total energy mix".
China's energy industry has made
impressive progress. Statistics show that the
production of primary energy reached 2.06 billion
tons of coal equivalent last year. The figure
marked a climb of 238% over 1978. At the end of
2005, the country's total installed
power-generating capacity exceeded 500 million
kilowatts.
In the past two decades, growth
in production supported a 5.16% average annual
growth in primary energy consumption. However,
gross domestic product (GDP) went up even faster,
at an annual average of 9.6%. The result was a
supply shortage that short-circuited in 2004, when
24 of the 31 provinces suffered power cuts.
Last year's coal output, a record high and
double the 2000 figure, was still not enough to
meet market demand. Meanwhile, China's net imports
of crude-oil products climbed to 143 million tons,
nearly doubling the 76 million tons it imported
five years ago.
Domestic energy resources
are limited. In per capita terms, China is
relatively poor in many energy resources. Its
remaining exploitable reserves of petroleum,
natural gas and coal equal merely 7.7%, 7.1% and
58.6% of the world averages respectively. At the
current speed of extraction, experts say, these
energy resources will last just 15, 30 and 80
years respectively. The corresponding world
averages are 45, 61 and 230 years.
The
situation prompted the country's economic planners
to look for alternative energy sources. Renewable
energies were high on the wish list.
Water
power has a relatively long history in China,
where more than 40,000 small hydropower facilities
aggregate 34 million kilowatts in capacity, the
biggest hydropower park in the world.
Given its grave energy-security concerns,
China is stepping up efforts to develop renewable
energies. According to the Medium- and Long-Term
Program for Renewable Energy Development, prepared
by NDRC, renewable energies are expected to
account for 16% of the country's total energy mix
by 2020. Hydropower capacity will reach 300
million kilowatts, wind power 30 million, biomass
energy 30 million, and solar energy 1.8 million.
The program has been scrutinized by the
State Energy Leading Group and a revised version
will soon be submitted to the State Council,
China's cabinet, for final approval.
China
has three laws pertaining to energy issues: the
Electricity Law, the Energy Conservation Law, and
the Renewable Energy Law. The almost unanimous
endorsement of the Renewable Energy Law by the
National People's Congress (NPC), China's
parliament, in February 2005, ahead of schedule,
caught many people by surprise. The law became
effective on January 1 this year. A dozen or so
implementation measures that accompany the law
were made public about a month later. And measures
for managing a special state fund for renewable
energies and measures for giving renewable energy
projects discount loans and preferential tax
treatment are reportedly being worked out.
Ma Kai, minister in charge of the NDRC,
said in July that on the agenda of government work
for the period 2006-10 is to enact an Energy Law
and revise the Energy Conservation Law.
Relevant government departments vowed to
see through the new legislation within two years.
The Energy Law will deal with basic and strategic
energy development issues in China. It will rely
on economic leverage to regulate the energy
sector, making sure that extravagant users of
energy pay a higher price, and encourage the
prospecting and extraction of energy reserves and
the development of renewable and new energies,
said sources who were closely involved in the
drafting work.
Officials in local
governments are enthusiastic about promoting
renewable-energy projects. Their motives vary,
though, from securing a lucrative source of
government tax revenues to building up a "green
government" image and gaining plaudits for their
personal work performance records. The so-called
"green GDP" factors now have a considerable
bearing on the government's assessment of an
official's performance.
Companies,
state-owned or private, domestic or foreign, are
also eager to embrace renewable energy projects,
for reasons similar to those mentioned above, or
out of a belief that the energy sector is a gold
mine - or will be in the future. And for some
companies, state-owned enterprises in particular,
government pressure is also playing a role. On a
number of occasions this year, NDRC Deputy
Minister Zhang Guobao has said a certain
proportion of the products produced by big energy
developers would have to come from renewable
sources.
A major barrier that has
prevented renewable energies from being developed
faster is the weakness China has shown in
independent technology development. To date, most
renewable-energy equipment or components used in
China for wind power, biomass or solar energy have
been imported, resulting in high costs.
However, the problem has been
acknowledged. The National Medium- and Long-Term
Outlines for Scientific and Technological
Development (2006-20), released by the government
in February, designated "energy" as the chief area
that "needs urgent support from science and
technology". The document mapped out a host of
government-supported plans covering key fields of
study, cutting-edge technologies, big special
programs, as well as basic research.
The
push for renewable energies is not entirely driven
by energy concerns. Environmental factors are also
critical. China ratified the Kyoto Protocol in May
1998. Although it was not obliged by the pact to
meet a specific emission-reduction quota, China is
making efforts to show that it is a responsible
member of the global family. International
cooperation is necessary in addressing problems
such as duststorms because, more often than not,
the dust that sweeps through Beijing a dozen times
each year comes from abroad, said an official with
the Beijing Meteorological Bureau.
And
China has a promise to keep with the upcoming
Summer Olympic Games in Beijing. In its bid to
host the event years ago, Beijing pledged to stage
a Green Olympics, which would be more
environmentally friendly than any previous Games.
The 2008 Beijing Olympic Games are expected to
recruit a diverse selection of renewable-energy
technologies. Its main venue, the Olympic Green,
is to have 20% of its power supplied by
wind-generated electricity.
According to
statistics, US$38 billion was invested in
renewable-energy development worldwide in 2005.
China topped the list with a commitment of $6
billion, which did not include its spending on
large hydro projects.
