Worldwatch Institute

Powering China’s Development: The Role of Renewable Energy



China’s need for secure, affordable, and environmentally sustainable energy for its 1.3 billion people is palpable. In 2006, China’s energy use was already the second highest in the world, having nearly doubled in the last decade, and its electricity use is growing even faster, having doubled since 2000. With both energy-intensive industry and high-tech manufacturing, China now serves as factory to the world. Rising living standards also mean more domestic consumption, including high-energy-use items like air conditioners and cars. By 2020, annual vehicle sales in China are expected to exceed those in the United States.

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Nov. 2007

While most of China’s electricity comes from coal and hydropower, the growing use of oil for China’s burgeoning vehicle fleet is adding greatly to concerns about energy security. Already, China must import nearly half of its oil. Concerns about energy security, power capacity shortages, and air pollution are all adding urgency and pressure to switch to alternative technologies and fuels, including greater energy efficiency, “clean coal” technologies, nuclear power, and renewable energy. Climate change also adds pressure—China will soon pass the United States as the largest emitter of carbon dioxide from fossil fuels.

China has become a global leader in renewable energy. It is expected to invest more than $10 billion in new renewable energy capacity in 2007, second only to Germany. Most of this is for small hydropower, solar hot water, and wind power. Meanwhile, investment in large hydropower continues at $6–10 billion annually. A landmark renewable energy law, enacted in 2005, supports continued expansion of renewables as a national priority. China currently obtains 8 percent of its energy and 17 percent of its electricity from renewables—shares that are projected to increase to 15 percent and 21 percent by 2020.

Among renewable energy sources:

  • Wind power is the fastest-growing power generation technology in China, having doubled in capacity during 2006 alone.While wind is still slightly more expensive than coal power, policies encourage competitive pressure on costs, and new mandates require power companies to obtain a minimum share of their power from wind and other renewables. China is home to more than 50 aspiring domestic manufacturers of wind turbines and a number of foreign producers.
  • Solar power is still in its infancy in China, although a growing amount is used in rural areas and other off-grid applications. A large market for grid-tied solar photovoltaic (PV) is still several years away, once costs decline further. Already, China is a global manufacturing powerhouse for solar PV, third only to Japan and Germany, with huge investments in recent years and much more expected.
  • China is the world’s largest market for solar hot water, with nearly two-thirds of global capacity. The country’s 40 million solar hot water systems mean that more than 10 percent of Chinese households rely on the sun to heat their water. When Chinese firms eventually turn to exporting, the lower costs of their units—seven times less than in Europe—could affect markets globally.
  • Biomass power in China comes mostly from sugarcane wastes and rice husks, and has not grown in recent years. New policies will likely mean more biomass power from other sources, such as agricultural and forestry wastes. In addition, industrial-scale biogas, such as from animal wastes, is starting to make a contribution to power generation.
  • Biofuels for transportation have received widespread attention in China. Ethanol is produced in modest amounts from corn, and biodiesel is produced in small amounts from waste cooking oil. The government plans to expand biofuels production from cassava, sweet sorghum, and oilseed crops, although the large-scale potential is limited. The greatest promise lies with cellulosic ethanol, which many expect to become commercially viable within 7–10 years. If China could use its vast cellulosic resource of agricultural and forestry wastes—up to half a billion tons per year—it might become a major ethanol producer after 2020.

It is likely that China will meet and even exceed its renewable energy development targets for 2020. Total power capacity from renewables could reach 400 gigawatts by 2020, nearly triple the 135 gigawatts existing in 2006, with hydro, wind, biomass, and solar PV power making the greatest contributions.More than one-third of China’s households could be using solar hot water by 2020 if current targets and policies are continued. Use of other renewables, including biogas and perhaps solar thermal power, will increase as well.

Achieving these outcomes will depend on domestic industry development, the availability of skilled personnel, technology cost reductions, continued aggressive government policy, appropriate pricing levels, and allowance for distributed power generation by electric utilities. Given China’s strong commitment to becoming a world leader in renewables manufacturing, as well as concerns about energy security, power shortages, air pollution, and climate change, the future of renewable energy in China appears bright.

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