News Article | May 17, 2017
Over the past decade, China has been greening its electric power system faster than any other industrial power. But China is also continuing to pump out more greenhouse gases than any other other country. Is its green transformation happening fast enough? Hao Tan and John A. Mathews dig deep into the 2016 data and present an awesome picture of the stunningly large Chinese electric power sector. We have been tracking China’s green shift across the power sector now for several years.1 The 2016 data are now in, released by the China Electricity Council and the National Energy Administration.2 The new data reveal a strong continuation of China’s green shift within the power sector as greening trends at the margin exceed blackening trends. In other words, even as China’s 7 percent annual growth and its growing coal consumption continues to drive the output of the world’s leading producer of greenhouse gases, China’s domestic dependence of power generation on fossil fuels, with their threat of pollution and energy insecurity, is diminishing. The headline results are that in the year 2016, China’s total electric power capacity increased to just over 1.6 trillion watts (1.65 TW), with water, wind and solar sources accounting for 34% — up from 32.5% in 2015. There is a consistent trend here that goes back for more than a decade. Since 2007, China’s dependence on WWS sources has risen from 16% to 25% in 2016 in terms of electric generation, and from 20% to 34% in terms of electric power generating capacity It is difficult to overstate the significance of these trends. They mean that in the largest electric power system in the world, in the country that currently has the highest carbon emissions, there is under way a significant green shift that is comparable to the best in the world. Of particular significance is the fact that this process it is driving down costs of green energy — for China and the world — and becoming the planet’s dominant business for production and export of green technology and green products. Examining the power generation sector, as in previous years we wish to focus on the leading edge (changes in terms of capacity added, electricity generated and investment) as distinct from the system as a whole. In capacity addition and electricity generation, the year 2016 saw it greening faster than it is continuing its black trajectory. The investment in clean energy, however, fell from its level in 2015, due to reasons we will discuss below. In 2016, additional capacity amounted to 125 GW (more than two billion-watt power stations added each week). Of this, thermal sources (mainly coal-burning) added 53 billion watts (53 GW) while WWS renewables sources added 64 GW, well in excess of thermal sources. Of the new capacity added in 2016, WWS sources accounted for 52%, and thermal sources for just 43%. The rest is the addition in nuclear power generation capacity (5%). So while China is still adding a billion-watt power station burning coal each week, it is adding wind turbines and solar farms at an even greater rate. In terms of electricity actually generated, in 2016 China generated 5,990 TWh of electricity (around 6000 TWh or 6 trillion kWh), 5% up on 2015, which is lower than the economic growth in the year (6.7%). In fact, the growth of electric generation has been lower than economic growth in the country since 2014, revealing a new trend that China may start to delink its electricity consumption from economic development. The delinking is partly a result of a change of the economic structure towards an economy more based on service and high-value manufacturing activities, and partly due to growing energy efficiency. Total electricity generated from WWS sources amounted to 1488 TWh (around 1.5 trillion kWh), up 11.4% on the total for 2015. To give a sense of the vast scale of China’s renewables generation, this sum of 1488 TWh is comparable to the total electricity generated by Germany, France and the UK combined.3 Looking at the margin, i.e. at the additional electricity generated in 2016, there was more additional electricity generated from WWS sources (152 TWh) compared with that in 2015, than from thermal sources (102 TWh). China invested US$ 132 billion (885 billion yuan) in new power supply systems in the year 2016, with power generating facilities accounting for US$51 billion (343 billion yuan) and investment in the grid for US$81 billion (543 billion yuan). Within the category of power generating facilities, thermal sources accounted for US$18 billion (RMB 117 billion yuan) of new investment, with hydropower and wind power accounting for US$22 billion (61 billion yuan) and US$13 billion (90 billion yuan) respectively, plus US$7.6 billion (51 billion yuan) of investment in nuclear power. Even without accounting for investment in solar power, the data for which are currently not available, the investment in power generation facilities based on renewable sources (water and wind) far exceeded that on thermal power generation facilities (151 billion yuan vs 117 billion yuan). The bottom line: we see that once again, in 2016 the increases in capacity, in electricity generated and in investment all showed green sources outranking black, thermal sources at the margin – where the electric power system is changing. g. Even as China continues to expand its consumption of energy based on black thermal sources (although in a diminishing rate), its green consumption is growing even more rapidly. But the great question remains: is the greening proceeding fast enough? China’s black electrical system remains a potent source of carbon emissions even as it greens at the margin. And the immediate pollution costs continue to mount. Our analysis aims to elucidate the rate and direction of China’s greening – but it cannot undo the damage already inflicted and the further damage that is likely to ensue as thermal power continues to be generated. Although China is greening its power system at a rate that is unprecedented for industrial countries, it could doubtless further accelerate the process with more concentrated policy and market guidance. As before, we check the data on power generation showing results for 2016 as published by China Electricity Council. The data revealing trends in electric generating capacity, in actual electric energy generated and in investment, are summarized in Table 1. First, in terms of electric power generating capacity, we note that China’s is now by far the largest electric generation system on the planet. It had grown to a capacity of 1.5 trillion watts in 2015 – as compared to 1.17 trillion watts in the US in the same year, and lower levels for EU countries and Japan. The total capacity in 2016 reached 1.6 trillion watts, with year on year growth of 8% — meaning that currently China’s capacity additions still outpace the country’s overall economic growth rate. However, much of the additional capacity is owing to the completion of previously initiated projects in the pipeline. As the investment data indicate, the capacity addition is likely to moderate in the next years, partly due to the change in the Chinese economic structure towards less energy-intensive, more value added economic activities, and also the effect of improvements in energy efficiency. It is China’s overall rate of renewable energy-based electricity generating capacity additions that is so striking. In Figure 1 we show that China increased its generating capacity from water, wind and sun from 20% in 2007 to 35.5% in 2016 – or a 14.5% increase in a decade. The chart shows very clearly the direction in which China’s power generation system is headed. The individual items for water, wind and sun capacity additions in 2016 (and over the decade to 2016) also need to be noted. The addition of 17 GW of wind power capacity was large, as is the cumulative total of 150 GW – although not as large as capacity additions in 2015 (about 35 GW), and not as large as claimed by the Global Wind Energy Council (GWEC). In fact the GWEC claims that China’s wind power capacity additions in 2016 were 23 GW, bringing global installed capacity to 487 GW (nearly half a terawatt). GWEC claims that China added 23.3 GW in 2016 and reached a cumulative total of 169 GW – but the more cautious figure put out by the NEA and CEC in Jan 2017 is likely to be more accurate.4 In any case, the target for wind power capacity to be reached by 2020 as issued in late 2016 by the 13th FYP for energy, at 210 GW or more, seems a safely conservative target and one likely to be exceeded, given that China had already reached a total of around 150 GW by 2016. The buildout of China’s wind power capacity continues to be impressive, as revealed by the growth over the past decade (Fig 2) The capacity of solar power added in 2016 was truly impressive, notching up a gain of 34 GW for 2016, more than doubling the addition in 2015 (16 GW), and reaching a cumulative total of 77.4 GW. (According to GlobalData the world’s cumulative solar PV capacity reached 271.4 GW in 2016, with China accounting for 19.7%.5) The expansion of solar-based electricity is highly significant, especially given there was little solar power generating capacity in the country before 2010. The 13th Five Year Plan for energy in China foresees only a modest 2020 target for solar power of 110 GW – a target that is widely viewed as very likely to be exceeded since it implies less than a further doubling between now and 2020. China’s wind and solar power companies continued to perform very well in international competition in 2016. China has 7 out of the world’s top 8 solar PV companies; and has 4 out of the top 10 onshore wind turbine manufacturers in 2016, according to the latest data from GlobalData (for solar PV companies) and BNEF (for wind manufacturers) respectively. All the top eight solar PV companies are based in East Asia; while most of the top 10 wind manufacturers are European and Chinese firms. Table 2 The top solar PV companies6 and the top onshore wind manufacturers in the world7 As for hydropower, this continues to be the dominant non-thermal source of power in China, aided by gigantic installations like the Three Gorges Dam system, some of which have been criticized for their adverse impacts on riparian ecosystems and local communities. But China is approaching the limits to its hydro power additions, with the year 2016 seeing only 12 GW added, bringing the installed capacity to 332 GW. The 13th FYP for energy foresees a target for hydro capacity in China of 340 GW by 2020 – a target that appears to be realistic, and also reflects the fact that China is approaching its limits of damming rivers to exploit their hydro capacity. (But note that hydro engineering is now a Chinese speciality, and it can be expected that Chinese hydro companies are bidding strongly for hydro projects around the world.)8 China is the world’s largest generator of electric energy. The total generated in 2016 was 5990TWh (or billion kWh), up 295 TWh over the energy generated in 2015. The additional electricity generated was only 5.0% higher than the amount generated in 2015 – a strong indicator that China is indeed decoupling its power production from economic growth. It is of course disappointing that China actually added some coal-burning power capacity in 2016 and generated more thermal electric energy than in the year 2015 – a point we shall return to below. Over the period between 2010 and 2016, however, the total electric power generation grew decisively faster than the thermal electric power generation, with the former increasing by 70% while the latter by 48%. In terms of the total electric power system, China is still much more ‘black’ than green. In 2016 its WWS sources accounted for 25% of total electric energy generated, while thermal sources accounted for 4288 TWh, or 71.6% of China’s total electricity generated. The rate of decline of thermal sources is nevertheless impressive – falling from 82.4% of electricity generated in 2008 to 71.6% in 2016 – an 11% drop in 10 years.9 While the share of fossil fuel-based electric power generation is not declining as fast as the decline in its share in generating capacity (which reached as low as 62.5% of total installed capacity in 2016 and is on target to reach 50% green capacity by the late 2020s) due to the relatively lower capacity factors of renewable energy technologies, the former is still on target to reach a tipping point of thermal electric energy falling below 50% in the early 2030’s. However, curtailment continues to be a major challenge to further expansion of WWS-based electricity generation.10 According to the data from NEA, the total curtailment in wind power generation in 2016 amounted to almost 50 TWh, increasing from 34 TWh in 2015, although the situation improved in the second half of 2016 over that in the first half of the year. The curtailment issue in the solar power sector was also concerning. The curtailment rate in five provinces in China, where about 40% of the country’s total solar PV capacity is located, reached 20%, with 7 TWh of power generation being curtailed. China is taking three main measures in response to the challenge, which have implications for investment in the power sector over the next few years.11 Those include: first, orderly development of renewable-based electricity generating capacity, especially in areas where curtailment is particularly severe; second, investment in long distance transmission capacity of the grid and development of micro gird access; and third, construction of pumped storage stations to improve the grid’s energy storage capacity. On the other hand, the Chinese government has also recently taken dramatic measures to correct the surge of construction of coal-fired power stations in the previous year.12 As per the NEA’s directives, a number of coal-fired power generation projects that had been previously approved, including many that were already under construction, were cancelled or suspended in 2016 and early 2017. Meanwhile, according to a media report, only 22 GW of new coal-fired power generating capacity was approved for construction in 2016, including only 6GW in the second half of the year, a significant drop compared with the 142 GW of coal-fired power generating capacity approved for construction in 2015.13 The data on investment in renewable-based electricity generation capacity in 2016 is disappointing. According to the CEC and NEA, investment in hydropower stations and wind power stations dropped by 22% and 25% respectively from the levels of 2015, and investment in thermal power facilities stayed at the same level with respect to the previous year. These developments reflect a more cautious approach taken by investors facing rising demand of electricity in the country due to concerns that power generated by their renewable energy projects would not be able to be sold in the market when completed, but also partly result from the rapidly falling costs of power generation equipment, especially those in the area of renewable energy such as wind turbines and solar PV. A widely quoted source of investment data is the Bloomberg New Energy Finance (BNEF). The BNEF data on investment in clean energy covers a number of sectors, including renewables, low carbon services such as finance, legal and other services and supports for clean energy, and energy efficiency technologies. According to the BNEF, China invested US$88 billion in the broad area of clean energy (including renewables) in total in 2016, a 26% fall compared with the 2015 level of US$119 billion.14 However, renewable energy investment levels in China can be expected to pick up over the next several years if the targets as set out in the Renewable Energy 13th Five Year Plan are to be achieved.15 According to the Plan, total investment of 2.5 trillion yuan ($US375 billion) on renewable energy is required over the period between 2016 and 2020, including 700 billion yuan on wind power, one trillion yuan on solar, 600 billion yuan on hydropower, and the rest for biomass power, biogas, geothermal energy, solar water systems etc. This would translate to about 500 billion yuan (US$75 billion) of investment per year on average. China has been struggling with its coal dependence for many years now, and the year 2016 saw further demonstrations of central planners’ determination to get off coal as principal fuel source. The 13th FYP for energy released at the end of 2016 set an important standard in setting an overall coal consumption cap of 4.2 billion tonnes (reiterating the cap first announced in the 2014-20 Energy Development Strategy Action Plan). As revealed in Fig. 3 China’s coal consumption peaked in 2013 at 4 billion tonnes, and it has been decreasing each year (although at a rate that moderated in 2016 over 2015), while electricity generated from burning coal has flattened out in the last five years. Source of primary data: The data for conventional thermal electricity generation is available from the China Electricity Council (CEC); the data for total coal production is available from the BP Statistical Review (2016) ‘Statistics of World Energy’; the data for coal consumption for thermal power generation is available from the National Bureau of Statistics, China. As shown above in Table 1, the share of fossil fuel-based power plants, predominantly coal fired stations, in China’s generating capacity has been falling by over 10% a decade, to reach 66% by 2015 and just 64% in 2016. The 5YP for energy released by the NEA calls for the share of fossil fuel-based generating capacity in total generating capacity to fall to 61% by 2020, and that of coal to 55% – which assumes that the current rate of reduction of 10% a decade can be maintained (or improved). On top of this consumption limit, the 13th FYP specifies a target for capping thermal power capacity below 1,100 GW (1.1 TW) – not far above the 2016 level of 1,054 GW of thermal capacity. Consistent with this stringent goal, in March 2016 the NEA ordered a halt to construction of new coal-fired power projects in 15 regions where capacity was in surplus. In April the NEA went further and introduced what is known as the ‘traffic lights’ control system based on capacity analysis region by region. In January 2017 the NEA announced that 104 planned or under-construction coal plants were being suspended, amounting to 120 GW of thermal capacity being decommissioned (at least until 2018).16 The London-based Carbon Tracker Initiative released a report in November 2016 stating that as of July 2016 China had 895 GW of operating coal-burning capacity plus another 205 GW of capacity under construction and 405 GW of extra capacity planned – amounting to investment in unneeded coal-burning capacity of more than half a trillion dollars (CTI 2016).17 Thus the suspensions announced by NEA in January, amounting to 120 GW of capacity being decommissioned, go some way to relieving the situation described by CTI.18 According to China’s 13th FYP for energy, released in October 2016, the share of coal in primary energy consumption is envisaged to fall from its current level of 64% to 58% by 2020, while the share of non-fossil fuel in primary energy shall be at least 15%. Its level currently stands at 13%, which is lower than the level of Germany (about 20% in 2015) but comparable to the level of the US (14% in 2015). The result in 2016 is that China is the world’s largest builder of renewable energy systems by far. Again there are three aspects to the comparative analysis of the scale of China’s domestic energy system compared with that of other leading industrial countries – in terms of WWS capacity, in terms of electricity generated from renewable sources, and in terms of investment. Taking generating capacity first, China is a clear world leader compared with other leading industrial powers, as shown in Fig. 4. China is likewise the world’s leading generator of WWS (green) electricity. As a point of comparison, the US generated just over 4,100 TWh of electricity in 2016, of which fossil fuel-based electricity accounted for 65%, nuclear power accounted for 20% and renewables including hydro accounted for 15%, according to the Energy Information Administration. The WWS-based electricity generation in the US amounted to 512 TWh in 2016, which is about one third of the WWS-based electricity generation in China (1488 TWh). On the financial front, China has again outperformed the rest of the world in terms of investment in clean energy. According to BNEF, of a total investment in clean energy in 2016 of US$287.5, China was stated to account for $87.8 billion (30.6%) while the EU accounted for $70.9 billion and Japan for just $22.8 billion. The London-based consulting firm E3G surprised the world with a chart showing China pulling ahead of the EU in clean energy investment in the decade up to 2015.20There will be great interest in any update that E3G may care to publish in 2017. Alongside China’s emergence internationally as a renewables superpower, the fear remains that China’s globalization is driving further expansion of its coal and fossil fuel activities. The issue was put starkly in an article in ClimateHome: ‘China cuts coal at home, grows coal abroad’.21 Is this really happening? The argument is that Chinese companies and banks continue to drive global coal expansion, with state-owned companies, backed by state loans, building coal-fired power plants across the world. Now there is no doubt that much of China’s internationalization strategy, particularly the infrastructure connectivity projects involved in One Belt One Road, involve further expansion of fossil fuels. There are pipelines, coal-loading facilities, and new coal-burning power plants. It would be surprising if these items were absent from any list of Chinese investments abroad. But the point is surely that these ‘black’ investments, like those involved in China’s domestic activities, are increasingly matched by green investments abroad. The China-backed Asian Infrastructure Investment Bank (AIIB) has been created to drive the financing of many of these projects, and it explicitly describes itself as a green bank, with green projects like the world’s largest solar farm being built in Pakistan with Chinese financing as clear evidence of this trend. India tends to be cited widely as the site of China’s “next” coal boom – yet it is worth noting that India is desperately seeking to build its green capacity, through the National Solar and Wind Power programs, while actually shutting down coal-fired plants.22 In the year 2016 the Indian Energy Ministry announced plans to cancel four proposed coal-fired power plants, having a combined capacity of 16 GW, while the draft National Electricity Plan released at the end of the year concludes that beyond already partially completed plants, India needs no further coal-fired power plants.23 At the same time that India’s dependence on coal is seen as diminishing, its reliance on solar and wind is rising. In the first week of February 2017 the state of Madhya Pradesh staged a public auction for bids to build solar arrays in the Rewa Solar Park, with the winning bid coming in at Rupees 3.59-3.64/kWh (US$53/MWh) – competitive with the best in the world and one that was 25% lower than bids lodged a year earlier.24 India is greening its black electric power system in emulation of what China has done a decade earlier. These developments in the greening of India’s electric power sector are not only of enormous benefit to India, such plans also cast China’s prospects for exporting coal-fired plants to India in a fresh light. 19 The chart for China is based on the 2016 data released by the CEC and NEA; the charts for other countries are based on the 2015 data, available from REN21 (2016)’s report.
News Article | September 14, 2016
China has made strategic choices favouring renewables over fossil fuels that are still not widely understood or appreciated, writes John A. Mathews, Professor of Management, Macquarie University, Australia. In this article he gives an overview of the latest trends in Chinese eletric power generation, which shows that the system is still “greening” faster than it is becoming black. But whether it is changing fast enough to save the world, is still an open question. Courtesy Asia-Pacific Journal. My colleague Dr. Hao Tan and I have been making these arguments for several years now, and in particular in our article in Nature in September 2014 we argued that China had overwhelming economic and energy security reasons for opting in favour of renewables, in addition to the obvious environmental benefits.1 In this article I wish to take these arguments further and update the picture to incorporate comprehensive 2015 data as well as fresh targets for 2017 and 2020. The context is China’s continuing battle to scale back its use of coal; its imminent release of the country’s 13th FYP for Energy, based on the overall 13th FYP for economic development over the five years 2016 to 2020, where new renewable energy targets will be announced or consolidated [See ChinaDialogue]; and China’s hosting of the G20 meeting in Hangzhou in September, where it will be promoting an international drive for greening of finance – with China itself playing a key role in this process. China is becoming a major promoter of international infrastructure development, in Africa and across Central Asia through the One Belt-One Road strategy – and this too carries strong implications for other countries’ energy choices. The first task is to review the results for China’s electric power system in 2015, to check that the leading edge of the system is still greening faster than it is becoming black – as Hao Tan and I have demonstrated for previous years. And it’s clear that the 2015 data do indeed support this trend. While the electric power system is just one industry, it is a large one and traditionally a heavy user of coal. And the strategic direction it takes carries over to the rest of the economy. So using the electric power system as proxy for the economy as a whole (it is the largest consumer of coal), the full data are given in Table 1, covering the three aspects of electric power generated, electric generating capacity added, and investment in new generating facilities. Source: Based on China’s primary sources: National Bureau of Statistics (NBS) and National Energy Agency (NEA) First, in terms of electric power generated, we find that total electric power generated by China in the year 2015 was 5,600 TWh (or billion kWh) – making China’s electric power generation by far the highest in the world. This total is flattening out, indicating that China is decoupling its energy consumption from economic growth. Each year the proportion of electricity generated by thermal sources (fossil fuels) declines; it reached just 73% in 2015 (meaning that non-thermal sources, mostly renewables, account for 27% of the electricity generated). In fact, the power generated from thermal sources actually declined in absolute terms in 2015, down to 4,077 TWh – a decline of 96 TWh, or by 2.3% compared with the year before – and this for the second year in a row. By contrast, power generated from pure renewables (water, wind and sun) increased in 2015 by 116 TWh, to reach 1,362 TWh – up 9.30% on the year before. So power generated from thermal sources declined in absolute terms in 2015, while power generated from water, wind and sun increased. This is the clearest possible evidence that the leading edge of the electric power generating system is greening. Nuclear sources also accounted for an extra 35 TWh, to reach 161 TWh – still a long way behind WWS (Water, Wind and Sun) pure renewable sources. Of course the system as a whole is still largely black – that’s what 73% dependence on fossil fuels means. But the trend, the leading edge, is definitely headed in a green direction. Over the past decade, dependence on thermal sources reached a peak of 83.3% of power generated in the two years 2006 and 2007, and has been declining each year since to reach just 73.0% in 2015 – or a 10% decline in a decade. This is a remarkably swift shift for such a large technical system – particularly one that is growing rapidly – and is the basis for targets that see thermal sources accounting for just 63% by 2020 and less than 50% by 2030. By this time the total electric power system in China would be greener than blacker. The implications of these trends and data for coal consumption and carbon emissions will be discussed below. Second, in terms of generating capacity the same shift in a green direction can be detected, if less strongly. Total electric power generating capacity reached just over 1.5 TW by 2015 – again, by far the largest in the world (compared with the US total of just 1 TW). In terms of capacity added in 2015 (i.e. where the system is changing), thermal sources added 74.5 GW, while water, wind and sun sources added 66.3 GW and nuclear a further 6.2 GW, making non-thermal sources adding 72.5 GW – so that thermal sources added marginally more than non-thermal sources in the year. It is the sub-totals that are of most interest, with China adding world records of 32.5 GW wind power in 2015 (to reach a cumulative total of 130 GW) and 14.6 GW of solar power, to reach a cumulative total of 41.1 GW – both totals being by far the largest of any country in the world, and growing faster than in any other country. In terms of capacity added, 66% came from thermal sources in 2015 and 32.5% from water, wind and sun, plus 1.7% from nuclear, or 34% from non-thermal sources – more than a third. This demonstrates clearly how large the Chinese commitment to non-thermal sources of electric power has become. Now as in the case for 2014 data we have an immediate issue to explain in these statistics, which is how a system that adds thermal power capacity in 2015 (albeit at a low rate) can actually generate less power from these sources than in the previous year. The answer is consistent with the explanation given by Tan and myself in 2014, namely that much of the thermal power capacity being added is actually not being utilized in generating electricity. When we look at trends in capacity being installed, we see another strong trend in China towards the green outranking the black. As noted for the 2015 results discussed above, there is a significant change in China’s energy patterns headlined by a strong shift towards the use of renewables, namely electric power generation from renewable sources such as wind, solar PV and water (hydro). This is captured in the changing proportions of power generated from WWS sources vs power generated from thermal sources in terms of capacity – as shown in Fig. 1. Figure 1 trends in power sources generated from water, wind and solar in China, 1990-2015, source: JM/HT based on Chinese sources Figure 1 demonstrates a clear change in direction in China’s electric power system – with WWS generating capacity rising from a low of just 21% in the years 2006 to 2007 to reach 32.5% in 2015 – or more than a 10% increase in a decade. This is a rapid shift in the fundamentals of the electric power system – with China demonstrating to other industrial and industrializing countries that the green shift is feasible and that it can deliver economic, social and environmental benefits. So the trends in terms of capacity are very clear. The total capacity for water, wind and sun in 2015 reached, as we have seen, no less than 490 GW power – very nearly half a trillion watts of clean power. According to official targets, the total is set to rise to 550 GW in 2017 (330 GW for water, 150 GW for wind and 70 GW for solar). And by 2020 the targets specify 740 GW (made up of 340 GW for water, 250 GW for wind, and 150 GW for solar PV). Note that these are realistic targets, consistent with previous rates of growth and with the additions for 2015. If China is indeed generating renewable power at 740 GW in 2020 it would be the world’s undisputed renewables superpower – and one that is well on the way to becoming the world’s first country to become a terawatt renewables powerhouse (generating in excess of 1 TW or 1000 GW) by early in the 2020s – less than a decade from now. Thirdly, the trends in terms of investment show a similar greening tendency outstripping the tendency towards blackening, or adding further coal-fired sources to the energy system. China’s investment in renewables sources of electric power in 2015 reached a world record of $110.5 billion – mostly going on wind farms, solar farms and hydro dams (including smaller hydro facilities, not just giant dams). According to Bloomberg New Energy Finance (BNEF), China’s investment of $110 billion accounts for no less than 33% of the global green investment of $329 billion in 2015 – itself a world record total. China’s investment matches the combined total of the next two industrial powers, namely the US ($56 billion) and the EU ($58.5 billion). The contrast with investment in thermal generating capacity is striking. According to China’s National Energy Administration, China invested 139.6 billion yuan (around US$21 billion) in new coal-fired power stations in 2015. This is less than a fifth of the investment in clean energy sources. In the same briefing on the electricity sector in China in 2015 the NEA revealed that investment in hydro amounted to 78.2 billion yuan (or US$11.7 billion) and in nuclear power investment was 56 billion yuan (or US$8.4 billion). So it is safe to say that China’s green investment in renewable power sources in 2015 well surpassed investment in thermal sources. This is a third indication that the leading edge of the electric power system is greener than blacker. The most arresting feature of China’s greening of investment in energy in 2015 was the introduction of green bonds as a major source of finance – a point to be returned to in a moment. The first point to acknowledge is how enormous China’s coal-based power system is, and how it continues to spew out carbon emissions as well as other greenhouse gases such as methane. There is as well the particulate pollution that so ruins the air in China’s big cities. China burns far more coal than any other country – indeed, as much as the rest of the world combined. This is the price that China has paid, and is paying, for its breakneck industrialization through which it is catching up with the industrially advanced world. While China is reducing its consumption of and reliance on coal each year, it nevertheless burns a lot of coal and will continue to do so for many years to come. When Hao Tan and I last examined this issue we noted the rapid increase in approvals for new coal-fired power plants being issued by provincial governments – but more recent moves by the national agencies including the NEA seem to have reversed these trends, and China is now on a path to permanently reducing its coal production and consumption, and coal imports, in favour of progressively greater reliance on green energy sources. Some commentators now project that China’s carbon emissions could peak by 2020 – a full decade earlier than commitments made by China in UN climate gatherings and as part of the US-China Climate Agreement reached in 2014. China’s ‘black’ energy system is certainly still black – although it is greening at the edges, as shown clearly in Fig. 2. Here it can be seen how China’s thermal generation of electricity increased rapidly (the black bars) particularly after 2001 when China joined the WTO and was ‘open for business’. But the last two years have seen a decline in thermal power generation from the peak reached in 2014. Coal consumption overall and coal consumed in power generation are shown as continuous lines, where again there was a marked increase after 2001 for the first decade and a half of the 21st century, followed by a plateau and then absolute decline in 2014 and 2015. Fig. 2 Source of primary data: The data for conventional thermal electricity generation is available from the China Electricity Council (CEC); the data for total coal production is available from the BP Statistical Review (2016) ‘Statistics of World Energy’; the data for coal consumption for thermal power generation is available from the National Bureau of Statistics, China. This is the ‘black face’ of China that is responsible for so much particulate pollution, making the air in cities like Tianjin and Beijing unbreathable. Indeed China’s coal consumption fell in 2015 to reach just over 4 billion tonnes. Coal production actually peaked in 2013, and has been falling ever since. Even more dramatically China’s coal imports fell in 2015 by 30%. Coal imports fell to 204 Mt in 2015, down from 291 Mt in 2014 – a drop of 30% in a year. And this trend can be expected to continue. The National Energy Administration (NEA) announced in 2015 that it would not approve any more coal-fired power stations, effectively putting them under a moratorium for the next three years. The levelling off in coal consumption around 2012/2013, with coal consumption actually falling in the years 2014 and again in 2015, is striking. It reveals the power exercised by governments in China, both national and provincial, to intervene in the economy to drive things in a new direction. This is an important advantage enjoyed by China.2 On the other hand, there have been reports of provincial governments deliberately intervening to support their coal-fired power plants at the expense of wind power installations. The Chinese Wind Energy Association has pointed to the Yunnan provincial government issuing a policy that imposed a surcharge on wind and hydropower producers and used the revenue to subsidize coal-fired plants; a similar arrangement was reported from the Xinjiang provincial government.3 At the same time we see that China has been building its green energy system as complement to the black, coal-fired system during a transition period. Taking wind power as the prime case, Fig. 3 demonstrates how China’s wind power capacity has been rapidly built out, doubling every three years or so since 2007. The scale of China’s build-up of green energy capacity is only appreciated when compared to what other countries are doing. Fig. 4 shows the situation in terms of capacity to generate power from water, wind and sun, in 2015, comparing different industrial countries.Note that this chart underestimates China’s real growth in wind power, as revealed by the official Chinese figures reproduced in Table 1. But we may use the data from the BP Statistics report as this is widely accepted. Figure 4 China’s generation capacity from WWS sources compared with other leading industrial countries, 2015 (Source: JM/HT, based on REN21 (2016) Global Status Report. Note that the total WWS capacity for China is listed as 496 GW, as per the REN21 report, whereas the revised Chinese statistics utilized above indicate that the figure should be 490 GW encompassing water, wind and solar.) It is worth comparing China’s investments in green energy with the EU, making it clear that China has already caught up and is now in the lead. Drawing on data from BNEF and Xinhuanet, the London-based consultancy E3G published a chart revealing the widening gap between China and the EU. China invested over $110 billion in clean energy in 2015 (as we have seen), compared with just $40 billion for the EU – outranking the EU 2.5 times. China’s investment overtook that of the EU in 2013, and has strengthened its lead each year since then – while EU investment has actually declined. Per capita investment by China also overtook that of the EU in 2015, while China’s investment in clean energy as a proportion of its GDP has already reached 1% — compared with less than 0.3% for the EU.4 Figure 5 Clean energy investment, China vs EU, 2005 – 2015 (Source: E3G Note that ‘Total investment in clean energy’ refers to investment for the relevant year in all renewable energy sources) Given this comparative dominance of China in building green energy infrastructure, it is all the more remarkable that international agreements such as the OECD-sponsored pact to limit subsidies for the export of coal-fired power stations (reached in the weeks prior to the Paris Climate deal of December 2015) leave China out of account.5 Such omissions become increasingly untenable as China’s international influence rises. Hao Tan and I have been at pains to emphasize that China has made a strategic choice in favour of renewables not (just) for reasons of mitigating climate change and reducing particulate pollution, but also (and probably more importantly) in terms of energy security. This is to be guaranteed by China’s strategic choice to manufacture all the devices needed for its renewable energy generation. With solar panels, for example, China has been building up its manufacturing capacity rapidly, moving to a position of world leadership in 2007 – a full decade ago – as shown in Fig. 6. The chart shows that China moved rapidly to world leadership by 2007, and to securing more than 50% of global output of solar panels by 2011. Now under the impact of trade sanctions brought against Chinese manufacturers, the companies like Trina Solar expanding into Thailand and Canadian Solar expanding into Vietnam are globalizing their activities, further cementing their leadership. A similar story can be told for wind power, where again China has been building a strong national wind turbine manufacturing capacity, alongside its build-up of wind farms. By the year 2015 there were five Chinese firms in the world’s top ten wind turbine producers, with Goldwind emerging for the first time as the world’s number #1 producer. China’s rapid expansion of manufacturing in wind turbines is reflected in the 2015 results for the world’s Top 10, with Chinese firm Goldwind emerging as world #1, followed by Danish firm Vestas and US firm GE in third place. [See “China overtakes EU to become global wind power leader”] [See also “Chinese wind turbine maker is now world’s largest”] In 2015 Goldwind received orders for 7.8 GW of new turbines, followed by Vestas with 7.3 GW of new orders and GE with 5.9 GW of new orders. Four other Chinese firms ranked amongst the world’s top 10 – Guodian, MingYang, Envision and CSIC (Fig. 7). Figure 7 The Top 10 Wind Turbine Manufacturers in 2015 and their global market shares (Source of primary data: REN21 (2016) Global Status Report) Behind these trends towards a greening of China’s energy system lies the power of finance – in this case, state-directed finance mediated via development banks. China is emerging as a leader in the financial aspects of the process of greening, driven by an appreciation of the crucial role of finance if ambitious investment strategies are to be successful. Brought together by Dr Ma Jun of the People’s Bank of China, the Green Finance Task Force in China issued its long-awaited report ‘Establishing China’s Green Financial System’ in April 2015 – making China the first country in the world to set specific guidelines for the issuing of green securities.6 The report sets out an ambitious agenda for how China can green its rapidly developing financial and capital markets, making use of policy, regulatory and market-innovations. The report notes that China will need investment each year of at least 2 trillion yuan (US$320 billion) or more than 3 percent of GDP, for at least the next five years if it is to achieve its green targets.7 China’s banks are already moving into this new space for the issuance of green bonds. The Agricultural Bank of China was the first Chinese financial institution to do so, raising $1 billion from a three-part green bond in October 2015.8 The green bond market in China is set to grow significantly as the government there has given the go-ahead to banks to launch large issues. The Shanghai Pudong Development Bank came out with a green bond worth 20 billion Yuan (US$4.3 billion) in January 2016. In its cautious but determined way, China is moving towards a quota for banks totalling 300 billion Yuan (more than US$45 billion) in green bond issues.9 Thus the year 2015 has seen a decisive shift towards serious greening of finance, with China playing a significant role in this process. As against these positive trends in greening of finance, it is also important to acknowledge that the year 2015 saw a considerable expansion of China’s development bank financing of infrastructure around the world, including new coal-fired power developments and fossil fueled projects in Africa, Central Asia and elsewhere. China’s ‘black’ energy economy is now internationalizing through the activities of China’s development banks, now the largest source of development finance in the world.10 While emphasizing the greening trends in this article, there are of course counter-trends that also need to be noted. As fast as China is adding solar and wind power to its national grid, the connection of these sources to the grid, and, as in many other countries, its capacity to accept input from fluctuating energy sources, is still limited. Curtailment of wind power contributions reached a high level in 2015, with cumulative wind power capacity reaching nearly 130 GW but only 100 GW of this supplying power to the grid. The fact is that China is leading the world in upgrading its grid to make it stronger and smarter. The world’s largest electric utility, the State Grid Corporation of China (SGC) is now moving ahead with advanced plans to build long-range Direct Current power lines that lose less power during transmission than their AC counterparts. And the SGC is investing heavily in its grid upgrading activities. On the international front, the SGC is advancing its support for and promotion of the North East Asian Grid, connecting China, Mongolia, Japan, Korea and Russia. This is seen by the SGC as a means of enlarging the scope for renewable power to be utilized by the grid, and as a step towards the proposed Global Energy Interconnection, SGC’s most ambitious project to date. [See the book outlining the proposal] No one really knows whether China’s efforts to green its economy and extend its greening efforts to the North East Asian Grid, for its own very practical economic and business reasons as much as for environmental reasons and reasons based on climate change considerations, will succeed. The commitments of decades towards the black, fossil-fueled system have been so enormous, and backed by powerful efforts to create a world class fossil fuel system that could mine, drill and transport huge quantities of coal, oil and gas to China’s fast-expanding manufacturing industry. Now the environmental and social price of this huge build-up has become clear, and China’s leadership is moving as rapidly as it can to change energy direction – with the results in 2015 indicating just how far these efforts are taking the country. But whether it will eventually prove to be sufficient, to save China and the world, is an open question. Green, F. and Stern, N. 2016. China’s changing economy: Implications for its carbon emissions, Climate Policy John Mathews and Hao Tan, The Revision of China’s Energy and Coal Consumption Data: A preliminary analysis Andrew DeWit, Japan’s Bid to Become a World Leader in Renewable Energy John Mathews and Hao Tan, A ‘Great Reversal’ in China? Coal continues to decline with enforcement of environmental laws John A. Mathews and Hao Tan, The Greening of China’s Black Electric Power System? Insights from 2014 Data John A. Mathews and Hao Tan, “China’s Continuing Renewable Energy Revolution: Global Implications” John A. Mathews and Hao Tan, “Jousting with James Hansen: China building a renewables powerhouse” John A. Mathews, The Asian Super Grid Andrew DeWit, Japan’s Energy Policy at a Crossroads: A Renewable Energy Future? Sun-Jin YUN, Myung-Rae Cho and David von Hippel, The Current Status of Green Growth in Korea: Energy and Urban Security 1 I would like to acknowledge the generous assistance that Dr Hao Tan has provided in the preparation of this article – as in other works where we have collaborated. 2 See the paper by Green and Stern (2016) making this point with regard to China’s dramatic turn to clean sources of energy. 4 See the E3G report ‘Pulling ahead on clean technology: China’s 13th Five Year Plan challenges Europe’s low carbon competitiveness’, by Shinwei Ng, Nick Mabey and Jonathan Gaventa (March 2016), available at: https://www.e3g.org/docs/E3G_Report_on_Chinas_13th_5_Year_Plan.pdf For commentary on Europe’s poor showing in investment in clean energy, and its likely implications, see the story in The Guardian, 23 March 2016, at: https://www.theguardian.com/environment/2016/mar/23/european-clean-tech-industry-falls-into-rapid-decline 5 See reports on this OECD-sponsored pact such as “OECD agrees deal to restrict financing for coal technology”, Eur-Active.com, 18 November 2015, at:http://www.euractiv.com/section/energy/news/oecd-agrees-deal-to-restrict-financing-for-coal-technology/ 7 The figure of 2 trillion yuan is a broad figure referring to investment in green industries generally; it is not a specific target as embodied in the 13th Five Year Plan. Nevertheless it is the first time that a government has been specific about the scale of investment needed to make the green transition. 10 See the recent study by Kevin Gallagher and colleagues from Boston University’s Global Economic Governance Initiative, in collaboration with Yongzhong Wang of the Chinese Academy of Social Science’s Institute for World Economics and Politics, ‘Fueling growth and financing risk: The benefits and risks of China’s development finance in the global energy sector’, available at:https://www.bu.edu/pardeeschool/files/2016/05/Fueling-Growth.FINAL_.version.pdf This article was first published by The Asia-Pacific Journal and is republished here with permission.
News Article | November 14, 2016
SHANGHAI, CHINA--(Marketwired - Nov 14, 2016) - ENERGY STORAGE CHINA (ESC) and Clean Energy Expo China (CEEC) recently announced that these two leading energy industry events will be co-located in 2017, at China International Exhibition Center in Beijing, March 29-31 in 2017. Energy Storage China is the most influential industry conference and exhibition in China's energy storage industry -- playing a significant role in informing and connecting industry professionals as the country develops a clean, efficient and reliable energy system. CEEC is a major industry event with the widest coverage in China's clean energy industry. Both events together are expected to draw more than 500 exhibitors and more than 25,000 professional visitors, including industry experts, policymakers, government officials and developers. ESC focuses on technology and applications for the energy storage industry, while CEEC covers the entire clean energy generation value chain. Collocating both shows will produce useful synergies for industry, research, regulators and media. "Energy Storage China is the key storage event in the country, and our alliance with CEEC will make it even more strategic and productive for expo visitors," said Heiko M. Stutzinger, Deputy General Manager of Messe Düsseldorf Shanghai, the event's organizer. "Messe Düsseldorf holds the leading energy storage exhibitions and conferences in five regions on three continents, covering the largest energy markets worldwide: China, North America, India, Germany and Japan, with nearly 70% of global renewable generation. We are confident that collocating these events will offer greater value, reach a wider audience, and facilitate increased deal-making in the fast-growing Chinese market." Wang Hong, General Manager of Tiger Exhibition Co., Ltd. and co-organizer of CEEC, agreed: "We are optimistic and confident in the strong alliance between our CEEC and Energy Storage China, hosted by Messe Düsseldorf Shanghai. Over the last years CEEC has become the largest clean energy expo in China. We believe that both events will drive development of the renewable energy and energy storage industries in China and Asia." China, the world's largest wind and solar power producer, has proven to be a key driver in the global energy storage market. China currently has 105 megawatts (MW) of non-hydro storage capacity, experiencing a 110 percent increase over the past five years. According to the Global Energy Storage Forecast, 2016-24, published by Bloomberg New Energy Finance, China is expected to install 1.8 gigawatts of capacity by 2024. In a statement on behalf of the State Grid Energy Research Institute, organization Vice President Jiang Liping said, "China is heading an energy revolution led by the transformation to low-carbon energy and the opening up of its wholesale power market. Storage will be important to bolster the changes." Strong ESC development since 2014 The first Energy Storage China event was held in 2014. Over the years ESC has become a high-value platform for learning, networking and deal-making. Under the theme, "Driving Energy Storage Commercialization, Policy Interpretation, Technology Application and Financial Innovation," three successful editions of Energy Storage China have been held. The 2016 event took place in May in Beijing, attracting 2,186 visitors from 12 countries. For more information, visit www.escexpo.cn. Clean Energy Expo China - the ideal partner Organized by the China Electricity Council, CEEC is the most influential industry expo in the field of renewable energies in China. Since 2008, CEEC has segmented and established sub-exhibitions in key areas of clean energy, such as smart grid, wind energy, solar PV energy, solar thermal and CSP, decentralized energy, biomass energy and clean energy grid connection. The CEEC conference has created exclusive trading and investment opportunities for domestic and overseas customers. For more information, visit www.ceecintl.com. Building the most influential industry platform As collocated events, ESC and CEEC will cover an exhibition area of 40,000 sqm and are expected to draw more than 25,000 professional visitors. The two expos will provide an improved communication platform for domestic and overseas clean energy suppliers and buyers to promote sustainable, long-term clean energy industry development. Background information Messe Düsseldorf (Shanghai) Co., Ltd. Established in 2009, Messe Düsseldorf (Shanghai) Co., Ltd. (MDS) is a subsidiary of Messe Düsseldorf GmbH, one of the world's top 5 exhibition organizers. MDS is committed to introducing the world's top trade fairs to China and to providing Chinese and international customers with superior exhibition services. MDS successfully stages more than 20 leading trade fairs and conferences in China, covering the industries of printing, packaging, wire and tube, plastics, renewable energy, medical devices, retail, safety and health, wine and spirits and caravanning. MDS runs branch offices in Shanghai, Beijing and Shenyang, with a workforce of 70+ full-time employees. The worldwide outbound exhibition business (trade shows in Düsseldorf, Germany and other leading Messe Düsseldorf Global Shows) is organized by Messe Düsseldorf China Ltd. (MDC), serving Chinese exhibitors and visitors with superior customer service from its Hong Kong branch office. Find out more at www.mds.cn. China Electricity Council (CEC) Founded in December 1988, CEC is a joint organization of China's power enterprises and institutions. The Board of CEC has gone through six terms. The sixth term of the Board took office in December 2015. CEC has 939 members, among which 172 are council members, 77 are executive committee members and 17 are presidential members. Functioning as a bridge between the government and power enterprises, CEC serves its members by appealing to the government on their behalf and protecting their legal rights, encouraging its members to fulfill their social responsibilities, and promoting the healthy development of the whole industry. Find out more at http://www.cec.org.cn Beijing Tiger Exhibition Co., Ltd Beijing Tiger Exhibition Co., Ltd. ("Tiger") is a professional company specializing in organizing and managing exhibitions and conferences. Its main business scope is to design, develop and stage most of the exhibitions in the building and construction sector under the auspices of the CCPIT Construction Sub-Council. Founded in the early 1990s and after successfully operating in Shanghai, Guangzhou and Xian, Tiger finally chose Beijing as its headquarters, and the China International Exhibition Center ("CIEC") as its preferred venue in consideration of the capital's unique political and cultural advantages. At present, Tiger mainly covers the fields of energy, environmental protection, photovoltaics, building and construction, heating, chemicals, information, industrial technology and food. Other fields are under exploration. Find out more at http://www.tigerzl.com
News Article | November 18, 2016
What the future of our energy system will look like continues to be a subject of heated debate. According to one well-established tradition, writes Professor John Mathews of Macquarie University in Australia, the route to decarbonisation will run via massive nuclear power systems to the hydrogen economy. But China and to some extent India are emerging as the principal practitioners of an alternative vision of energy growth, underpinning their vast industrialisation efforts with conventional renewables that are the products of manufacturing. According to Mathews, the world is much more likely to follow the second route. Renewables, he argues, are benign, provide energy security, create jobs and above all are the least expensive option. How we envision the future of our energy systems is important as this tends to drive our policies and decisions. In a new scientific paper, “Competing principles driving energy futures: Fossil fuel decarbonisation vs. manufacturing learning curves”, published this month in the journal Futures, I contrast two broad energy visions. Both are based on an argument concerning the phasing out of fossil fuels. One envisions a process of decarbonisation that evolves towards a centralised energy system based mainly on hydrogen, which includes large-scale ‘zero emission power plants” (ZEPPs), to be reached through the route of a massive expansion of nuclear power. The other, alternative vision is based on the expansion of decentralised renewable energies systems, such as wind and solar power, which are products of manufacturing and which embody increasing returns and decreasing costs. In this alternative vision, decarbonisation is not the primary driver but instead the side effect of a process of creative destruction of fossil fuels by lower-cost renewables. The first “centralised” vision was developed by scholars who in the past were associated with the International Institute for Applied Systems Analysis (IIASA), an East-West research centre based in Laxenburg near Vienna founded jointly by the US and Soviet Academies of Science. It was first developed by the visionary physicist Cesare Marchetti when working at IIASA in the 1970s. It displays a marked techno-bias towards giga-scale nuclear power and the hydrogen economy as well as a marked disdain for present trends towards solar, wind and renewables generally. Marchetti developed a ‘master-concept’ of decarbonisation as the driver of energy transitions, culminating in an article published in Futures in 1986, where he outlined his idea of a 50-year pulse underlying transitions in technology in energy, power and transport systems. Marchetti viewed energy transitions as moving ineluctably from one fuel source to another with continually lower carbon: hydrogen ratio: the sequence goes from wood (with a C:H ratio of 10:1, to coal, with a ratio of 1:1, to oil, with ratio of 1:2 and then natural gas (mostly methane, or CH ), with a consequent ratio of 1:4. The sequence culminates in hydrogen, where there is no carbon at all. This was surely an elegant idea, and it seemed to be based on an observable gradual decline in global carbon intensity in the real world, as shown in this figure: The problem is that this trend has recently reversed or at least stalled. There has been no secular decline in global carbon intensity in the last two decades, as can be seen in this chart from the International Energy Agency (IEA): Source: International Energy Agency (2013), Tracking Clean Energy Progress 2013, OECD/IEA, Paris. 6DS: a trajectory assumed to result in temperature increase of 6 degrees C; 4DS a trajectory corresponding to 4 degrees C; and 2 DS corresponding to 2 degrees C. The fact is that there is no relentless process of fossil fuel decarbonisation, leading inevitably to a hydrogen economy, and there is no clockwork mechanism, as Marchetti believed, driving substitution of energy sources one after another in a sequence leading from highly carbonised to the least carbonised source. Marchetti’s notion of a relentless process of fossil fuel decarbonisation was a clever depiction of the way things stood in the world by the 1970s – but shocks like the oil shock of the 1970s (OPEC in 1973 and Iran in 1979), and the ‘China shock’ of rapid industrialisation utilising coal in the 2000s, and now the ‘India shock’ following perhaps a decade behind – not to mention the American coal seam gas ‘shock’ and the (small) inducements towards energy efficiency and renewables provoked by the ‘climate shock’ have all played their part in destroying the statistical regularity of the system. Resting on the false foundations of a purported ‘decarbonisation’ driving the energy system towards nuclear and hydrogen, scholars in the IIASA tradition then make their own techno-optimistic proposals for giga-scale power plants (zero emission power plants, or ZEPPs) and their Continental Super Grids (CSGs) that (it is argued) are the only options that are consistent with these (non-existing) trends. Marchetti envisioned the creation of giga-scale ‘energy islands’ which would be producers of nuclear power and nuclear-power-based hydrogen, standing apart from the wider industrial system, feeding their massive contribution to a global grid. All of this is very interesting – but quite irrelevant to the energy choices having to be made by countries today. Continental Super Grids (CSG) fed by dozens or so enormous ZEPPs seem an extremely unlikely pathway of energy evolution at a time when Google in the US cannot even negotiate a connection and transmission across the country for its proposed Atlantic Wind Connection. What is rarely canvassed in these discussions of a possible nuclear giga-future is the counter tendency towards smaller, modular nuclear reactors, which may be simpler, safer and cheaper than their giga-scale competitors. Bigger is not always better. The proponents of a centralised view in the IIASA tradition are quite disdainful of conventional renewable energy, especially solar and wind power. They tend to ignore hydropower altogether, as it does not fit into their scheme, although some countries, like Norway and Brazil, have largely built their electricity systems on it. Wind power they disregard on the basis of its low power density and its supposed impossible demand on land areas. But if we take China for example, we see that wind power in that country already exceeded the contribution of nuclear in terms of capacity by 2009 and in terms of electric energy generated by 2012, as shown in Fig. 3. Source: Mathews and Tan (2015). Primary data up to 2007 for wind power capacity and generation is available from the BP Statistical Review of World Energy 2014; data for the years 2008-2014 is available from the China Electricity Council; data for nuclear power capacity up to 2007 is from the EIA International Energy Statistics database. Wind power is also frequently criticised for making excessive resource demands, but, as I show in another paper (Mathews and Tan, 2014), 1 TW of wind power, equivalent to the entire US electric generating system, requires 29 million tonnes of iron, 90 million tonnes of steel and 350 million tonnes of concrete. In China alone, the year 2012 saw the country’s industry producing 709 million tonnes of crude steel and 654 million tonnes of pig iron. So materials supply is not the issue. The IIASA case against solar is built on equally flimsy foundations, e.g. assuming that solar panels “remain stuck at about 10% efficiency”, which is simply untrue. In Italy the Montalto di Castro solar PV power farm has been completed, covering 1.7 km2 with panels rated at 84 MW, and generating 140 GWh of electricity in a year. This is a real capacity factor of 19%. If we take these data and scale this up to the 1 TW of the entire US power system, we would need a land area of 20,000 km2 – or just over 0.2% of the US land area of 9.6 million km2. Let me develop the real reasons why conventional renewables are likely to emerge as the dominant primary energy sources in the first half of the 21st century. The fundamental advantages of renewables, as revealed by practical experience in China as well as in industrialised countries like Germany where an energy transformation is well under way, are these. They are clean (low to zero-carbon); they are non-polluting (important in China and India with their high levels of particulate pollution derived from coal); they tap into inexhaustible energy sources; and they have close-to-zero running costs since they do not need fuel. They are also diffuse, which should be viewed as an advantage, since this means that renewable sources are decentralised, and can be harvested by both large and by small operations. So they are eminently practicable. Some advantages of renewables are not at all obvious and need to be made explicit. Fundamentally, they are scalable. They can be built in modular fashion – one solar panel, 100 solar panels, 1000 solar panels. As they are replicated in this fashion so their power ratings continue to rise, without complexity cutting back on efficiency. This cannot be said of nuclear reactors, which have an optimal operational size – below which or above which the plant under-performs. Moreover as they scale they do not present greater and greater hazards. Instead they are relatively benign technologies, without serious risks. When they use hazardous materials, such as the cadmium in Cd-Te solar, the solution would be to recycle materials in order to minimise the use and waste of virgin materials. Most importantly, the superiority of conventional renewables lies in their cost reduction trends which are linked to the fact that they are always the products of manufacturing – and mass production manufacturing, where economies of scale really play a role. This means that they offer genuine energy security in so far as manufacturing can in principle be conducted anywhere. There are no geopolitical pressures stemming from accidents of chance where one country has deposits of a fossil fuel but another does not. Manufactured devices promise an end to the era in which energy security remains closely tied to geopolitics and the projection of armed force. As Hao Tan and I put it in our article published in Nature, manufacturing renewables provides the key to energy security. Manufacturing is characterised by improving efficiencies as experience is accumulated – with consequent cost reductions captured in the learning or experience curve. Manufacturing generates increasing returns; it can be a source of rising incomes and wealth without imposing further stresses on the earth. Add to these advantages that renewables promise economic advantages of the first importance: they offer rural employment as well as urban employment in manufacturing industry; they offer an innovative and competitive energy sector; and they offer export platforms for the future. This is to list the advantages of renewables without even mentioning their low and diminishing carbon emissions. Indeed they offer the only real long-term solution to the problem of cleaning up energy systems. With all these advantages, it is little wonder that China and now India are throwing so much effort into building renewable energy systems at scale. These are not exercises undertaken for ethical or aesthetic purposes, but as national development strategies of the highest priority. So the real driver of the renewable energy revolution is not government policy, or business risk-taking, or consumer demand. It is, quite simply, the reduction of costs – to the point where renewables are bringing down costs of generating power to be comparable with the use of traditional fossil fuels, and with the promise of reducing these costs further still. Supergrids are also being promoted for renewables, but these are very different conceptions, based on integrating numerous fluctuating sources in IT-empowered grids, offering the same practicable, scalable and replicable energy future. Against these advantages, the obstacles regularly cited are small indeed. There is the fluctuating nature of renewables, which can be addressed by various forms of systems integration (smart grids, demand response) and of course through energy storage, which is moving into the same kind of cost reduction learning curve that has characterised solar and wind power, promising rapid diffusion of both commercial and domestic energy storage units. With rapidly falling costs of storage providing the buffer that can even out fluctuating levels of generation, there is no further serious argument against renewables. I conclude that of the two competing principles, the one based on decarbonisation and giga-scale nuclear plants producing hydrogen is destined to remain a fantasy, while the other based on renewables and the manufacturing of renewables devices, with their declining costs, is destined to power the further industrialisation of emerging giants like China and India. Donald Trump will discover this if he delivers on his campaign promise of a 100% pro-fossil fuels course and negates a renewables future. This article is based on a scientific paper by John A. Mathews, Competing principles driving energy futures: Fossil fuel decarbonization vs. manufacturing learning curves, which was published in Futures in November 2016 (.http://www.sciencedirect.com/science/article/pii/S0016328715300227) John Mathews is author of the Greening of Capitalism: How Asia is Driving the Next Great Transformation”, published by Stanford University Press: http://www.sup.org/books/title/?id=24288. His latest book, “China’s Renewable Energy Revolution” (co-authored with Hao Tan) was published by Palgrave Pivot in September 2015: http://www.palgrave.com/page/detail/chinas-energy-revolution-john-a-mathews/?isb=9781137546241. See his author’s archive on Energy Post.
News Article | February 13, 2017
In one year China added almost as much generation from renewable power as Germany’s total renewable energy generation, according to the end of January statistics for 2016 by the National Energy Administration of China and the China Electricity Council. Yet the country’s electricity supply still relies strongly on coal, notes Simon Göß of Berlin-based consultancy Energy Brainpool. With an increase of 5 percent in 2016, Chinese electricity consumption rose to 5920 TWh, of which 25% was supplied by renewables. By far the most electricity (4211 TWh) was consumed by China’s secondary industry. Households roughly consumed 800 TWh, the remainder is shared by primary and tertiary industries. The largest growth rates in power consumption with each more than 10 percent can however be attributed to tertiary industries as well as urban and rural households (Source: National Energy Administration). The average utilization of power generators declined again, as it has done for years now, laying bare the overcapacities in the Chinese power sector. In 2016, thermal power full load hours went down on average by 200 hours to 4165 hours, even lower than the lowest utilization level in decades in 2015. Addition of new generating capacity amounted to 125 GW, ending 2016 with 1646 GW of installed capacity. With a growth of more than 80 percent, the capacity additions of solar power outstripped all other generators, except of coal. Figure 1 (own representation) depicts the installed power generating capacity in China along with the additions in 2016 in GW, as well as the year-on-year capacity additions in percent (Source: China Electricity Council). Clearly, the Chinese power system is still being dominated by coal. However the additions of solar (a total of 77 GW installed by the end of 2016) and wind power solar (a total of 149 GW installed by the end of 2016) in recent years led to an increasingly higher share of renewables in installed capacity. Such an analysis however has to be complemented with the actual share in power generation from different sources. Not surprisingly, the huge additions of solar and wind capacity are also reflected in an increase in generation. In 2016, wind turbines generated 241 TWh of electricity, an increase of 30 percent compared to 2015 levels. Electricity generation from solar power grew by 72 percent with a cumulative generation of 66 TWh in 2016. The third-strongest sector was nuclear power, which generated 24 percent more electricity than last year, reaching 213 TWh. Even though with 5 percent, the growth rate of thermal capacity was not impressive, the year-on-year growth of coal and gas-fired generation in terms of electricity rivals that of renewables as can be inferred from figure 2 (Source: China Energy Portal). In total, growth in thermal fossil-fuel based power generation was 111 TWh, while the combined new electricity generation from hydro, wind and solar power amounted to 153 TWh in 2016. This new electricity generation by renewables in 2016 in China is almost equal to the electricity generation by all German renewables in 2016 with 186 TWh. The incredible growth of renewables in China is certainly impressive. The challenges are however also daunting. Transforming a power system with 1000 GW of thermal generators, most of which are coal-fired, will be a huge effort. In addition coal-fired power plants are arguably one of the most important sources for heating many of China’s northern mega-cities during the winter months. A district heating infrastructure – huge compared to the European one – has been built up and millions have been invested there as well (Source: ThinkChina). The reliance of the Chinese power sector on coal is and will therefore still be huge for years to come. And even though renewables, especially hydro power, play a pivotal role in the generation mix, the replacement of coal by renewables, such as wind and PV, or low-emission technologies, such as nuclear or gas has yet to manifest itself. More than 65 percent of all electricity in 2016 was generated by coal-fired power plants, as figure 3 shows (Source: China Energy Portal). When compared to the 4 percent share of wind power or 1 percent by solar – despite of several years of strong growth in both technologies – the challenge becomes obvious. Most renewable generation is still hydro power, which at least might be a source of flexibility in the power system and thus could enable the integration of more fluctuating renewable generation from wind and PV. The author is an expert analyst at Energy Brainpool, an independent market specialist in Berlin focusing on electricity and energy trading in Europe. The expertise of Energy Brainpool encompasses the analysis, forecasting and simulation of energy markets and prices, researched and scenario-based studies, and providing individual consulting services as well as training and expert seminars for the energy sector. The article first appeared on CEEN (Chinese European Energy News).
News Article | August 15, 2016
In recent months, the Chinese government has issued several high-profile policy statements directed toward the twin challenges of renewable energy curtailment and runaway investment in coal-fired capacity. These new policies appear to signal policymaker interest in dealing with these problems and might have some success in the near term. However, they rely on blunt mechanisms—guaranteed numbers of annual operating hours for wind and solar generators and limits on coal-fired power plant construction. As such, these policies do little to address underlying problems, particularly the need for increased flexibility and the need for reform of generator compensation. Meanwhile, a less-discussed policy, issued by China’s National Energy Administration in June, may ultimately be more important for dealing with these challenges. This document, with the innocuous name Power Sector Planning Regulation (Chinese), sets out a broad framework for a transition of the Chinese power sector away from a model in which meeting rapid demand growth is the prime consideration—and toward a model based on careful consideration of complex trade-offs and multiple targets, including China’s goals for renewable energy, environmental quality, affordability, and reliability. Outside observers are often struck by the emphasis in China on five-year plans and other forms of economic and industrial planning. However, when it comes to the power sector, China suffers from inadequate and poorly coordinated planning. China’s massive power sector build-out over the past decade has unfurled with little attention—on the part of government and regulatory agencies—to the sort of planning seen in the United States and Europe. RAP’s technical primer discusses the history of power sector planning in China, including the omission of a published overall power sector plan from five-year plans in recent years. This lack of coordinated power sector planning is one of the main factors behind China’s struggle with renewable energy curtailment and overinvestment in coal-fired generation—a recent RAP modeling exercise estimates that overcapacity had already reached 100 GW by the end of 2014. The United States has had its own history of rapid power sector expansion with inadequate attention to costs and environmental consequences. However, in the 1970s, various states began to shift toward more rational power sector planning, in the face of demand for improved air quality and slowing economic growth. Many parts of the United States implemented integrated resource planning. Even in parts of the United States that have implemented electricity markets, planning still plays an essential role in evaluating resource adequacy, informing the need for adjustments to market design, and helping to coordinate investments in generation with those in transmission and demand-side resources. Planning practices continue to evolve, particularly with respect to meeting the challenges of renewable energy integration. China’s new planning regulation has several promising features. First, it sets out a rolling schedule, on the familiar five-year cycle, with milestones for research, preparation, publication, implementation, adjustment, and evaluation. Second, it calls for transparency, at least in general terms, and outlines a process for comment from “experts” and companies. Third, it puts the concepts of “coordination” and “integration” front and center, by: The new policy even stipulates that power sector planning be coordinated with planning in other key sectors, including land-use, urban construction, environmental protection, water resource use, transport, gas supply, and heat supply. This latter point is very welcome, given that rapid growth in combined-heat and power plants in northern China has been a significant reason for inflexibility of the grid and has contributed to high rates of wind generation curtailment. The new regulation is admirable in putting forth these important concepts. In many ways, it is quite close to what RAP’s team has long recommended as best practice in these areas. However, there are several broad shortcomings in the new regulation. First, and most importantly, the regulation fails to mention demand-side resources or raise the notion of end-use energy efficiency as a resource. At least one media report (Chinese), however, suggests that planning may ultimately include consideration of demand-side resources. Mechanisms for comparison between energy-efficiency investments and alternative investments in more traditional power sector resources have been an essential—and very cost effective—part of the best examples of coordinated power sector planning in North America. Second, although the regulation raises the concepts of transparency and stakeholder participation, it also limits those to a significant degree. Under the regulation, power-sector firms will provide much of the analysis, with additional contributions from academic experts and industry groups such as the China Electricity Council. In the United States, broader scrutiny—including that from expert organizations who represent consumers and the public interest—provides important counter-balance to utility interests. China’s media outlets—whose analytical capacity and output in these areas has improved greatly in recent years—may be able to provide useful input into planning, if they are allowed sufficient access and leeway. Third, the planning regulation would have been better if it had explicitly mentioned the concept of “risk-aware” planning. Ideally, the new planning process should include careful assessment of various risk factors when comparing resource investment options. These risk factors include fuel cost risk, construction risk (unplanned cost increases and delays), water constraint risk, and carbon price risk. On a related note, the analysis that underpins the plan should ideally consider likely changes in policy targets that have yet to be decided or implemented—for example, foreseeable tightening of emission regulations (standards and pricing). Fourth, questions of how to actually achieve the outcomes identified in the plan are left unaddressed. The regulation briefly mentions that “market mechanisms” are to be used to procure the resources, in line with “guidance” provided by the plan (Article 38). This notion of the interaction between the plan and markets is sensible and in line with best practice in other countries. In addition, increased use of market mechanisms is a “basic principle” of China’s broad push for power sector reform, launched in March 2015. However, although provincial pilots have been announced, wrork on the detailed design of market mechanisms is still at the very early stages, and there is much work to be done to design mechanisms to deliver resources in line with the plan. The new planning regulation emphasizes measures to discourage construction of projects that are not called for in the plan (Article 30). In particular, these unapproved projects will not be allowed to access the usual means for compensation. Enforcement will need careful attention as failure to stop construction of unnecessary projects—even when there is a regulatory policy calling for such a halt—has been a major sticking point. Overall, the new regulation is a very useful blueprint for a new planning process in China. However, the road to successful implementation may be quite long. The next items on the work agenda will include building adequate institutional capacity, establishing suitable analytical approaches, and ensuring adequate oversight and transparency. The post Excess Coal Generation Capacity and Renewables Curtailment in China: Getting With the Plan appeared first on Regulatory Assistance Project.
News Article | November 24, 2015
The New York Times has recently carried two important stories on China’s coal consumption, indicating that the situation is even more serious than previously appeared to be the case. On November 3 the NYT carried a front page report that China has revised its estimates of how much coal it has been burning, and concluding that its carbon emissions have been higher than had been previously reported and assumed (“China burns much more coal than reported, complicating climate talks”, Nov 3 2015). This was then widely taken up, with the emphasis invariably on the “new fact” that China’s coal burning is higher than previously reported. Then on November 11 the NYT carried a second story concerning a glut of new coal-fired power plant approvals, with the implication that again carbon emissions were likely to be higher in future than previously anticipated (“Glut of coal-fired plants casts doubt on China’s energy priorities”, Nov 11 2015) This second story followed similar reports from both Deutsche Bank and from Greenpeace East Asia.1 Given the global significance of energy and emissions data from China, we explore some of the causes and implications of these developments. Firstly, let’s consider the revision of China’s coal burning estimates for past years. It is true that China’s statistical agencies have revised upwards their data for primary energy consumption (measured in terms of coal-equivalent) and for raw coal consumption. These revisions were contained in the China Energy Statistical Yearbook 2014, which was published on 1st Aug 2015, and some of the revised data first appeared in the China Statistical Abstract 2015 which was issued in May 2015 without fanfare by the Chinese or any international comment by the NYT or anyone else. According to the National Bureau of Statistics (NBS) of China, the revised data are based on the results of the 2013 National Economic Census which better captured national economic data, especially data from small and medium-sized enterprises. This was only the third such Census carried out since 1949 after the country decided to combine previous sector-based censuses into comprehensive national economic censuses. The first National Economic Census was carried out in 2004 and the second one in 2008. Several questions have been the subject of speculation in international media such as the NYT as well as the research community since the new data emerged regarding the discrepancies between the original and revised energy data. First, did the Chinese government deliberately conceal or fabricate previous energy data? Second, what are the implications of the new data for statistical analysis of Chinese emissions including the extent to which previously published analysis requires revision? And third, to what extent do the new data assist in understanding the extreme level of pollution threatening China, especially its cities which have suffered from yet another wave of smog over the past few days. Rather than indicating that China had been ‘hiding’ some of the data on its coal consumption – as implied by the NYT article and made explicit in much of the follow-up commentary – we suggest that this is rather a result of poor quality control in collecting and compiling energy data at the national, provincial and local levels, an issue that has long been noticed by both Chinese and international researchers and is widely viewed as a systemic problem within Chinese data collection (Guan, et al. 2012). On the positive side, however, the revision is a strong indication that the Chinese government is prepared to allow the less favorable data to be published without hindrance. The Chinese government seems prepared to release data more clearly indicative of the dimensions of the problem of curbing greenhouse gas (GHG) emissions. One could think of this as having the effect, for example, of strengthening both domestic and international forces for curbing GHG by revealing that pollution levels were higher than previously reported even as renewables provided an increased share of energy production. Our view on this is reinforced when one considers that the same revision of energy data also carries an upward estimate of non-fossil energy consumption (in terms of coal-equivalent), of a magnitude in fact greater than that for coal in percentage terms– as shown in Fig. 1. This means that had the Chinese been ‘concealing’ their bad coal consumption data, by under-reporting levels of coal consumption, they would at the same time have been under-reporting their usage of renewable energy sources – hardly plausible if political correctness had been the goal. It is interesting that the NYT and other Western reports focused exclusively on under-reported coal consumption and ignored the underreporting of renewable sources, indeed they ignored China’s renewable efforts entirely. We plot the proportional variation in data for primary energy consumption from various sources, over the years 2000 to 2013 which have been subject to correction, in Fig. 1. Fig 1. Proportional differences between the revised data and the original data (%); Source: authors based on data from the NBS Fig. 1 reveals that estimates of coal consumption have been under-reported with figures for actual totals revised upward by between 0 and 14% in the years between 2000 and 2013. But what has not been widely discussed (or mentioned at all) is that non-fossil fuel consumption has also been under-reported by between 15% and 22% over the same period. For example, 50 million of energy generated from non-fossil fuel sources including hydroelectricity, nuclear and wind power was underreported in the year 2012 alone. While China has been burning more coal than previously reported, it has also been generating more power from water, wind and sun than previously reported. In other words, while the continued growth of coal consumption is indeed alarming, it is also notable that increased consumption of energy based on non-fossil fuels was substantially greater in the years 2000 to 2010 and slightly greater in the years 2011-13 (Fig. 1). We shall return to the 2015 data in a moment. In terms of actual increases in the total energy and the coal consumption, there are several data series to consider. The first concerns the total energy consumption of the country, measured in terms of coal-equivalent. In Fig. 2 we show the new estimates of total energy consumption (in tonnes of coal-equivalent), and in Fig. 3 we show coal consumption again in the energy unit of tce. In both of the charts we plot the original data published in the previous2013 Energy Yearbook and the revised data in the latest 2014 Energy Yearbook. As shown in Fig. 2, even with the adjustments, the expected curve for total energy consumption in the next five years still approximates the official target of 4.8 billion tce by 2020 (where we provide an extrapolation of the curve based by us on a quadratic function).2 So the upward revision of past data points does not disturb the 2020 target for primary energy consumption. Similarly, it is also reasonable to expect that the official target for coal consumption in tonnes of coal-equivalent, i.e. 62% of the total energy consumption or about 3 billion tce by 2020, can still be met even with the new data (Fig. 3). Fig. 2 Revised energy data in terms of coal-equivalence in China and the 2020 target; Source: authors based on data from the NBS and other government documents Fig. 3 Revised coal consumption in terms of tonnes of coal-equivalent in China and the 2020 target; Source: authors based on data from the NBS and other government documents Exploring the data further reveals that the difference between the revised and original total energy data is mainly attributable to the increases in the reporting of energy use in three energy-intensive industries, namely basic chemical and chemical product manufacturing, non-metallic mineral product manufacturing, and iron and steel manufacturing. The upward revision of energy consumption in those three industries, accounting for 55, 84, and 77 million tce respectively, contribute no less than 53% of the total increase between the original and revised energy consumption of the country in 2012. For the coal consumption in terms of tonnes coal equivalent (tce), the most significant revision occurs in the coal mining and coal washing industry, which has a revised coal consumption in 2012 of 146 million tce (accounting for almost 25% of the discrepancy between original and revised figures for coal consumption in tonnes of coal-equivalent). This is followed by the discrepancies in basic chemical and chemical product manufacturing (80 million tce of coal, or 14% of the total difference), non-metallic mineral product manufacturing (13% of the total difference) and electric power generation (11% of the total difference). The substantial revision of energy use data in those energy-intensive industries would likely be a result of the previous underreporting of capacity additions in those industries. For example, the documentary ‘Under the Dome’ released early this year suggests that a large number of small steel mills and coal mines in China were built without official approvals. Consequently they are unlikely to report their energy usage properly if at all. On the other hand, with the enforcement of environmental laws3 as well as the economic slowing down, many of those industries recently faced significant declines. In the steelmaking industry, for example, one of us has argued that the crisis facing the industry reflects a structural change and has passed its production peak.4 But the real interest of the NYT, and of everyone else, is in the upward estimates of raw coal consumption, which we indicate in Fig. 4. This shows raw coal consumption in its original form as the blue line, and revised coal consumption data as the black line. The increased estimate of raw coal consumption for 2012 adds up to a figure of 4.1 billion tonnes – as compared with the original figure of 3.5 billion tonnes of raw coal consumption. This is how the NYT arrived at its figure of an upward revision of 600 million tonnes of coal burnt in the same year (the difference between 3.5 Gt and 4.1 Gt). Thus we agree with the NYT on the scale of China’s correction for its coal consumption. Fig. 4 Revised coal consumption data (in tons) in China and the 2020 target; Source: authors based on China Energy Statistical Yearbook 2013 andChina Energy Statistical Yearbook 2014. Note that the 2014 figure is estimated by the authors based on a statement in the 2014 National Economic and Social Development Statistics Bulletin released in Feb 2015 that “coal consumption in 2014 decreased by 2.9% from the 2013 level”. While the statement needs to be taken with caution given the revision of the energy data, we believe the information is still indicative, especially given that the compilation of the data in the Bulletin appears to have taken the latest results from the 3rd Census into account. China’s target is to use less than 4.2 billion tons of coal per year by the year 2020. However, according to revised data, the raw coal consumption in 2013 already reached 4.24 billion tons. There seem to be only two options now for China. One is to reduce the use of coal from its 2013 level, which would represent the ‘peak’ of coal consumption of the country in that case; or to revise its official target. The coal consumption for 2014 can only be estimated indirectly. As explained in the note for Fig 4, we refer to the statement provided by a separate document, the 2014 National Economic and Social Development Statistics Bulletin, and estimate that the raw coal consumption for 2014 would have been about 4.12 billion tons. This figure is subject to further examination when new official data is released. As a result of the estimate, the trend in which coal consumption falls year on year is not changed by the revision of energy data. The official target for coal consumption which has been set at a maximum of 4.2 billion tonnes by 2020, would still seem to be eminently achievable if the falling trend continues. China has been emphasizing its adherence to energy efficiency gains specified as targets in the current 12th FYP covering the years from 2011 to 2015. The evident trend towards a decoupling of China’s energy consumption from its economic growth appears to survive the revision of energy data. According to the information revealed by the NBS, the GDP figures would have also been adjusted upward based on the census data. The exact revision of GDP data is unknown at this stage, 5 but according to the 2015 Statistics Abstract which also takes the census results into consideration, the energy elasticity (the ratio of the change in energy consumption to the change in GDP) has been well below 1 since 2005 — and continues to fall (Fig 5). An elasticity of energy consumption below 1 implies the decoupling of energy consumption from economic growth. Comparing the revised data in energy elasticity and the original data, the differences seem very small, and almost negligible since 2012 (refer to the orange bars in Fig 5). Fig 5. Elasticity of energy consumption: Revised data; Source: authors based on data from the NBS 3. China’s electricity generation data for 2015 and new thermal generation approvals In our opinion the more pressing issue is that of China’s recently reported approval of new coal burning electric power generation projects, as revealed in the most recent story in the NYT and as previously covered in a report from Deutsche Bank and separately from Greenpeace East Asia. First let us offer some good news. Data for the first three quarters of 2015 from the China Electricity Council indicate that once again the growth of new generating capacity based on water, wind and sun greatly exceeds the growth of new capacity based on burning fossil fuels. The data are shown in Table 1. Note in particular that generating capacity powered by wind grew to 108.9 GW, up 28.3 % over the 2014 level, while capacity powered by solar grew by 61.4% above the level in 2014 – compared with growth of just 6.8% in fossil fuel burning capacity. Thus the trend towards China’s greening of its electric power system at the margin (in terms of addition of new capacity) continues strongly. Now the bad news. There has been a spurt in planning approvals for new thermal (fossil fuel burning) capacity. It represents a significant increase in numbers of approvals and scale of construction of thermal power stations, with the implication that there will be increases in carbon emissions in the next three to five years when those power stations start to operate. The NYT story focused on the fact that 155 new thermal power stations had been approved, largely by provincial governments, adding a further 123 GW of new capacity to existing coal-burning power capacity. According to a Chinese media report 6, by September 2015 an even worse figure of about 200 GW of thermal power capacity had been granted provisional approval, with the projects being cleared to carry out preparatory work. The actual construction will of course be subject to further conditions, however. There are some estimates that those new investments, if carried through to full realization, would create considerable over capacity (of the order of 200 GW) and thereby a significant carbon emissions problem – even worse than that reported by the NYT. Table 1 Electric power capacity by the end of Sep 2015 Source: authors based on data from the China Electricity Council * Note: only the hydro plants with a capacity over 6MW are included. In our view, the increase seems to be driven by two major factors. First, the fall in the price of coal means that margins are superior in coal-based electricity generation and hence there is greater financial incentive for investment by companies and governments alike. Such development provides new evidence that China should create mechanisms to counteract the economic incentive derived from the fall in coal price, perhaps by implementing a carbon tax in some form (as now announced). Second, a reform in 2014 shifted the locus of approval from the national level (through the National Development and Reform Commission (ND&RC)) to the local level, through provincial governments. Since local governments have a strong incentive to create new investments and new power sources, the new projects are now more likely to be approved. Of course there is scope for the national government to intervene once the implications of this shift in locus of approvals becomes more widely known and appreciated. We agree with the emphasis that the NYT placed on the fact that it is provincial governments that are mainly responsible for the surge in new coal-fired plant approvals. In our own work on China’s energy trajectory, we have emphasized that there are parallel tracks, one being the coal-burning ‘black’ trajectory (with its growth getting smaller each year, with absolute reduction in 2014) and the other the ‘green’ track involving non-fossil pathways and in particular the strictly renewable pathway based on water, wind and sun (whose net additions are expanding each year). Do the revisions to the energy data have any impact on our argument? Actually our data for coal consumption have mainly been taken from the US Energy Information Agency (EIA). The revisions to China’s energy data have yet to be reflected in the data on China published by the EIA, but in the interests of accurate reporting, we are revising our basic chart on China’s ‘black face’, to show the new levels of total coal consumption – as depicted in Fig. 6. Figure 6. Chinese thermal power generation and rising coal consumption up to 2014 (revised); Source: Mathews and Tan (2015), based on data from the US EIA and the NBS, China, and the China Electricity Council Our data points for total coal consumption in this chart are now shifted upwards (the new data points are shown in red above the old data points in black). Note again that the trend towards lower coal consumption in 2014 is preserved – in agreement with the recent Greenpeace report. 7 In closing, we have always emphasized that China’s energy production and consumption patterns with the current dependence on fossil fuels (largely coal) is a large ship that will take considerable time to turn around. But turning is what the ship is doing – as disclosed by the greening at the margin, where net additions to generating capacity, to new investment and to electricity generated all reveal green sources outstripping the black. China has every incentive to pursue such a course grounded in enhancing its energy security and in reducing levels of particulate pollution that create unbearable smog. The new data on China’s past coal consumption levels mean that the black picture we have always painted has been even blacker than we imagined. But it would be quite mistaken to project these data revisions as meaning that China has been ‘found out’ in seeking to minimize its past coal consumption. On the contrary it reveals a greater openness and preparedness to allow the data to be published, irrespective of what it shows; indeed the new data encourages greater pressure to be brought to bear on major GHG-emitting industries to reform their practices. And we note that the new data reveal not only that coal consumption was under-reported – but also that dependence on renewable sources (hydro, wind, sun) has been under-reported as well – a boon for China and the world. It is China’s preparedness to be more open and transparent in its energy data that gives us greater confidence that the reported trends towards a greening of the system are real trends and not just statistical artefacts. Greenpeace (2015) Is China doubling down on its coal power bubble? Available here. 1 For example, see an article published in Reneweconomy.com.au based on a report from Deutsche Bank; and a report by Greenpeace East Asia. 2 Those official targets are stated in the Energy Development Action Plan (2014-2020), released by the State Council in November 2014 (in Chinese). The details of the Plan can be found in English in ‘China unveils energy strategy, targets for 2020’, China Daily, Nov 19 2014. 3 See our previous article on this topic in this Journal as well as our new book on China’s renewable energy revolution (Mathews and Tan 2015). 4 See the article ‘The Post-Steel Era of China’ published in Financial Times (Chinese Edition) by Hao Tan (in Chinese). 5 A preliminary revision of the GDP data indicates an increase of the Chinese GDP in 2013 by 3.4%; and it is suggested that the upward revision could even be higher if a more internationally acceptable standard is adopted for calculating the GDP. See a commentary on this matter.
News Article | March 2, 2016
The U.S. led the world in wind energy production in 2015. American innovation at work: U.S. top wind energy producer in world The United States created more electricity from wind than any other country in 2015, according to new data released by the Global Wind Energy Council and the U.S. Energy Information Administration (EIA). American ingenuity and strong wind resources have helped make U.S. turbines the most productive in the world, producing over 190 million megawatt-hours of electricity in 2015. That’s significantly more than runners-up China, Germany and Spain. Although China has more than two times the installed wind power capacity as the U.S., production-based policies and top notch wind reserves allowed American turbines to generate more energy. The new data also included some impressive milestones. Iowa became the first state to crack 30 percent wind-generated electricity, and 12 states now generate at least 10 percent of their electricity with wind. New to that list is Texas, the nation’s largest electricity user. Wind created enough electricity in 2015 to power 17.5 million typical American homes. To put that into context, that’s enough to satisfy the full electricity demands of Colorado, Oklahoma and Kansas combined. These findings show the U.S. continues to be on the path to hit the Department of Energy’s target of generating 20 percent of America’s electricity with wind by 2030. Not only would achieving that goal mean more clean, affordable energy, it could support as many as 380,000 jobs. So let’s give ourselves a hand! We should all be proud that America is leading the world toward a clean energy future. Data used from the EIA can be found at www.eia.gov/electricity/monthly in tables 1.1 and 1.1A, and in this public statement by the China Electricity Council http://bit.ly/1oJQ3qT.
Yuan J.,North China Electrical Power University |
Hou Y.,China Electricity Council |
Xu M.,University of Michigan
Renewable and Sustainable Energy Reviews | Year: 2012
China has pledged to reduce its CO 2 emissions per unit of GDP by 40-45% by 2020 as of 2005 level. This research examines China's 2020 carbon intensity target and its interdependence with the overarching national economic and social development goals. The results show that, with annual GDP growth rate at 7% during the 12th Five-Year-Plan (FYP) period and 6% during the 13th FYP period, the 45% CO 2 intensity reduction target implies annual CO 2 emissions of 8600 million tonnes by 2020, close to 8400 million tonnes, the UNFCCC 450 ppm scenario for China. However, achieving only the 40% reduction target will lead to 9380 million tonnes CO 2 emissions in 2020 which largely surpass the UNFCCC 450 ppm scenario. We conclude that Chinas 45% CO 2 intensity reduction target is not only within international expectations but also self-consistent with its overall economic and social development strategy. Then primary energy and power planning for implementing the 45% carbon intensity reduction target is proposed. Related investment requirements are also estimated. To achieve the target, China needs to restructure the economic structure for significant improvements in energy conservation. © 2012 Elsevier Ltd. All rights reserved.