Beijing is famous for its landmarks—the Forbidden City, Tiananmen Square, the Great Hall of the People—and notorious for its air quality. On Jan. 26, the U.S. Embassy in the Chinese capital reported the average daily air quality index was in the red zone. That’s face-mask conditions for the average motorist and bicyclist. The sad truth is that Beijing is in the red zone far too often.
The city’s pollution problem is largely self-inflicted, a result of China’s reliance on coal to power the country’s booming economy. About 70 percent of China’s power—85 quadrillion BTUs a year—comes from coal. By 2035, the country’s consumption of coal is expected to rise in absolute terms to about 112 quadrillion BTUs. The consolation for Beijing’s residents is that China is starting to invest in cleaner, more efficient coal-fired plants.
The emissions from coal are nasty and include nitrogen dioxide, sulfur dioxide and carbon dioxide. SO2 and CO2 are greenhouse gases. Since 2008, China has held the unenviable distinction of being the world’s top CO2-emitting nation, according to the Paris-based International Energy Agency. At 6.5 billion metric tons of CO2 a year, China’s output beats that of the former leader, the United States, by about 1 billion metric tons and amounts to about 22 percent of the world’s total annual CO2 emissions. (The U.S. still holds the top rank when it comes to CO2 per capita.)
China is well aware of its ranking and its predicament. With GDP growth of 8 to 10 percent a year expected for the foreseeable future, it’s doubtful that China’s 1.3 billion people can hope to enjoy their newfound wealth in relative environmental comfort unless the country starts cleaning up its act. Thanks in part to its one-party system, it is doing just that.
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Clean energy powerhouse
There’s a consensus among analysts that China is on its way to becoming a dominant player in the global clean energy business. In the past few years, the country has outspent other nations on renewable energy technology and infrastructure, including wind, solar, electric vehicles and the batteries that power them. Hydroelectric and nuclear power also figure prominently in the country’s energy plans.
Based on government and industry publications and actions—including China’s 12th Five Year Plan, which sets the national governmental agenda for 2011-2015—the country’s renewable energy sector is poised for strong growth, both domestically and overseas, over the next few years.
Ernst & Young calls China the “clear leader” in the renewable space, ranking the country first in its latest “Renewable Energy Country Attractiveness Index” report, published in November. The previous leader, holding the title for three and a half years, was the United States; it now is five points behind China.
Similarly, a recent Pew Charitable Trusts report calls China the “world’s clean energy powerhouse.” The country spent $34.6 billion in the renewable energy sector in 2009, according to Pew; that’s nearly twice the U.S. figure of $18.6 billion. Granted, the United States was in the midst of the Great Recession that year. But even as its economy recovers, many pundits say, it’s unlikely the country will regain the lead, given the rhetoric coming out of Washington following the midterm elections.
Built-asset consultancy EC Harris (London) estimates that China invested $120 billion to $160 billion in renewable energy between 2007 and 2010. The consultancy ranks China’s clean energy investment climate fourth, behind Germany, France and the United States. The investment factors considered include energy policy, incentives, subsidies, purchasing quotas and tax breaks.
“The Chinese government has set an ambitious target of becoming the world leader in terms of design, development and production of renewable energy technologies, and has invested huge sums of money into developing this sector,” said Mark Stewart, an EC Harris partner. “The aim is to diversify away from producing cheap goods and into developing and producing high-tech, high-value, homegrown technologies, starting with those in the renewable energy sector.”
Today, China generates less than 8 percent of its total energy from wind, solar, nuclear and hydroelectric power, but the nation’s goal is to double nonfossil-fuel-based energy production to 15 percent by 2020, according to the U.S. Energy Information Administration. Coal’s share of the pie is expected to decline to 62 percent by 2035.
Hydroelectric power generation in China will increase significantly as the Three Gorges Dam comes online. When completed this year, the dam will be the largest hydroelectric power plant in the world, with capacity of 22.5 GW. Dams, of course, have their own environmental implications, and the Three Gorges project has stirred controversy at home and abroad. But renewable energy sources, notably wind and solar, are also expected to see dramatic growth in China over the next 10 years.