in Business, Economics and Finance

China is Ramping Up Use of Renewable Energy

Sara Hsu, series editor of Comparative Studies of Sustainable Development in Asia, writes about the surge in the use of renewable energy in China.

China is known for having pollution levels so high in urban areas that citizens must wear a respiratory mask in order to brave the outdoors without breathing in carcinogens, so it may come as a surprise that China is one of the top producers and consumers of renewable energy. Reliance on renewable resources such as hydropower, wind and solar energy, and geothermal energy has increased over the past ten years, and, combined with nuclear energy, currently provides about 18% of China’s power.

China has lofty aims—the country announced in January that it would invest $360 billion in renewable energy by 2020, and aims to produce 20% of its energy from clean sources by 2030. This is greater than the current share of renewable energy in domestic electricity production in the US, which was under 15% in 2016. Last year alone, China added 35 GW of solar generation, close to Germany’s total solar capacity. In fact, China leads all other nations in installed photovoltaic solar power; its runner-up is Japan, whose installed capacity is about half of China’s.

China has shown that it can produce renewable energy, and even more interestingly, that it can depend on renewable energy. In recent news, Chinese province of Qinghai ran solely on renewable energy for seven days, June 17-23 of this year. This was part of a test by the State Grid Corporation of China to find out whether reliance on renewables is possible in the long run. The test was successful, and, impressively, Qinghai generated 1.1 kilowatt hours of energy to serve more than 5.6 million residents that week.

China still has improvements to make in its renewable energy system, however. The country’s renewable energy sources do not always touch the grid, for example, and grid operators sometimes prefer to use coal sources over renewable sources. Wind power output is lower than it should be because of this, and also because turbine quality tends to be lower than in other countries. Although China has the most installed wind capacity at about 33% of global installed wind power and the US has about 17%, China generates less electricity from wind than the United States.

Wind and solar power also tend to be less cost competitive than coal power, which puts them at a disadvantage. Local governments may favor inexpensive coal power, especially if coal is produced by suppliers in the local area. Even though coal consumption has been on the decline, it still provides about 60% of energy consumption. Coal usage in China has led to severe environmental problems, including contamination of air and water resources.

China is attempting to improve its environmental outlook, however, and has reduced excess capacity in the coal industry as well as called for increased flexibility in grid management for renewable energy access. Its commitment to increase the use of renewable energy resources by 2030 will help to keep its carbon footprint under control.  As a middle-income country and not a high-income country with vast fiscal resources, China should be commended for its effort to expand the use of renewables.

Sara Hsu is Associate Professor of Economics at the State University of New York at New Paltz, USA. Hsu specializes in Chinese economic development, informal finance, and shadow banking. She is the editor of Palgrave Macmillan’s series Comparative Studies of Sustainable Development in Asia.