China Leading Global Race to Make Clean Energy

China vaulted past competitors in Denmark, Germany, Spain and the United States last year to become the world’s largest maker of wind turbines, and is poised to expand even further this year.

 A worker inside a wind turbine at a factory in Tianjin, China.

China has also leapfrogged the West in the last two years to emerge as the world’s largest manufacturer of solar panels. And the country is pushing equally hard to build nuclear reactors and the most efficient types of coal power plants.

These efforts to dominate renewable energy technologies raise the prospect that the West may someday trade its dependence on oil from the Mideast for a reliance on solar panels, wind turbines and other gear manufactured in China.

“Most of the energy equipment will carry a brass plate, ‘Made in China,’ ” said K. K. Chan, the chief executive of Nature Elements Capital, a private equity fund in Beijing that focuses on renewable energy.

President Obama, in his State of the Union speech last week, sounded an alarm that the United States was falling behind other countries, especially China, on energy. “I do not accept a future where the jobs and industries of tomorrow take root beyond our borders — and I know you don’t either,” he told Congress.

The United States and other countries are offering incentives to develop their own renewable energy industries, and Mr. Obama called for redoubling American efforts. Yet many Western and Chinese executives expect China to prevail in the energy-technology race.

Multinational corporations are responding to the rapid growth of China’s market by building big, state-of-the-art factories in China. Vestas of Denmark has just erected the world’s biggest wind turbine manufacturing complex here in northeastern China, and transferred the technology to build the latest electronic controls and generators.

“You have to move fast with the market,” said Jens Tommerup, the president of Vestas China. “Nobody has ever seen such fast development in a wind market.”

Renewable energy industries here are adding jobs rapidly, reaching 1.12 million in 2008 and climbing by 100,000 a year, according to the government-backed Chinese Renewable Energy Industries Association.

Yet renewable energy may be doing more for China’s economy than for the environment. Total power generation in China is on track to pass the United States in 2012 — and most of the added capacity will still be from coal.

China intends for wind, solar and biomass energy to represent 8 percent of its electricity generation capacity by 2020. That compares with less than 4 percent now in China and the United States. Coal will still represent two-thirds of China’s capacity in 2020, and nuclear and hydropower most of the rest.

As China seeks to dominate energy-equipment exports, it has the advantage of being the world’s largest market for power equipment. The government spends heavily to upgrade the electricity grid, committing $45 billion in 2009 alone. State-owned banks provide generous financing.

China’s top leaders are intensely focused on energy policy: on Wednesday, the government announced the creation of a National Energy Commission composed of cabinet ministers as a “superministry” led by Prime Minister Wen Jiabao himself.

Regulators have set mandates for power generation companies to use more renewable energy. Generous subsidies for consumers to install their own solar panels or solar water heaters have produced flurries of activity on rooftops across China.

China’s biggest advantage may be its domestic demand for electricity, rising 15 percent a year. To meet demand in the coming decade, according to statistics from the International Energy Agency, China will need to add nearly nine times as much electricity generation capacity as the United States will.

So while Americans are used to thinking of themselves as having the world’s largest market in many industries, China’s market for power equipment dwarfs that of the United States, even though the American market is more mature. That means Chinese producers enjoy enormous efficiencies from large-scale production.

In the United States, power companies frequently face a choice between buying renewable energy equipment or continuing to operate fossil-fuel-fired power plants that have already been built and paid for. In China, power companies have to buy lots of new equipment anyway, and alternative energy, particularly wind and nuclear, is increasingly priced competitively.

Interest rates as low as 2 percent for bank loans — the result of a savings rate of 40 percent and a government policy of steering loans to renewable energy — have also made a big difference.

As in many other industries, China’s low labor costs are an advantage in energy. Although Chinese wages have risen sharply in the last five years, Vestas still pays assembly line workers here only $4,100 a year.

China’s commitment to renewable energy is expensive. Although costs are falling steeply through mass production, wind energy is still 20 to 40 percent more expensive than coal-fired power. Solar power is still at least twice as expensive as coal.

The Chinese government charges a renewable energy fee to all electricity users. The fee increases residential electricity bills by 0.25 percent to 0.4 percent. For industrial users of electricity, the fee doubled in November to roughly 0.8 percent of the electricity bill.

The fee revenue goes to companies that operate the electricity grid, to make up the cost difference between renewable energy and coal-fired power.

Renewable energy fees are not yet high enough to affect China’s competitiveness even in energy-intensive industries, said the chairman of a Chinese industrial company, who asked not to be identified because of the political sensitivity of electricity rates in China.

Grid operators are unhappy. They are reimbursed for the extra cost of buying renewable energy instead of coal-fired power, but not for the formidable cost of building power lines to wind turbines and other renewable energy producers, many of them in remote, windswept areas. Transmission losses are high for sending power over long distances to cities, and nearly a third of China’s wind turbines are not yet connected to the national grid.

Most of these turbines were built only in the last year, however, and grid construction has not caught up. Under legislation passed by the Chinese legislature on Dec. 26, a grid operator that does not connect a renewable energy operation to the grid must pay that operation twice the value of the electricity that cannot be distributed.

With prices tumbling, China’s wind and solar industries are increasingly looking to sell equipment abroad — and facing complaints by Western companies that they have unfair advantages. When a Chinese company reached a deal in November to supply turbines for a big wind farm in Texas, there were calls in Congress to halt federal spending on imported equipment.

“Every country, including the United States and in Europe, wants a low cost of renewable energy,” said Ma Lingjuan, deputy managing director of China’s renewable energy association. “Now China has reached that level, but it gets criticized by the rest of the world.”

Article by Keith Bradsher, NYTimes

China Supplants the U.S. As Most Desirable Place for Clean Energy Investments

 The clean energy race is over. At least for now.

A new Ernst & Young report says what many have suspected. China has surpassed the United States as the most desirable place for clean energy investment.

"China invested almost twice as much in clean energy projects compared with the U.S., and has emerged as the world's market leader in installed wind power capacity in 2009," the report said.

Little policy support by the U.S. Congress is the primary culprit. Manufacturers and capital markets look to the 10-year horizon for clean energy support from central governments and the contest isn't close.

The American clean energy industry and affiliated trade groups have been warning for years that the U.S. would fall behind.

What's been clear for some time China doesn't always play fair - check its currency valuation -- so why would manufacturing and export policy be any different?

That's why the trade case the United Steelworkers of America last week asked the Obama administration to pursue seems to have a kind of finger-in-the-dike quality to it. Yes, even if proved, and a quick read of the complaint's highlights looks pretty convincing, then what?

Sanctions from the World Trade Organization - years away, at best - may come, but one can see the lead will be insurmountable by the time the original case gets resolved.

Article by Bill Opalka, RenewablesBiz

Why Greening China is a National Priority (Interview)

It’s a 14-hour flight from New York City to Beijing. But despite the distance, the similarities between the two cities are indubitable.

Just like New York, Beijing is a thriving mega world of jam-packed architectural wonders, raw talent, cut-throat business and a resilience to overcome its own marked recession.

NRDC was the first international environmental organization to establish clean energy and green building programs in China. Photo: Flickr

But Beijing is an oxymoron. It’s the capital city of the world’s No. 1 energy consumer and the world leader in clean energy, making it both a model and a learning experience for the United States’ own green endeavors.

More than 15 years ago, the Natural Resources Defense Council (NRDC) took on accelerating the greening of China as one of its top six priorities.

Alex Wang, senior attorney; director for the China Environmental Law Project, tells us why the world’s two most energy-intensive countries should take lessons from and make investments in each other.

EARTH911: One of the NRDC’s overarching goals is the greening of China. How influential is China on the United States’ own environmental progression?

ALEX WANG: China and the U.S. can learn a great deal from each other. The U.S. has, over the past 40 years, been able to reduce emissions of key pollutants by more than 50 percent, while growing GDP by nearly 200 percent. China is very interested in how the U.S. achieved this.

China now is accelerating its investments in energy efficiency and clean energy technologies at an unprecedented pace. Clean energy technology is a critical area for U.S.-China collaboration and this work is beginning. But this work needs to be ramped up significantly.

E911: China has surpassed the U.S. in clean energy investments, even with that promised funding, why is it important that we get involved?

AW: It is imperative that the U.S. and China, the world’s two largest greenhouse gas emitters, work together to tackle the challenge of climate change. An important component of this will be joint collaboration on key clean energy technologies.

The U.S. and China can share information, financing and expertise in a variety of areas to accelerate the development of these technologies. And the U.S. and China are already doing this.

When President Obama went to China at the end of 2009, the two countries signed a series of cooperation agreements on electric vehicles, renewable energy, energy efficiency and other key issues.

E911: Other than more governmental attention to clean energy and global warming, what can the U.S. do to become a “powerhouse” for environmental progress?

AW: We need to wake up to the reality that clean energy will be one of the key drivers of economic prosperity in the future. Other countries are beginning to accelerate their efforts on developing clean energy industries, and if the U.S. does not take this seriously we will lose out.

E911: How much of an impact does Chinese pollution have on Americans? (There have been stories of trash from China appearing on the West Coast of the U.S., for example.)?

AW: Chinese pollution does have an impact on the U.S., and it is critical that China ramps up its environmental regulation. But this is a two-way street.

In 2009, the money China invested in clean energy reached $34.6 billion, far surpassing any other major economy in the world. Photo: Flickr

The U.S. is now sending a tremendous amount of e-waste and other pollution to China. More critically, a significant percentage of the pollution produced in China is for export of products to the rest of the world.

One-third of greenhouse gas emissions emanating from China, one study found, are from producing products for export.

So, we in the U.S. can actually play a role in improving this situation by thinking carefully about the way we consume and demand that the companies we purchase from use or source from companies that use the most energy efficient, least polluting methods in China.

E911: We hear about China’s continued investment in clean energy, what is country about manufacturing waste and recycling?

AW: China has a great deal of work to do on pollution, control of waste and recycling. Environmental officials are out-manned and out-financed.

Whereas clean energy is receiving a flood of investment and policy support now, pollution control – while better than in the past – still needs a rapid infusion of resources, strengthened laws and policies.

E911: It would be interesting to learn more about China’s goals. What do the Chinese people think about these initiatives? We only hear about news from officials, but is there an overall sense of environmentalism from Chinese residents?

AW: Chinese officials and the citizenry alike know that pollution and environmental degradation are a serious problem that must be resolved. Environmental awareness has never been higher in China.

However, in the past there has been a view in many quarters that environmental protection and greater economic prosperity are in conflict. That viewpoint is changing as people realize the enormous cost that environmental degradation is visiting upon China.

E911: In the time that you have spent in China, what has been the most profound change you have witnessed?

AW: The biggest change we have seen over the last 15-20 years is the elevation of environmental protection and energy efficiency to a central place in China’s policies and laws.

Over the last five years, China has made energy efficiency and pollution targets one of the central elements of its five-year development plan. The rhetoric and the awareness of the issues are there. However, implementation is still an enormous challenge.

Article by Amanda Wills Earth911.com

Clean Tech Investments Still Strong

Investors Are Still Flocking To The Green Energy Sector.

Global investment in clean technology and renewable energy companies by venture capital and private equity funds topped $5 billion in the second quarter of this year. While this is a slight drop - 4 percent - from January-March, the amount is 45 percent above the corresponding period last year.

That's according to a report from VB/Research "CleanTech & Renewable Energy Review" for the second quarter of 2010.

"The market lacks pre-credit crunch exuberance but has recovered significantly from the moribund levels of 2009," said report author and VB/Research CEO Douglas Lloyd.

Venture capital (VC) accounted for 43 percent of total investment ($2.2 billion) this quarter, similar to the first quarter of this year. There was a pronounced shift in the way VC was invested: early-stage VC investment declined by 31 percent while late-stage VC investments surged by 63 percent, according to the report.

Europe bucked the trend with a 40-percent rise in the recent quarter, with two deals accounting for $100 million. But the interesting part in the United States is the effect government support for a clean energy project had on the private capital markets. That's a point clean energy advocates make every chance they get.

In this case, large-scale solar developer BrightSource Energy Inc. raised $150 million of funding within weeks of securing $1.37 billion of loan guarantees from the U.S. Department of Energy in February.

Development capital and buyout investment in the second quarter increased by 33 percent and 52 percent, respectively, compared to the corresponding period last year. Corporate VC activity remained robust with corporations, utilities and industrial groups including Alstom SA, Total SA, Israel Corp., GE Capital and Intel Capital Corp., investing in 26 companies through their venture capital divisions.

But the investors seem to be more selective, according to Lloyd. "The main beneficiaries of this upturn are more mature companies seeking late-stage VC funding or development capital, particularly those that have received government support," he said.

And with the way government support has been doled out this year, that trend may continue.

Article by Bill Opalka Courtesy of RenewableBiz.com

Copenhagen Forecast: Snow, Protest, Apocalypse; Can Obama Clear the Air?

The Final Stretch

Citizens around the world have called for a fair deal at climate talks, and in Copenhagen, they plan to make that call louder tomorrow with civil disobedience. The world's leading mayors have also called for a real deal, as have some of America's leading businesses. But where it counts, in the negotiating rooms, something is, sorry to say, still rotten in the state of Denmark.

No one said bringing all the world's countries together to hash out a deal -- or really, the foundations of a deal -- would be easy. But after nearly half a decade of facing the inconvenient truths of climate change, and its economic, political, and moral imperatives, does it have to be this hard?

Though we may not be fighting the apocalypse, as Greenpeace would have it, in Copenhagen we're staking the boldest claim yet for the future of the earth. We've messed it up -- we know that -- and we have the power to correct our mistake. So of course it has to be hard, because it has to be good.

Where We Are Now

To get things on track for the last day before heads of state take over, Denmark's Environment Minister, Connie Hedegaard, has formed five small groups to sort out the five "crunch issues" at the summit:

Improving the targets to be set by developed countries to reduce their emissions of greenhouse gases (GHG) that are causing climate change

* The mitigation actions of developing countries;*

* The long-term finance to be provided by rich nations so that poor countries can cope with climate change effects;

* How to deal with emissions caused by the aviation and shipping industries; and

* Special circumstances of some countries (such as Russia) in relation to mitigation.

The Divisions

The end times may not be upon us, but the developed and developing countries certainly look more divided than before. The African nations, which suspended talks on Monday, want a continuation of the Kyoto Protocol, a regime the US and most other developed countries reject outright.

Rich countries are also reluctant to dole out the long-term aid poor nations need to survive and fight climate change. The US is especially adamant that it won't give China any money -- or reparations, as the US negotiator idiotically called them -- because China doesn't need the US's money. China's negotiator seemed to agree with that at first, but then Beijing backtracked, saying China deserves money too.

What China says it doesn't deserve is to have its emissions cuts overseen by any carbon police, a demand the US insists is an absolute must for any climate deal. Meanwhile, the Alliance of Small Island States (AOSIS) says that an upper limit of two degrees Celsius of warming isn't good enough as it would result in a loss of coastlines and sometime entire islands; they want a 1.5-degree cap, but not all developing nations do. And now, thanks to a backroom deal between France and Ethiopia, even the African nations are showing rifts.

The Agreements (Sort Of)

There have been some promising steps forward, apart from the promises made just before the summit by China, India, Brazil and others. Yesterday a number of potential financing options were put on the table. Today Holland committed to the 40 percent cuts called for by Kyoto.

Meanwhile, the Reducing Emissions from Deforestation and Degradation scheme, known as REDD, got a dollar amount affixed to it today: $22 billion to $37 billion to jump start the plan, which would seek to halt deforestation in developing nations completely by 2030. (Currently, the only money being offered for a climate deal is a meager $30 billion in so-called "kick-start" financing over three years; some groups also call it "kick-end" financing because it doesn't go beyond that date).

But ultimately, these steps forward are signs of good will and good faith, not agreements that are likely to make it into a final agreement.

Endgame - Or New Game?

With expectations as low as ever, and anger and concern rising, Barack Obama may be well positioned to attempt a modest Hail Mary pass when he flies in on Thursday. The timing of the White House's report today about green jobs seems fortuitous; what better way to prime the American public for a ramping up of the US's carbon cutting commitments? But chances are, his throw won't be strong enough, and if it is, he may not have any teammates to catch it.

At the summit where world leaders were supposed to ink a binding deal on climate change, environmental groups, activists and journalists are already preparing for a greenwash, and getting ready to pack their bags for the next possible climate agreement end zone in Mexico.

Before they get there though, they may need to help remake the game completely.

Article by Alex Pasternack Courtesy of Treehugger.com http://www.treehugger.com/files/2009/12/copenhagen-forecast-snow-protest-apocalypse-can-obama-clear-the-air.php

Helping Poor Nations Switch to Clean Energy Could Bring a $100 Billion Renewable Boom

It's disconcerting to see the media continue to frame this investment as a 'giveaway'--it only serves to build opposition to the droves that feel we don't owe developing countries anything. And that's exactly how the Times frames it:

"The money would be used to help developing nations reduce emissions by switching to renewable energy sources like wind and solar and by compensating landowners for not cutting down or burning forests, a major source of carbon dioxide emissions.

It's like it's one giant philanthropic fund from the rich world to the poor--but that shouldn't be the case at all. “

Instead, as Susan Kraemer at Clean Technica points out, the media should be analyzing the potential benefits that such an investment could have on the world economy. She writes:

..this is an investment in solar and wind and flood wall businesses. The real beneficiaries are the countries whose renewable energy businesses will grow from this investment. A more appropriate headline might be: Climate Deal Likely to Bring Big Boom to Renewable Sector.

This so-called giveaway is not from the developed to the developing world, but from the developed world's governments to their own developing companies in the post carbon age. Their own renewable energy companies will benefit - and add jobs.

How much might they benefit? Two think tanks, San Francisco-based ClimateWorks and The EU's Project Catalyst; whose work has helped shape the negotiations in Copenhagen estimate that this investment globally will amount to about $100 billion by 2020. Just from this assistance fund.

These are the right things to be considering in determining how to allocate aid--not dragging our feet because we have to give poor nations money. Let's consider how the burgeoning renewables industry could benefit--and how American companies could profit by investing in such projects abroad. A thriving renewable sector could bolster developing nations' economies and present real opportunities--so let's stop complaining that it will be so expensive to bail out poor polluting nations, and start asking the right questions.

Courtesy of Brian Merchant - TreeHugger.com