By Ros Donald
While Europe and the US’s growth figures continue to limp along, China’s economic expansion remains remarkably resilient in the face of the global economic crisis. Chinese economic growth is reflected both in its growing carbon footprint and the increasing number of trade complaints it’s involved in.
In an interview with China Daily last week, former Chancellor and climate skeptic Nigel Lawson, defended China’s predominantly coal-fuelled growth, and warned against imposing emissions targets or trade barriers on the country. But does this really reflect where China is at?
China is certainly burning a lot of coal to fuel economic growth which is currently estimated at between seven and eight per cent. According to the International Energy Agency (IEA), China made the biggest contribution to the 6.1 per cent rise in carbon emissions outside OECD countries recorded in 2011. The IEA says China’s emissions rose by “720 million tonnes, or 9.3%, primarily due to higher coal consumption”. According to Chinese government figures, the country burned an extra 95 million tonnes of coal last year, compared to 2010.
But while China’s emissions are rising rapidly, it also has policies in place that are helping to limit the country’s carbon footprint. The IEA says energy efficiency and clean energy deployment meant China’s carbon intensity – the amount of carbon dioxide emitted per unit of GDP – fell by 15 per cent between 2005 and 2011, cutting China’s overall emissions by 15 gigatonnes of carbon dioxide.
China’s government says the country currently gets 8.3 per cent of its energy from renewables – and it’s led the world in terms of installed renewable energy capacity since 2010 with 103.36 gigawatts installed. For comparison, in 2011 renewables met 3.8% of UK energy consumption, with 12.3 gigawatts installed.
Last year China tripled its solar energy generating capacity and increased wind and hydropower capacity. China’s current five-year plan includes ambitions to increase the proportion of energy from non fossil fuels to 11.3 per cent by 2015.
The country appears to have much bigger carbon-cutting ambitions and plans to cap coal consumption this year in order to “reduce pollution and curb reliance on the fuel”, according to Bloomberg, with the National Development and Reform Commission vowing to take an “active part” in international efforts to mitigate emissions. Liu Tienan – the director of the country’s National Energy Administration – called for energy use to be kept below 4.1 billion tonnes of coal equivalent per year by 2015, although a spokesman from a state coal body voiced concern that the cap would make it hard to fuel China’s growth.
So although China has resisted signing up to binding emissions cuts at international summits, it’s undoubtedly got its own thing going on in terms of climate targets. It’s a complex picture that suggests China doesn’t want to be tied to coal forever – and that at least some parts of the government are keen to have a leading role in efforts to green the world’s economy, including cutting emissions.
China’s export industries
China’s growth is based on the ability to export cheap products. Its export-led growth policy allowed China to become the world’s biggest exporter in 2009, overtaking Germany. The country’s main export products include electronic goods, agricultural goods and machinery. You can see these figures in more detail on the World Trade Organisation (WTO) and Hong Kong Trade Development Council sites.
Renewable energy technology is one of China’s fastest-growing export industries, presumably because growth projections for the sector suggest there’s a lot of money in it. The Energy Information Administration, for example, predicts that world consumption of renewable energy will almost double by 2035. Since the early 2000s, for example, 95 per cent of China’s production of solar photovoltaic (PV) equipment has been destined for export markets, and China dominates the global market – accounting for half of world PV output, according to Bloomberg New Energy Finance.
Trade disputes with China
With export growth has come a fair share of trade disputes. China is involved in just under half of all trade conflicts brought before the WTO from 2011 onward. The press is full of stories entertaining the possibility of an all out trade war with the US – which Lawson’s interview is a nod towards. Republican presidential hopeful Mitt Romney, never one to pour oil on troubled international waters, has threatened to file a complaint with the WTO over alleged currency manipulation. He claims China is undervaluing the Yuan in order to flood the US market with under-priced products – a practice known as dumping.
The US has failed so far to make any blanket complaints about Chinese goods, but allegations that the Chinese state is producing under-valued products are common. The country’s renewables sector has taken centre stage in some of these tussles. Although many countries have created schemes to promote renewables exports, China’s have been especially comprehensive, and that is causing friction. Last year, for example, the Chinese government revoked grants of between US $6.7 million and US $22.5 million to domestic wind turbine manufacturers following a US complaint to the WTO. The government gave the subsidies on condition that the turbine manufacturers purchased parts and materials in China, provoking a complaint from US steelmakers.
China: the world’s green competition
The complaints about China’s renewables export industries indicate just how worried other countries’ domestic renewables industries are about competition from China. Last month, European solar companies asked the EU to investigate whether China is selling solar PVs at unfairly low prices, saying several of them now face bankruptcy due to competition from China. This follows a recent decision by the US to impose 31 per cent tariffs on Chinese PVs, after finding the Chinese government is subsidising panel exports.
China has become more confident in filing its own complaints, too. This year it filed a complaint about the US’s application of countervailing measures – tariffs designed to raise the price of subsidised goods – to a wide range of its products, eight days after the US solar tariffs were imposed. This willingness to file retaliatory cases has fuelled concerns that trade war with the globe’s other powers looms, despite Chinese protestations to the contrary.
Competition from China has its cheerleaders, too. The Worldwatch Institute, for example, finds in a recent report that Chinese products’ downward pressure on prices – coupled with progress in Chinese research and development – is generally a good thing for cleantech deployment. The institute says: “As the country’s skills in efficient, low-cost manufacturing are brought to clean energy industries, this could widen the energy options for the world as a whole.”
The new green superpower?
In the West, many stories of China’s economic rise tend to focus either on its carbon footprint or on accusations of mercantilism. This comes into focus especially in the world’s renewable energy industries, which – especially in the West – must promise domestic jobs to counter political arguments that they are expensive and ineffective. Cheap exports from China, competing with these infant industries have increased pressure on governments to impose tariffs, possibly at the risk of hurting faster green rollout in the process.
Though spooked by China’s aggressive market tactics, it’s possible these industries – and governments – could benefit from taking a look at China’s policies. A recent study from the University of Pennsylvania argues that China’s renewable energy experience could provide important lessons for other countries wishing to kick-start economic growth using new, low carbon technologies. By offering renewable energy industries consistent support combined with exposure to competitive markets, despite its dependence on coal, China now has one of the world’s leading green industries.
And China’s energy profile has to change – as the Pennsylvania study’s authors point out, the choking smog Beijing suffered last year illustrates that there’s a “newfound urgency” to China’s efforts to sustain growth while cleaning up its act. That doesn’t change the fact that China now has more to do than any other country to cut its emissions, but it’s worth bearing in mind.
UPDATE 14/08/2012, 4pm:
Here’s an update and a bit more detail on China’s renewable energy capacity stats. According to the PEW Charitable Trusts’ most recent edition of its report ‘Who’s winning the clean energy race?’, China has 133 gigawatts of renewable energy capacity installed as of 2011, up from 103.36 gigawatts in 2010.
This breaks down into wind: 64 gigawatts, small hydro: 62 gigawatts, biomass and waste: 4 gigawatts and solar PV: 3 gigawatts.
The report is available here – and you can see the China breakdown on page 40.
This article first appeared on the Carbon Brief website, and has been reproduced with the author’s permission.