China Leads In Renewable Investment -- Again!

Every opportunity — and every problem — in China is big! There is no such thing as a small opportunity, or a small problem, in the world’s most populous country.

That is certainly true when it comes to environmental and energy issues. With more cars on the road every year and increasing demands for power from individuals and industrial users alike, China is fast becoming the world’s largest consumer of energy. In 2013, China’s growth in oil consumption accounted for one-third of the world’s oil consumption growth. In 2014, China will likely surpass the United States as the world’s largest oil importer. China’s dependence on imported oil, combined with its well-publicized air-pollution problem, gives the country two big reasons to reduce its dependence on fossil fuels.

The good news is that China recognizes its energy problem and is making big bets on renewable energy. According to The Global Status Report, which was released earlier this month by the Renewable Energy Policy Network for the 21st Century, China once again led the rest of the world in renewable energy investment in 2013, spending a total of $56.3 billion on wind, solar and other renewable projects. The report stated that China accounted for 61 percent of the total investment in renewables by developing countries, and that China invested more in renewable energy than all of Europe last year.

China’s continued commitment to renewable energy investment is all the more striking because it came in the face of a global decline in renewable energy investment. In 2013, global new investment in renewable power and fuels was approximately $214.4 billion, down 14 percent compared to 2012, and 23 percent lower than the record high in 2011. By way of contrast, China has increased its investment in renewables nearly every year for the past ten years. New renewable power capacity surpassed new fossil fuel and nuclear capacity in China for the first time in 2013. China is now home to about 24 percent of the world’s renewable power capacity, including an estimated 260 gigawatts of hydropower.

China’s renewable energy investment is part of its 12th Five-Year Plan for Economic and Social Development, which calls for the country to spend $473.1 billion on clean energy investments from 2011 to 2015. China’s goal is to have 20 percent of its total energy demand sourced from renewable energy by 2020. The Ningxia Hui Autonomous Region in China’s interior provides an example of the steps China is taking to develop clean energy.

With a population of just over six million people, Ningxia is one of the smallest provincial economies in China. Located in the northwestern part of the country, Ningxia ranks sixth among all provinces with 31.5 billion tons of discovered coal reserves. Access to substantial coal reserves provides Ningxia with low cost electrical power, and Ningxia has led the way in terms of supplying electricity to other provinces. Despite its strong coal economy, though, Ningxia is also one of the major areas for renewable energy investment in China. Ningxia has set a target of installing five gigawatts of wind power and 600 megawatts of solar power by 2015.

To reach its objective, Ningxia is using both imagination and capital. For example, Zhongwei City, located in the middle of the province, has entered into an unusual partnership with the city of Beijing that brings clean energy, as well as economic development, to Ningxia. The so-called “Zhongguancun Project” employs the “office in front and workshop behind” concept, where decision-making and research and development are in Beijing, and manufacturing is in Ningxia.

The Zhongguancun Project has three initiatives. The first is to take advantage of Ningxia’s substantial coal reserves by developing coal gasification projects that convert dirty coal to cleaner burning gas. The second is to take advantage of Ningxia’s desert-like climate to develop both wind and solar projects as a way to increase the penetration of renewable energy. The third is to take advantage of Ningxia’s access to low-cost electricity to create a cloud-based data storage industry. As part of this third initiative, Beijing is encouraging major internet and data collection companies to locate backup cloud storage facilities in Zhongwei City, where land and electricity costs are much lower than in Beijing.

Government officials in Beijing and Ningxia hope to make Zhongwei City an example of how industrial development, and the development of new technologies, can provide clean, sustainable development for China’s inner provinces. In order to oversee the project, a senior official in Beijing has taken the position of Deputy Mayor of Zhongwei City.

How are Beijing and Zhongwei City doing in their unusual collaboration? In a recent conversation, the Deputy Mayor of Zhongwei City said that Shenhua, China’s largest coal company, has built a major coal gasification facility in the city. He also reported that Zhongwei City now derives 50 percent of its energy from renewables, and that both IBM and Amazon are building new data centers in the city.