As the climate summit in Copenhagen continues, all eyes remain on the world’s two great polluters — the U.S. and China — for a breakthrough. The U.S. has shown some willingness to compromise, but China remains reluctant [“U.S. pledges billions; China says climate pact is doubtful,” by Juliet Eilperin and Anthony Faiola, Washington Post, 17 December 2009]. As disheartening as China’s position might be, Armond Cohen, executive director of the Clean Air Task Force, a Boston-based green advocacy group, claims that in some “cleantech” areas, “China is now more advanced” than the United States [“China’s Surprising Clout in Cleantech,” by Adam Aston, BusinessWeek, 30 November 2009 print issue]. China has partially climbed aboard the environmental bandwagon along with the U.S. and India because it now sees opportunities where it once saw roadblocks to development. That doesn’t mean that everything is environmentally on track in China — the picture remains mixed — but China is becoming an increasingly important player in the cleantech arena. In the area of carbon capture and storage (CCS), for example, Aston reports:
“China Huaneng Group, the nation’s largest power producer, is leading the Chinese thrust. Its Beijing Cogeneration Power Plant showcases a system for collecting and compressing CO2 from a variety of waste gases. The CO2 is then sold to a bottler that uses it to carbonate soft drinks. A bigger carbon-capture operation using the same approach should come on line this year in Shanghai. And this fall, Huaneng signed a technology licensing deal with Charlotte (N.C.)-based Duke Energy, which intends to use many of the techniques at a 630-megawatt facility it is building in Edwardsport, Ind. … [The Chinese are also building] GreenGen, a $1 billion coal-fired power plant capable of CCS due to come on line in Tianjing in 2011. Being built by Huaneng and a group of other Chinese utilities, the project is also being designed as an R&D center for carbon management technologies. GreenGen shows China can become ‘the world’s leading clean-coal provider,’ said Peabody CEO Gregory H. Boyce, in a release.”
Another area where China is outpacing the United States is in solar technology [“China Racing Ahead of U.S. in the Drive to Go Solar,” by Keith Bradsher, New York Times, 25 August 2009]. Bradsher reports:
“Chinese companies have already played a leading role in pushing down the price of solar panels by almost half over the last year. Shi Zhengrong, the chief executive and founder of China’s biggest solar panel manufacturer, Suntech Power Holdings, said in an interview here that Suntech, to build market share, is selling solar panels on the American market for less than the cost of the materials, assembly and shipping. Backed by lavish government support, the Chinese are preparing to build plants to assemble their products in the United States to bypass protectionist legislation. … Since March, Chinese governments at the national, provincial and even local level have been competing with one another to offer solar companies ever more generous subsidies, including free land, and cash for research and development. State-owned banks are flooding the industry with loans at considerably lower interest rates than available in Europe or the United States. Suntech … is on track this year to pass Q-Cells of Germany, to become the world’s second-largest supplier of photovoltaic cells, which would put it behind only First Solar in Tempe, Ariz. Hot on Suntech’s heels is a growing list of Chinese corporations backed by entrepreneurs, local governments and even the Chinese military, all seeking to capitalize on an industry deemed crucial by China’s top leadership.”
Chinese companies are also investing money into research and development [“China steps up, slowly but surely,” by Steven Mufson, Washington Post, 24 October 2009]. Mufson reports:
“At a gleaming new research center outside Beijing, about 250 engineers and researchers from the ENN Group are trying to figure out how to make energy use less damaging to the world’s climate. In a large greenhouse, hundreds of tubes hold strains of algae being tested for how much carbon dioxide they can suck from the air. Outside, half a dozen brands of solar panels are being matched for performance against the company’s own. Next door, large blocks of earth, carved out of Inner Mongolia, have been trucked in to test for new methods of gasifying coal underground. The private company is part of a growing drive by China to work out a way to check the rapid growth of its massive emissions of greenhouse gases. Seeking to transform an economy heavily dependent upon coal for electric power and industrial production, the government has closed down old cement and coal plants, subsidized row upon row of new wind turbines and taken other measures.”
There is an interesting side story to be told about China’s building “row upon row of new wind turbines.” The Chinese government has been subsidizing wind farms in order to qualify for carbon trading credits. The UN recently halted those payments because they believe that China is manipulating the system [“UN suspends China wind farms funding,” by Kathrin Hille, Geoff Dyer, and Fiona Harvey, Financial Times, 2 December 2009]. The authors report:
“The United Nations body in charge of managing carbon trading has suspended approvals for dozens of Chinese wind farms amid questions over its use of industrial policy to obtain money under the scheme. China has been by far the biggest beneficiary of the Clean Development Mechanism, a carbon trading system designed to direct funds from wealthy countries to developing nations to cut greenhouse gases. China has earned 153m carbon credits, worth more than $1bn and making up almost half of the total issued under the UN-run programme in the past five years, according to a Financial Times analysis. Industrial countries can meet part of their commitments under the 1997 Kyoto protocol to battle global warming by financing projects that mitigate emissions in developing nations. Projects only qualify for credits if the applicants prove they would not have been built anyway, a condition known as ‘additionality’. The controversy over Chinese wind farms will intensify calls for the system to be overhauled at the UN’s Copenhagen conference.”
Accusations of manipulation won’t sit well with opponents of cap and trade schemes. China’s support for lowering greenhouse emissions relies heavily on cap and trade because they believe that already industrialized nations need to help developing nations by paying for them to install energy efficient technologies. The Chinese have quickly learned how to profit from the cap and trade scheme known as the Clean Development Mechanism (CDM) that is “at the heart of a new global industry” [“Beijing races ahead of its peers to profit from fledgling trade,” by Kathrin Hille, Financial Times, 2 December 2009]. Hille writes:
“With a shy smile and a retiring manner, Liu Deshun has the slightly bedraggled appearance of an ageing professor. But make no mistake: this academic at Tsinghua University in Beijing is one of the world’s most powerful players in the rapidly growing market for carbon credits. As the deputy-head of the Global Climate Change Institute at Tsinghua, often referred to as China’s MIT, Prof Liu sits at the heart of an industry his country has come to dominate: the sale of carbon credits to developed countries under the United Nations scheme established under the Kyoto protocol. Prof Liu not only knows how the carbon market ticks, through the Tsinghua consultancy, he also helps wind the clock. With close to a third of the world’s 1,873 projects, China has raced ahead of its peers in exploiting a system intended to reduce carbon emissions by stimulating the use of cleaner technology that would not otherwise materialize.”
As Hille goes on to note, some critics of CDM believe that China’s success shows how easily the system can be manipulated. Hille continues:
“[China’s] very success, however, exposes some serious flaws in a fledgling market. ‘Getting a CDM project approved is really difficult because it is not easy to argue why a project is additional, why it would not happen without CDM,’ says Yang Zhiliang, general manager of Accord Global Environment Technology, one of China’s leading private CDM consultants. ‘So we are always glad when Prof Liu looks at our projects, because he gives us valuable advice.” There is a good chance he will. For Tsinghua offers not only consulting services; Prof Liu is also a member of the expert group that reviews all those proposals for domestic approval.”
China aggressively pursues CDM credits because “the cost of reducing China’s total greenhouse gas emissions is likely to reach $438bn a year within 20 years” [“China’s high price for emission cuts,” by Kathrin Hille and Fiona Harvey, Financial Times, 1 September 2009]. Chinese leaders want much of those costs to be paid for by developed countries. Few countries, however, are willing to take on that burden. Cost is one reason that the Bush administration kept the U.S. out of the Kyoto protocol that established CDM credits. “If the US were to participate in carbon trading, which it does not because it has not ratified the Kyoto protocol, Point Carbon [an analyst company] estimates the total value of the market would rapidly rise by several hundred billion dollars, and could reach $3,000bn (€1,985bn, £1,800bn) by 2020” [“Climate change strategy rests on reform and US support,” by Fiona Harvey, Financial Times, 2 December 2009].
Regardless of the future of cap and trade, China will likely continue to pursue cleaner alternatives to energy consumption. It understands that by staying on its current course it will have a huge health bill to pay down the road. China is already pursuing a vigorous nuclear program that is could increase its requirement for uranimum five fold over the next decade [“China’s Uranium Needs Grow,” by Jing Yang, Wall Street Journal, 27 November 2009]. Yang reports:
“China Guangdong Nuclear Power Holdings Co., one of the country’s two nuclear-energy firms, said it will need more than 100,000 metric tons of uranium between 2009 and 2020 to feed its growing fleet of nuclear plants, a huge jump that underscores the scope of China’s nuclear-energy ambitions. … The World Nuclear Association estimates that global uranium consumption is 65,000 tons a year. Guangdong Nuclear Power is expected to have 34 gigawatts of nuclear-power capacity in operation by 2020, accounting for more than 50% of China’s total capacity, up from 3.94 gigawatts currently.”
China is also pursuing other energy efficiencies such as a model “smart city” project in partnership with IBM [“IBM Launches a ‘Smart City’ Project in China,” by Aaron Back, Wall Street Journal, 17 September 2009]. Although most people still perceive China as dirty industrializing country whose skies are darkened by pollution, the country is making continuous progress towards more environmentally friendly development. China is a big country, however, and undoing decades of poor practices will take decades of effort.