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Michael Davidson’s Blog

Clean Energy Standard: How China Does Long-term Targets

Michael Davidson

Posted February 23, 2011 in Greening China, Solving Global Warming

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What will the U.S. clean energy standard look like? Following President Obama’s call for an 80-percent clean electricity-driven economy by 2035[1], Center for American Progress released a brief “Helping America Win the Clean Energy Race”. It outlines a framework for capitalizing on the growing clean energy market worth $243 billion last year.

While China does not have a clean energy standard in the same sense as President Obama’s state of the union address, China has put in place many of the key elements. In this post, I will point out some similarities with what China’s doing on long-term renewables and efficiency targets, and then highlight a crucial element to the successful clean energy transition that is lacking in the CAP brief: strategic international cooperation.

1. Intermediate and internal goals

Stimulus funds and tax credits have led to massive clean energy investments in transportation, renewable energy and efficiency sectors. The role of government support is undeniable. What’s missing is a long-term signal. China, Spain, Germany and many others are much farther along than we are, taking the U.S. “out of the running”, as CAP pointed out last year. By 2020, the EU has committed to 20-percent renewable electricity, China to 15-percent non-fossil fuel final energy (note: the 20-percent that CAP quotes is neither official nor the same metric as the EU); and Germany and Spain have even more ambitious country targets.

To achieve their targets, China has set a number of intermediate goals, such as getting 11.4-percent of final energy consumption from non-fossil fuels by 2015. This includes renewables as well as nuclear. China has also set what CAP calls “internal” goals: diversifying its portfolio of energy options by looking at each clean energy source individually.

A listing of China’s current clean energy targets and last year’s generation (recently updated are in bold):

Metric

2010 Actual

2015 Goal

2020 Goal

Non-fossil energy  (% of final energy consumption)

8% (about)

11.4%

15%

Hydro  (% of final energy consumption)

 

6.5% (about)

>7.5%

Hydro

210GW

 

300GW

Nuclear

10.8GW

48GW

80GW

Wind (connected)

31GW

 

30GW (150GW proposed)

Solar PV

700MW

 

1.8GW (20GW proposed)

Solar hot water

 

400m m2

300m m2 (no new target yet)

(see this summary of new announcements; others are taken from Eric Martinot and World Nuclear Association; 2010 generation figures are from the National Energy Administration, Chinese only).

A kilowatt saved is a kilowatt earned, and so China is investing even more in energy efficiency, to drive down wasteful energy consumption and boost economic productivity. Nation-wide demand-side management (DSM) regulations put in place this year require each utility to save at least 0.3% in the previous year’s sales volume through an energy efficiency resource standard (EERS) – a requirement that has already been adopted by 19 U.S. states.

While the target of 0.3% may seem like a relatively small contribution to total sales, when implemented nationally, this translates to 11 billion kWh of avoided generation needs.[1] Also, it is important to keep in mind that many successful DSM programs start small, ramping up over several years. (See, for example a recent DSM agreement in Illinois that starts at 0.2%, ramping up to 2% by 2015.)

2. Regional flexibility

Because of different local conditions, allowing flexibility at the state level to meet the clean energy requirement will ensure the national goal is met while maximizing the on-the-ground benefits of new power infrastructure investments.

Indeed, China has already institutionalized this flexibility in its energy plans. Released in 2007, the Medium to Long Term Development Plan for Renewable Energy (2005-2020) (abbreviated English, full Chinese) sets national targets, while indicating that provinces will share the burden based on the abundance of natural resources. Amendments to the 2005 Renewable Energy Law build upon this long-term blueprint, legally mandating all grid companies to satisfy the equivalent of a renewable portfolio standard.

Set by government agencies, the Chinese grid-level targets create an enforceable legal obligation, expanding on the mandatory market share (MMS) concept in the Medium to Long Term Plan. NRDC drafted a series of recommendations on how to implement these new regulations. Some of the highlights:

  • Set targets annually and ramp up predictably. Hydropower should continue to be excluded in order to drive additional renewable generation.
  • Establish a pilot trading scheme for renewable energy credits (REC).
  • Bring specific technology targets (for solar, wind, etc.) into the legal framework.

(Read the whole paper, or a blog summary of these points.)

In addition to financial penalties, we recommend considering a performance evaluation system for grid operators. This would be similar to the target responsibility system that was put in place to keep track of the 20-percent reduction target in energy intensity from 2005-2010. This central directive allocated targets to provinces based on potential and feasible reductions, and were modified each year based on past performance (though, some call for better allocation: read about Guangdong, China’s wealthiest province). The system ties promotion opportunities for officials with success in meeting their targets.

What’s missing? Strategic international collaboration

With all this focus on domestic innovation, it’s easy to forget that many U.S companies are innovating through strategic partnerships with foreign firms, especially from China. These pioneers are capitalizing on the respective strengths of the two countries, reducing overall costs, and building a robust U.S. clean energy export economy.

During President Hu Jintao’s visit to Washington last month, we heard about a number of these companies, in fields ranging from wind to EVs. My colleague has highlighted all the clean energy initiatives that were announced. These include municipal partnerships on electric vehicle demonstrations, EcoPartnerships on sharing policy best practices (such as renewable portfolio standards), and the work plans for the U.S.-China Clean Energy Research Center. (Read also the DOE factsheet released during the visit.)

The private sectors of both the U.S. and China – “joined at the hip” according to Bloomberg New Energy Finance – must cooperate to achieve their respective governments’ long-term energy and environmental goals. Personally, I would like to see a race to the top, where mobilization of the U.S. clean energy sector is met by greater ambition in China. And where smart Chinese policies illustrate clearly to Congress that there is no future to win without clean energy.

 


[1] The President defined clean energy as solar, wind and energy efficiency; in addition, “clean coal”, nuclear and natural gas.

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Switchboard is the staff blog of the Natural Resources Defense Council, the nation’s most effective environmental group. For more about our work, including in-depth policy documents, action alerts and ways you can contribute, visit NRDC.org.

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