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It is not until marked as one of the major polluters in the world that China started shifting to a cleaner path in generating energy. China has been listed in the top three greenhouse gas (GHG) emitter, followed by the United States and the European Union. It has been identified that China’s being the biggest emitter strongly correlates with its industrial revolution which in fact relied on coal power.
However, this overreliance on coal to fuel the economic growth has begun to reverse towards cleaner direction started in 2014. The decision is marked by the establishment of energy transition blueprint under the Energy Development Strategy Action Plan (2014-2020), envisaged by the Communist Party to transform China into an “ecological civilisation”. Since then, the Chinese government has taken the transition process very seriously, proven by various action plans to green the economy. One of China’s ambitious commitment is to reduce 15% of energy intensity and 18% of carbon emission from 2015 levels as stated in the 13th Five-Year Plan, pushing government and private sectors to work hand in hand to move towards sustainable practices.
In less than 10 years’ time, China has become a leader in renewable energy. Two-thirds of the country’s new installed capacity in 2017 came from renewables, with 53.1 GW coming from solar (which was more than half of the global solar power capacity) and 15 GW new installed capacity coming from wind. The striking trend of renewable energy (RE) development in China is indicated in Figure 1 below.
Figure 1. Installed Power Capacity and Growth (1980-2017)
Source: China Electricity Council (CEC); National Energy Administration.
This remarkable growth of RE in China is strongly related to the huge investment in RE. China decided to go big on RE development. In 2017, China stepped up the game by disbursing approximately USD 97 billion for renewables which accounted for 85% of the total investment in the power sector and this was just a start. The government of China announced that USD 360 billion will be invested for RE until 2020. This extravagant plan is further amplified by cancelling the development of 85 coal-fired power plants.
China by far is a leading example of countries that ‘walk the talk’ in terms of fulfilling its energy agenda. By March 2017, the Chinese authorities have reported that they have passed their energy efficiency (EE), carbon intensity and share of clean energy targets. The rapid transition in RE is also supported by plummeting costs of renewables and technological development due to continuous researches.
In addition to that, the reason China can push for the transition in a relatively short period is the implementation of relevant policies to synergise the market. By creating steering policies, the market is driven to move towards cleaner practices. If they can change the local market preference, they can somehow influence the market globally, since the local market is equivalent to almost 20% of the world’s population.
One successful example of how China dominates global electric vehicle (EV) sales is by putting a restriction on gasoline cars to help create new opportunities for domestic EV makers such as BYD and BAIC Motor Corp. The innovative policy to limit citizens from buying gasoline cars is done by establishing a purchasing license that can only be obtained through a lottery, which in turn limits conventional cars sales. The lottery for the license is set in a certain period of time and quota which is much smaller than the actual demand. The limitation to own gasoline cars drives people to opt for electric cars. For these, the government provides unlimited purchasing licenses for free. This policy has been implemented in six cities in China (Beijing, Shanghai, Shenzen, Tianjin, Hangzhou, and Guangzhou), and proven to effectively boost EV sales to 40% of the nation’s cars sales last year (579,000 units) which accounted for 21% of the world’s EV sales in 2017 according to Bloomberg New Energy Finance. Figure 2 shows the effectiveness of the lottery policy in different cities in China.
Figure 2. EV sales pick up in different cities in China
Source: Bloomberg New Energy Finance.
To conclude, there are two main lessons to be learned from China’s transition towards a greener economy. First, the key is putting all the puzzle pieces together which are: establishing clear roadmap and plan; disbursing adequate investment; strengthening and maintaining public-private partnerships. Second, in accelerating the transition, the market should be created and triggered by strongly implemented policies. For this, it is important for all stakeholders to be on the same side despite different interests.
Like the Chinese, ASEAN has also done a great effort in greening the economy. At the regional level, guided by the ASEAN Plan of Action for Energy Cooperation 2016-2025, ASEAN put an ambitious target to achieve 23% of RE in the energy mix by 2025 and to reduce its energy intensity by 30% in 2025 from 2005 level. These targets are strongly supported as all ASEAN Member States have also created national targets and committed to cut emissions as pledged in their Intended Nationally Determined Contributions. Looking at the progress, ASEAN is half-way to realise the target as in 2015 the region has reached 13.6% of RE in the total energy mix. It is projected that if ASEAN wants to achieve its collective RE target, the region needs to invest USD 21.4 billion annually. To further accelerate their efforts, ASEAN could learn from China’s experience in transitioning to cleaner energy.
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Featured photo credit: Mikes Photos
ASEAN Centre for Energy (ACE) is an intergovernmental organisation within ASEAN structure that represents the 10 ASEAN Member States’ (AMS) interests in the energy sector.