Opportunities for solar energy in China


China’s demand for energy has surpassed that of the United States, and the nation is now the largest consumer of energy in the world.  What implications can be drawn?  It seems as though China has begun to explore renewable energy options with greater enthusiasm.  China has, as of the last climate discussions in Durban, committed to reduce its carbon intensity of its domestic power generation fleet.  This is not a hard cap because it allows for continued consumption of fossil fuels to support GDP growth.  However, it does raise demand for low-carbon renewable energy resources.  The solar industry is rising to meet this need.  As such, we have seen that Chinese development banks, state financial institutions, and central government have committed to supporting a domestic photovoltaic manufacturing base to service this increased demand.

As the largest manufacturer of photovoltaic solar panels in the world, China has strong potential to develop solar energy to meet its projected demand.  Manufacturing has scaled, and costs involved have declined meaningfully, by 40% in 2011 alone.  Moreover, in 2011, the installed amount of photovoltaic power generation in China reached 2.9 gigawatts (approximately three nuclear power stations).  While not the largest market for photovoltaic power in the world, outshone by heavily subsidized European countries like Germany, Chinese demand is expected to outpace EU nations in the next two to three years.[1]  Chinese companies such as Yingli Energy, Trina Solar, and JA Solar Holdings constitute a large proportion of the worldwide market share of solar companies, and have enjoyed profitable earnings despite recent global financial instability.

China’s expressed commitment at the Copenhagen Climate Conference to reduce carbon emissions further strengthens the case for solar energy.  China was the second-largest source of fossil fuel energy-related greenhouse gas emissions in 2005.[2]  In that year, the nation released 5060 mega tons of carbon dioxide, while the United States released 5817 mega tons.  Experts figure that energy demand might stabilize over the next ten years, in part because China’s GDP grew faster than energy demand during the years 1980-2002.[3]  Now, they are beginning to increase in tandem.[4]

Moreover, China’s Five-Year Economic Plan lists as one of its top priorities the investment in so-called clean energies, including solar, as well as wind, nuclear, hydroelectric, and biofuels.  The Plan lists China’s goals in the energy sector, including the nation’s aim to “restrict development of high-consuming project to save energy and reduce emissions;” and to “vigorously promote [the] development of energy-saving and environment-protecting industries.”[5]  China will further aim to “focus on key technologies and equipment, products, and services in respect of energy efficiency, environmental protection, and recycling of resources.”[6]  The Plan also includes a pledge to draw 15% of energy from renewable energy sources.[7]

While China’s demand for energy will continue to grow with its economy, the Middle Kingdom is clearly welcoming opportunities for solar energy manufacturing and power generation.

[1] See, e.g., Max Blythe, China’s New Five-Year Plan and Solar Power, ETF Channel (Feb. 28, 2011), http://www.etfchannel.com/article/201102/china-s-new-five-year-plan-and-solar-power-fslr-jaso-ldk-yge-tan-kwt-Solar20110228.htm/.

[2] INT’L ENERGY AGENCY, KEY WORLD ENERGY STATISTICS 2007 at 50, 56 (2007). The last official figures for China’s overall GHG emission inventory are for 1994, filed with the UNFCCC in 2004, and amounted to 3650 mega tons C02. PEOPLE’S REPUBLIC OF CHINA, NATIONAL COMMUNICATION ON CLIMATE CHANGE 27 (2004), available at http://www.ccchina.gov.cn/WebSite/CCChina/UpFile/Filel75.pdf. See also Tseming Yang, The Implementation Challenge of Mitigating China’s Greenhouse Gas Emissions, 20 Geo. Int’l Envtl. L. Rev. 681 (2007-2008).

[3] Mark D. Levine et al., U.S. Dept. of Energy, The Greening of the Middle Kingdom: The Story of Energy Efficiency in China (May 2009).

[4] Id.

[5] Dorsey & Whitney, LLP, China’s New Five-Year Plan and its Impact on Environment and Clean Energy Industries (2011).

[6] Dorsey & Whitney, LLP, China’s New Five-Year Plan and its Impact on Environment and Clean Energy Industries (2011).

[7] APCO Worldwide, China’s 12th Five-Year Plan: How it actually works and what’s in store for the next five years (Dec. 10,  2010).

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