Globalist Perspective

Green China — Part II: A New Growth Model

What are the practical and security-related concerns driving China’s embrace of green development?

Credit: Arkadymar/Shutterstock.com

Takeaways


  • China is sensibly seeking to avoid energy resource confrontations by building its renewable energy industries as fast as it can.
  • By 2010, China was adding more capacity from hydro, nuclear and "new" renewables than from conventional power stations.
  • In the conventional linear economy, raw materials are mined or extracted at one end and wastes are dumped at the other.
  • Eco-industrial initiatives aim to solve resource and waste problems by encouraging firms to source their raw materials from wastes generated by other firms.

Since 2001, when it joined the WTO, China has built the world’s largest manufacturing system, powered by the world’s largest energy system — and fuelled, for the most part, by coal and other fossil fuels.

China is replicating the steps of earlier industrializers — of Great Britain, Europe and the United States, and of the 20th-century East Asian tigers like Japan, Korea and Taiwan. All these countries utilized fossil fuels to build their formidable industrial systems.

China is doing it on a vaster scale than anyone else. By 2010, China’s electric power capacity exceeded 1 terawatt (1,000 gigawatts) — and it is adding 50 billion watts of coal-fired electric power each year (equal to a new, 1,000-megawatt thermal power station per week). It is scouring the world for coal, oil and gas supplies.

China’s rapid ramping-up of fossil fuel electric power generation is following a well-established trajectory, and its leaders recognize that it is not a sustainable strategy. If China were to call for coal production and oil imports that impinged too openly and too aggressively on other countries’ claims, it would lead inevitably to resource wars.

China is sensibly seeking to avoid such confrontations by building its renewable energy industries as fast as it can — and so far with notable success. In wind power, for example, China has risen from a marginal position in 2005, doubling its wind power capacity each year, to the point that it was the world leader by the end of 2010.

By 2010, China was adding more power-generating capacity in hydro, nuclear and “new” renewables than in conventional thermal power stations — an extremely important milestone, both for China and for the world. Its 12th Five-Year Plan has notable goals of raising these levels.

In terms of electric power, China’s leadership — in the form of its planning body, the National Development and Reform Commission (NDRC), anticipates that electric power capacity will be rated at 1.6 terawatts by 2020. Of this total, almost a third (500 gigawatts) will be generated from renewable sources — hydro, wind, solar.

China is already having a big impact on the global market for renewables. In particular, it is driving down the cost curve for solar photovoltaic systems in dramatic fashion.

The latest data on this cost curve reveals that China has driven the costs of solar PV down to below $1 per watt — which has long been the target of policymakers — with costs declining by 45% per year. This brings solar PV within reach of households not just in China, but all around the world.

Thus, while China’s backing of fossil fuel expansion continues apace, at a rate of one 1,000-megawatt thermal (coal-fired) power station per week, increasingly this investment is being matched by expenditure on renewables.

As a result, the character of the energy sector is changing. A strong constituency is being created that promises to drive further development and expansion of the renewables sector.

China’s backing of renewables is entirely pragmatic, as well as driven by national security concerns. But it does have implications for environmental effects around the world, and in particular for global warming concerns.

China’s emissions of carbon particulates, which are making the air in industrial cities practically unbreathable, are continuing to rise. But they are expected to plateau in the 2020s and then start to decline, as cleaner energy sources take over (both “clean coal” and renewables).

Likewise, China’s greenhouse carbon emissions are also be expected to keep rising, plateauing in the 2020s or 2030s, and then start to decline significantly.

The circular economy

At the same time, eco-industrial development is accelerating in China. It now promises to become one of the main industrial development models being pursued.

Eco-industrial initiatives aim to solve resource problems and waste problems by encouraging firms to source their raw materials from wastes generated by other firms – that is, turning waste into resources.

A number of eco-industrial initiatives have been designed and implemented for the purpose of the “circular economy” since the concept was first introduced by Chinese scholars in the late 1990s.

In 2005, the National Development and Reform Commission, in conjunction with five other ministries, launched the first batch of national pilot demonstration projects. A second batch was launched in 2007.

Meanwhile, a program established by the Ministry of Environment Protection, in conjunction of two other ministries, had designated a total of 30 Eco-Industrial Parks (EIPs) across the country as of December 2008.

It cannot be emphasized enough what a radical break the concept of the circular economy is with the conventional linear economy, in which raw materials are mined or extracted at one end and wastes are dumped at the other, with both ends exploiting a sink called “nature” without thought or restraint.

Indeed, the very concept of national accounts, based on the measurement of gross domestic product (GDP), is an expression of the linear economy. Growth of GDP — in the absence of increasing returns — means growth in throughput.

This has, of course, become the unofficial religion of industrial capitalism. As a consequence, any proposal that might interfere with extensive growth is ruled out of order.

China so far is maintaining the framework of GDP accounting, while building an alternative circular economy of eco-industrial linkages. These initiatives are all backed by strong legislative support (such as the 2006 Renewable Energy Law, which introduced feed-in tariffs into China, and the 2008 Circular Economy Law).

China began to tilt towards green development in its 11th Five-Year Plan and has continued in the more recent 12th. These planning tools, combined with strategic initiatives and strong encouragement from the state, mean that China’s promotion of the green development model is anything but casual and haphazard.

Read the third part of this article: The Big Push

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About John Mathews

John Mathews holds the Chair of Strategy at the Macquarie Graduate School of Management at Macquarie University, Sydney.

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