Brave new energy world

PUBLISHED : Tuesday, 28 March, 2006, 12:00am
UPDATED : Tuesday, 28 March, 2006, 12:00am

How do you measure economic success? On the mainland, the all-consuming focus has been on the growth of gross domestic product. But that may change if Premier Wen Jiabao succeeds in introducing a new standard: the energy consumption rate.

The premier is promoting a vision of balanced growth and environmental protection through a system of incentives and leverages. He told the National People's Congress this month: 'Energy consumption per unit of GDP should fall by about 4 per cent in 2006.'

The total volume of energy consumption in China last year was equal to burning 2.22 billion tonnes of coal. That means 1.43 tonnes of coal was consumed to generate every 10,000 yuan of GDP - roughly the same level as in 2004.

So a lot remains to be done to meet Mr Wen's target.

The National Development and Reform Commission (NDRC) recently set out targets for the development of renewable energy. It said such sources should account for 30 per cent of China's total generating capacity by 2020.

The use of renewable energy is growing by over 25 per cent each year.

China's hydropower generating capacity is now 108GW, according to the latest statistics. By 2020, that is set to reach 290GW, while wind power generating capacity will increase to 30GW.

The NDRC report calls for solar energy panels to cover 300 million square metres - replacing 40 million tonnes of coal each year and providing 2GW of power.

Other renewable energy sources set to increase are biological liquefied fuel and marsh gas.

Of all these initiatives, it is solar power that the mainland seems to be embracing the fastest. Photovoltaic (PV) technology - which turns sunlight into electricity - is now generating 65MW per year. However, China has not developed its own technology, and imports PV panels from Europe. Policy incentives are required to make solar power more attractive, and local research and development more viable.

For instance, in Germany the government compensates people who install solar systems in their homes. Such an approach would no doubt have mass appeal in China.

Bio-fuel has already made great inroads at the grass-roots level: in some provinces it is now difficult to purchase normal petrol for cars. Fuel price rises and shortages have driven locals to concoct bio-fuel using sugar cane and corn-based additives.

Such experimentation is occurring organically, without government support. If these efforts were supported with proper funding, China could find itself pioneering new technology for cars - changing how this entire industry may evolve in the country.

Burning agricultural waste to generate electricity is another scheme that is being taken seriously. It would not only be a source of alternative energy, but would help solve rural unemployment.

Mr Wen has also called for energy-efficient buildings. Developers have begun importing energy-conserving equipment from Europe because China does not produce its own. The government is offering incentives, through property-development loans, for the adoption of such energy-saving technology.

Under another scheme, new buildings that fail to pass energy-efficiency criteria will have their apartment unit sales licences withheld. Such policies are positive steps. Whether corruption at the local level will obstruct practical enforcement is another question.

To develop renewable energy on a commercial scale, market incentives will not be enough. The government will have to support research and development until it reaches a commercially viable level, if Mr Wen's stated targets are to be achievable. The market still needs management.

Laurence Brahm is a political economist, author, filmmaker and founder of Shambhala Foundation