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Meeting Xi's promise will require the equivalent of 500,000 wind turbines. Photo: Bloomberg

Xi Jinping's green pledge will require an economic revolution

Xi Jinping's pledge to have renewable sources provide a fifth of the country's energy by 2030 will require a full-scale economic restructuring

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China, which does nothing in small doses, is planning an environmental makeover in keeping with the political, cultural and market revolutions it has pursued over the past six decades.

In his agreement last week with US President Barack Obama, President Xi Jinping committed to capping carbon emissions by 2030 and turning to renewable sources for 20 per cent of the country's energy.

His pledge would require China to produce either 67 times more nuclear energy than the country is forecast to have at the end of this year, 30 times more solar or nine times more wind power - more non-fossil-fuel energy than almost the entire US generating capacity. That means building roughly 1,000 nuclear reactors, 500,000 wind turbines or 50,000 solar farms.

The cost would run to almost US$2 trillion, holding out the potential of vast riches for nuclear, solar and wind companies that get in on the action.

"China is in the midst of a period of transition, and that calls for a revolution in energy production and consumption, which will to a large extent depend on new energy," said Liang Zhipeng, deputy director of the renewable energy department under China's National Energy Administration. "Our environment is facing pressure and we must develop clean energy."

By last year, China had already become the world's largest producer of wind and solar power. Now, with an emerging middle class increasingly outspoken about living in sooty cities reminiscent of Europe's industrial revolution, China is looking at radical changes in how its economy operates.

"China knows that its model, which has done very well up until recent times, has run its course and needs to shift, and they have been talking about this at the highest levels," said Paul Joffe, senior foreign policy counsel at the Washington-based World Resources Institute.

Meeting the challenge is anything but assured. China has already run into difficulty managing its renewables. About 11 per cent of wind capacity sat unused last year because of grid constraints, with the rate rising to more than 20 per cent in the northern provinces of Jilin and Gansu , according to the China Renewable Energy Engineering Institute.

With its huge population, China is a country accustomed to eye-popping goals. Some have worked, such as the rapid growth and poverty reduction from the market reforms of the past two decades. Others, though, have exposed central planning run amok, such as Mao Zedong's Great Leap Forward in the 1950s to collectivisation and industrialisation.

Xi sees no alternative to going big. "Letting children live in a good ecological environment is a very important part of the Chinese dream," he said last week as he welcomed Asian leaders to a summit in Beijing.

Protests over pollution turned violent in Chinese cities at least three times this summer. In Hangzhou in the east, rioters set fire to police vehicles in May because of plans to build a waste incinerator near a residential neighbourhood.

In the weeks leading up to last week's Asia-Pacific Economic Cooperation summit, China closed factories and limited traffic in Beijing so the air wouldn't be offensive to visiting dignitaries.

A government previously focused on growth at all costs has suddenly become sensitive to its environmental challenges, activists say. Smog in Beijing and Shanghai made the government "realise that it has to take measures to rein in pollution, otherwise it will cause social discontent", said Li Shuo , a researcher at Greenpeace East Asia. "Health is of immediate concern to everyone."

The targets Xi announced alongside Obama have been hailed as a boost for negotiations at a UN conference beginning on December 1 in Lima, Peru. Envoys from more than 190 nations are seeking to craft a global pact that world leaders will sign next year in Paris.

For China to succeed, it will have to install the clean-energy equivalent of Spain's entire generating capacity each year until 2030, according to Bloomberg data. It has achieved that only once - last year.

"The fact is the Chinese government knows they need to clean things up," said Martijn Wilder, the head of global environmental law at Baker & McKenzie in Sydney. "China is a developing country. There are challenges, but those are rapidly being addressed."

Electricity demand will rise 46 per cent by 2020 and double by 2030, according to the International Energy Agency. China now depends on coal for two-thirds of its energy, more than any other Group of 20 country except South Africa.

The shift to renewables stands to benefit nuclear-reactor makers including General Electric and Areva, along with wind-turbine manufacturers. It also provides expansion opportunities for China's solar-panel makers such as Yingli Green Energy and Trina Solar, the two biggest suppliers.

"China, as one of the world's biggest energy consumers, must catch up, as it lags behind other countries on energy security and energy-supply diversification," said Chen Kangping, chief executive officer of JinkoSolar, China's third-largest solar-panel manufacturer.

In all, China will spend US$4.6 trillion upgrading its power industry by 2040. Nuclear and renewables alone will garner US$1.77 trillion in new investment, taking 79 per cent of all the funding for power plants built in China, the International Energy Agency said in November. Fossil fuels get the remaining share.

The nuclear industry is under tighter scrutiny after the Fukushima disaster in Japan and faces a manpower shortage. All those new reactors would require large uranium supplies and as many as 1,000 workers each, Credit Suisse Group said.

Much of the change would come from a different economic mix, said Joffe of the World Resource Institute. China was already in the midst of a long-term rebalancing of its economy, shifting from a reliance on heavy industry to less energy-intensive service businesses, he said.

 

This article appeared in the South China Morning Post print edition as: China's green revolution
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