Sunday, September 18, 2011

The greening of China a mirage

EARLIER this month, Zhang Ping, chairman of China's National Development and Reform Commission, which is charged with developing social and economic policies to transform the country, reportedly told local industry leaders China would show global leadership in fighting climate change.

Even though China overtook the US as the world's largest emitter of carbon dioxide last year, it also became the world's largest manufacturer of wind turbines and solar panels and a leader in the development of carbon sequestration technology.

The carbon tax bills are now before Australia's federal parliament. Julia Gillard, Greens leader Bob Brown and climate-change adviser Ross Garnaut have argued China's can-do green example ought to be our inspiration. But while China is playing a smart commercial game, its pro-green credentials are a mirage.

There is superficial evidence that China takes climate change seriously. Its 12th Five-Year Plan (2011-2015) claims China will reduce its carbon intensity (the amount of carbon emitted per unit of output) by 17 per cent in 2015 compared with current levels. And 50 per cent of its energy will come from renewable sources by 2050.

Yet dig a little deeper and it becomes clear Beijing's carefully crafted message about shifting towards a green future is primarily designed for Western markets eager for alternative energy sources and as a defence against these same governments putting greater pressure on China to reduce its greenhouse gas emissions.

Take the issue of coal-fired power stations. China has closed down hundreds of its more inefficient coal-fired stations in the past few years. But for every coal-fired station shut down in the past three years, two have sprung up. While gross domestic product has been growing at about 10 per cent during the past five years, Chinese consumption of coal has been increasing at about 17 per cent each year and coal production has been increasing by more than 20 per cent in the same period.

According to some figures, investment in the coal industry has been increasing between 30 per cent and 50 per cent a year for the past three years.

The International Energy Agency estimates almost 80 per cent of China's energy needs will be met by coal and oil in 2030. Official Chinese estimates by industry, science and technology ministries suggest coal alone will still provide about two-thirds of China's fuel needs in 2030. Which leads to the inescapable conclusion that a target that half the country's energy needs will be met by renewable sources in 2050 is not achievable.

What about China's ascension as world leader in the manufacture of wind and solar technologies? When China announced its fiscal stimulus in 2009, about one-third of it, or $US200 billion, went to green energy projects in the wind, solar, hydropower and "clean-coal" sectors. Since then, the government has subsidised more than half of all costs incurred by Chinese state-owned companies engaged in these sectors. But this is more about the Chinese seeking opportunities in global markets than a more environmentally friendly future at home.

Wind power now accounts for less than 1 per cent of China's energy needs while solar constitutes one-thousandth of 1 per cent of the country's energy use. Provincial and local officials charged with maintaining economic growth at all costs and little else have few incentives to connect renewable energy assets to the power grid when fossil fuels are much cheaper. Chinese figures estimate by 2030, renewables (including hydropower) will meet 2 per cent to 3 per cent of the country's energy needs.

The outlook for Chinese-made renewable products and technologies is much more encouraging when viewed as an export opportunity to subsidised clean-energy sectors in foreign markets. Because of low production costs and peerless export manufacturing and shipping infrastructure, a Chinese-made wind turbine is one-third the price of one made in Germany or Spain. Foreign companies based in China and state-owned enterprises in the clean-energy sectors send most of the wind turbines and almost all the solar panels to the US and Europe. Far from exercising environmental leadership, Beijing has simply identified yet another export opportunity to Western consumers.

The understandable and overriding logic in Beijing's thinking is all about energy rather than environmental security. In a country where 800 million people still live on less than $2 a day, Chinese leaders do not wake up in the middle of the night thinking about the challenge of climate change. The Australian government should keep that in mind next time it thinks it is joining China in constructing a future green paradise.

By John Lee adjunct associate professor and Michael Hintz Fellow for Energy Security at the Centre for International Security Studies, the University of Sydney, and a scholar at the Hudson Institute in Washington, DC. From: The Australian

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