Climate

China’s Gigantic New Commitment To Renewable Energy, Explained

CREDIT: AP Photo/Elizabeth Dalziel

Windmills operate at the Da Bancheng Wind Farm, about 40 km (25 miles) south of Urumqi city, in Xinjiang, China.

Late Tuesday night, the U.S. and China announced an historic agreement to combat climate change, a major step forward from the world’s two largest greenhouse gas emitters. Not only does the agreement hold the two nations to taking additional steps to bring down the carbon emissions that drive climate change, but China just pledged to deploy a tremendous amount of clean energy.

“The non-fossil target may be the most important part of the package,” said Melanie Hart, Director of China Policy at the Center for American Progress. “Renewable and nuclear energy accounted for 9.8 percent of China’s energy mix in 2013. They have just promised to double that percentage by 2030. That target will light a fire under China’s already-aggressive renewable deployments and put even stronger limits on coal and other fossil fuels.”

The country’s current five-year energy plan set forth the goal of reaching 11.4 percent renewables by 2015, and considering the fact that China should have passed the 10 percent mark by 2013, Hart said it’s not entirely certain that target will be met. Nevertheless, the government elected to ramp up its commitment to clean energy with this new agreement, rather than water it down. “Chinese leaders have decided they can’t continue on their current path,” Hart said. “If change hurts, so be it. They just cannot afford to slow down.”

As for signs that the ambitious new target can be achieved, one only need to look to the agreement itself, said David Sandalow, senior fellow at the Center on Global Energy Policy at Columbia University and former senior official at the U.S. Department of Energy. “The Chinese government does not make international pledges without a high degree of confidence that those pledges can be achieved,” he said via email. “The next Five-Year Plan will likely include specific policies including interim goals, tax incentives and more.”

China’s pollution problems are no secret and more than an unsightly nuisance, the severe and sustained smog has become a full-on public health emergency. At the same time, the drive to continue rapid economic growth and accommodate a growing population has perpetuated a strong reliance on fossil fuels, namely coal.

Leading up to the new climate agreement, however, there were signs that China recognized the ramifications of business as usual and was serious about change. That commitment to fundamental change is reflected throughout the country’s new policies, Hart said.

In the first three quarters of 2014, China spent $175 billion on clean energy projects, a 16 percent jump from the previous year, according to data from Bloomberg New Energy Finance. This comes on top of the $54.2 billion invested in China’s renewable energy market in 2013, far more than any other country.

Chinese solar investment reached a record of $12.2 billion this fall and the country could very well add more than 14 gigawatts (GW) of solar capacity this year, almost one-third of the worldwide total. And China exceeded its goal of installing 100 GW of total installed wind capacity by 2015; Renew Economy predicts China may surpass that benchmark by as much as 30 percent.

Furthermore, Chinese leaders took a crucial step by reforming the state-controlled electricity pricing system. Changing the system to stipulate that wealthier households and more profitable businesses pay more for the electricity they consume is a “big move against the price barrier that has kept coal dominant,” Hart explained. Now, the “electricity market can become profitable again and you can pull more renewables into the mix.”

Another key aspect of the newly announced U.S.-China deal is a five-year extension for the Clean Energy Research Center (CERC). In addition to continuing the three existing tracks of research and cooperation between the two countries — building efficiency, clean vehicles, and advanced coal technologies with carbon capture, use and sequestration — the countries launched a new track on the interaction of energy and water.

As for challenges moving forward, Hart pointed first to China’s electric grid. “China is very good at building things; the hard part is system integration,” she said. Grid companies have been resistant to adding a significant amount of renewable energy, but with the Chinese government expected to go after the country’s main electric monopoly, that is expected to change. Deploying such a high amount of renewable energy will also require significant investment in the country’s transmission infrastructure.

An additional area to watch is China’s nuclear target, which has shifted considerably in recent years. The country’s nuclear roll-out has been slower than expected after several projects were halted following the Fukushima disaster in Japan. Looking ahead, Hart said it will be key for the U.S. to ensure that China is using and paying for American nuclear technology; not only is the technology proven, but the U.S. would be able to assist with any incidents, should they arise.

Outside of China’s borders, the increased commitment to carbon-free electricity will have a significant ripple effect. “In general, large-scale deployment of renewables anywhere in the world helps bring down costs everywhere,” Sandalow said. “So significant deployment of renewables in the U.S. and China in the years ahead can help bring down costs in many other countries.”

And such a strong commitment from China puts significant pressure on other developing nations to follow suit. “If China can do it, anybody can do it,” Hart said.