Renewable energy is big business in China…
The country, which — for more than a decade — once led the world in greenhouse gas emissions and where coal-fired power dominated the energy mix, has now embraced renewables in a big way.
China has pledged to get at least 20% of its electricity from nonfossil fuel sources by 2030.
It’s currently dominating the world in investments in clean energy, already reaching its 2020 goal of producing 110 gigawatts (GW) of solar power. And it has the momentum to outrun the rest of the world in renewable energy advancements in the future.
The country is also aiming to generate at least 210 GW of wind power by 2020. However, the International Energy Agency (IEA) is foreseeing that target easily being met by 2019 — with big strides having already been made in that area.
In January 2017, as part of the country’s latest five-year plan for energy development, China’s National Energy Administration (NEA) stated it would be spending more than $360 billion on renewable energy projects through year-end 2020.
Of the 8.1 million renewable energy jobs that exist around the world today, 3.5 million are in China — with that number set to jump by over 13 million by 2020. But fewer than 1 million global renewable energy jobs are located within the U.S.
It’s a major philosophical change for the country of nearly 1.4 billion people. Just a few years ago, China considered the development of renewable energy far too costly to pursue.
That all changed when Chinese manufacturers began to dominate solar panel manufacturing.
According to the National Renewable Energy Laboratory (NREL) in Golden, Colorado, and San Francisco-based SPV Market Research, six of the top 10 global solar panel manufacturers in 2017 are located in China.
That has allowed the Chinese government to reduce project costs for solar developers. By some estimates, this reduction has been as much as 40%. And the Chinese government will instead allocate those funds to the country’s own renewable energy production.
In short, China’s renewable energy sector is eating our lunch.
And as of October 2017, three of the world’s five largest solar farms are in China. This includes that massive 850-megawatt (MW) Longyangxia Dam Solar Park and part of the Longyangxia Hybrid Hydro-Solar Project in the Qinghai province, which includes the 1,280-MW Longyangxia Dam on the Yellow River.
Construction of the solar park began in 2013. Today, it features more than 4 million solar panels, spread across more than 10 square miles of high desert on the Tibetan Plateau in eastern China.
It was built for approximately $911 million, with a continual expansion over the past few years that, at least for a brief period, made it the world’s largest solar panel farm — according to the U.S. Energy Information Administration (EIA).
China’s solar success is nothing short of remarkable, particularly for a country long known for its heavy reliance on coal-powered generation.
With this year’s additions, China — which had 77.4 GW of solar capacity at the end of 2016 — will have about three times as much solar generation capacity as the U.S. — which had about 40 GW of generation capacity at the end of 2016, according to the EIA.
China’s massive new solar development this year has cemented its status as the world’s leading nation in solar power generation.
In the first half of 2017, China installed enough solar capacity to outperform all of Europe combined, completely taking the rest of the world by storm.
Several factors came together for the central government authorities to commence such a radically fast change from coal-generated energy production: the untenable smog situation in China’s largest cities, the ability of renewables to quickly meet China’s voracious appetite for new electricity supplies, and the recognition that solar, in particular, could be a new major source for manufacturing jobs.
The country’s lead in renewables can’t be ignored.
Dominance in clean energy exports feeds into the country’s geopolitical efforts of carving out leadership in the global economic order.
Through a strategy of “economic diplomacy,” which involves strong trade partnerships and foreign reliance on its investments and sales, China’s economic and regional rise is strengthened and safeguarded.
These investments, in turn, bolster deeper cooperation on other infrastructure projects and development goals between China and its trade partners.
This has substantial implications for the U.S., too.
Policymakers must keep in mind that China’s preeminence in renewables supports a strategy where Chinese economic and geopolitical gains come at the U.S.’ expense.
Abdicating a lead in clean energy to this major competitor accordingly risks the U.S.’ long-term prospects as an energy powerhouse and leader in the global economic order.
Coupled with its retreat from sustainable climate goals, and the Paris agreement, the U.S. has opened a vacuum in economic and normative leadership that rising powers, such as China, are willing and able to fill.
With Chinese investments in clean energy showing no signs of abating — in fact, they’re actually showing signs of the exact opposite — the U.S. must aggressively pursue developing a strong domestic manufacturing and exporting capability for renewables and also integrate into this emerging energy sector of critical future importance.
This is a strategically significant goal, considering the long-term global shift toward renewables from traditional energy sources — such as natural gas — where the U.S. currently leads.
In effect, we seriously need to play catch-up.
That’s all for now.
Until next time,
John Peterson
Pro Trader Today