“China” remains one of the most loaded words in the energy business.
The country plays several very different roles in the energy markets today. A large consumer of energy, China has recently become a leader in the elusive energy “innovation” game by charging ahead with large-scale state support for clean generation fuels.
China has become one of the heaviest users of energy in the global market, with the capacity to whipsaw prices for all types of energy-related commodities as it cycles its consumption of energy imports higher. Developed-country markets remain larger overall, but the all-important changes at the margin of energy consumption that drive pricing and investment are being driven by developing countries, with China at the fore.
China is now the second-largest consumer of oil behind the US, according to the US Energy Information Administration (EIA), and as of 2009 became the world’s second largest oil importer.
For many years the country supported its industrial growth mostly by burning more coal and importing more oil. The country is the world’s largest coal consumer, burning roughly 3.5 billion tons of the fuel in 2009 only five years after passing through the two billion ton level in 2004, according to the EIA.
The latest five year plan from the still nominally Communist and doubtlessly centrally-organized economy shows a new shade of understanding of energy economics by China’s leadership.
The country’s turn to clean energy has been as swift and decisive as many of its other policy-driven approaches to markets. The Chinese government has a goal of 15% of total renewable energy use by 2020, and consultants estimate that China’s total investment in renewable energy hit as much as $160 billion between 2007 and 2010. Wind energy capacity has doubled in recent years to make China the fifth largest wind power producer in the world after a standing start in the middle of the last decade.
Much of the Chinese approach to developing and integrating renewable fuels has relied on subsidies. In filing a complaint against the Chinese government in October 2010 for what it said were illegal subsidies and import discrimination, the United Steelworkers (USW) identified five programs that accounted for hundreds of billions of dollars and $216 billion in stimulus funding for green projects, a sum the USW says is more than twice what the US spends in the sector.
Reliable statistics on Chinese subsidies programs often remain elusive, but other groups have pressured China to reduce its subsidies as part of promoting fairly priced markets, including the International Energy Agency, the energy arm of the developed-world club Organization for Economic Coordination and Development.
For All the Patents in China
The goal is as much to slow the country’s dependence on ever-more-expensive fossil fuels and grow a technologically innovative industry as it is to reduce emissions of pollutants.
The country’s hope is that it can leverage the power lent it by manufacturing scale into access to technology that in turn can drive longer-term and higher-return investment in Chinese business.
Reflecting the climbing value of research in China, filings of international patents by Chinese researchers have skyrocketed, the World Intellectual Property Organization said in reviewing the country’s research and development efforts in late 2010.
Losing to the Competition
The US is threatening to fall behind China in clean energy technology, Department of Energy Secretary Steven Chu warned in a “Sputnick Moment” speech at the National Press Club in November 2010.
“From wind power to nuclear reactors to high speed rail, China and other countries are moving aggressively to capture the lead,” Chu said. “Given that challenge, and given the enormous economic opportunities in clean energy, it’s time for America to do what we do best: innovate.”
Chinese efforts have the US clean energy business lobbying for matching subsidies.
American companies are at a disadvantage, Tufts University professor Kelly Gallagher told a Congressional hearing on clean energy markets development in March.
“Hopefully the U.S. will adopt a portfolio approach to investing in clean energy technologies, taking into account the different stages of technology deployment, to better have public-private partnerships,” Gallagher told the hearing
But there remain substantial legal, logistical and cultural obstacles for energy firms to overcome in China before the world’s workshop can become its laboratory.
“Like other countries with significant state ownership, China faces the challenge of finding an appropriate balance between the government’s responsibilities as an active owner, and the need to refrain from undue political interference in the management of the company,” the OECD said in its end-2010 review of an ongoing multilateral effort to improve governance in China.
The US is also making an effort to overcome the lag in clean energy development and boost its manufacturing and export sector with government-led programs like the Renewable Energy and Energy Efficiency Export Initiative, an eight-agency coordinated approach to clean energy. Those efforts have shown some success, as companies invest in new US production like Suntech’s Arizona plant.
Chinese Walls
By Peter Gardett on May 17, 2011 at 5:30 PM“China” remains one of the most loaded words in the energy business.
The country plays several very different roles in the energy markets today. A large consumer of energy, China has recently become a leader in the elusive energy “innovation” game by charging ahead with large-scale state support for clean generation fuels.
China has become one of the heaviest users of energy in the global market, with the capacity to whipsaw prices for all types of energy-related commodities as it cycles its consumption of energy imports higher. Developed-country markets remain larger overall, but the all-important changes at the margin of energy consumption that drive pricing and investment are being driven by developing countries, with China at the fore.
China is now the second-largest consumer of oil behind the US, according to the US Energy Information Administration (EIA), and as of 2009 became the world’s second largest oil importer.
For many years the country supported its industrial growth mostly by burning more coal and importing more oil. The country is the world’s largest coal consumer, burning roughly 3.5 billion tons of the fuel in 2009 only five years after passing through the two billion ton level in 2004, according to the EIA.
The latest five year plan from the still nominally Communist and doubtlessly centrally-organized economy shows a new shade of understanding of energy economics by China’s leadership.
The country’s turn to clean energy has been as swift and decisive as many of its other policy-driven approaches to markets. The Chinese government has a goal of 15% of total renewable energy use by 2020, and consultants estimate that China’s total investment in renewable energy hit as much as $160 billion between 2007 and 2010. Wind energy capacity has doubled in recent years to make China the fifth largest wind power producer in the world after a standing start in the middle of the last decade.
Much of the Chinese approach to developing and integrating renewable fuels has relied on subsidies. In filing a complaint against the Chinese government in October 2010 for what it said were illegal subsidies and import discrimination, the United Steelworkers (USW) identified five programs that accounted for hundreds of billions of dollars and $216 billion in stimulus funding for green projects, a sum the USW says is more than twice what the US spends in the sector.
Reliable statistics on Chinese subsidies programs often remain elusive, but other groups have pressured China to reduce its subsidies as part of promoting fairly priced markets, including the International Energy Agency, the energy arm of the developed-world club Organization for Economic Coordination and Development.
For All the Patents in China
The goal is as much to slow the country’s dependence on ever-more-expensive fossil fuels and grow a technologically innovative industry as it is to reduce emissions of pollutants.
The country’s hope is that it can leverage the power lent it by manufacturing scale into access to technology that in turn can drive longer-term and higher-return investment in Chinese business.
Reflecting the climbing value of research in China, filings of international patents by Chinese researchers have skyrocketed, the World Intellectual Property Organization said in reviewing the country’s research and development efforts in late 2010.
Losing to the Competition
The US is threatening to fall behind China in clean energy technology, Department of Energy Secretary Steven Chu warned in a “Sputnick Moment” speech at the National Press Club in November 2010.
“From wind power to nuclear reactors to high speed rail, China and other countries are moving aggressively to capture the lead,” Chu said. “Given that challenge, and given the enormous economic opportunities in clean energy, it’s time for America to do what we do best: innovate.”
Chinese efforts have the US clean energy business lobbying for matching subsidies.
American companies are at a disadvantage, Tufts University professor Kelly Gallagher told a Congressional hearing on clean energy markets development in March.
“Hopefully the U.S. will adopt a portfolio approach to investing in clean energy technologies, taking into account the different stages of technology deployment, to better have public-private partnerships,” Gallagher told the hearing
But there remain substantial legal, logistical and cultural obstacles for energy firms to overcome in China before the world’s workshop can become its laboratory.
“Like other countries with significant state ownership, China faces the challenge of finding an appropriate balance between the government’s responsibilities as an active owner, and the need to refrain from undue political interference in the management of the company,” the OECD said in its end-2010 review of an ongoing multilateral effort to improve governance in China.
The US is also making an effort to overcome the lag in clean energy development and boost its manufacturing and export sector with government-led programs like the Renewable Energy and Energy Efficiency Export Initiative, an eight-agency coordinated approach to clean energy. Those efforts have shown some success, as companies invest in new US production like Suntech’s Arizona plant.
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