A weekend New York Times story makes the bold assertion that China is leading the “race” in renewable energy.
The key reason given is that China is the world’s biggest solar panel and wind turbine manufacturer. Its own domestic market is also huge: massive infrastructure projects and big incentives for renewable power are stimulating demand. Also helping is the rapid growth in overall energy demand, together with policies, such as a plan to double the proportion of power coming from renewable sources to 8 per cent by 2020. Meanwhile cheap labour and cheap finance are relatively abundant.
However some western companies such as Vestas are setting up factories in China, to service both local and international markets, which highlights that China may be pushing the hardest on renewables, but it isn’t necessarily leading the intellectual property race. The NY Times story raises the spectre of the US being just as dependent on Chinese renewables manufacturing as it currently is on Middle Eastern oil imports – but that compares two completely different markets, each with wildly varying implications for energy security. Much of the world is already dependent on China’s dominance for manufacturing all sorts of products, but they rarely lead to security fears.
Meanwhile HSBC, one of the global banks most gung-ho about climate-savvy investing, underlines another aspect of China’s leadership with its latest low-carbon report today:
Finally, China will deliver the world’s largest slice of ‘green stimulus’ spending this year at just over USD87bn. This year, the focus of stimulus spending will be on rail (49.1%), grids (34.9%), water and waste (11.6%) and building efficiency (3.6%).
By contrast the US will come second with 20 per cent of that $87bn.
They write that China’s much-vaunted target of reducing carbon intensity by 40 – 45 per cent is an “achievable objective and represents around a 7% deviation from BAU by 2020″.
In the US, in line with the punditry consensus there, they see little chance of a cap-and-trade bill being, passed, but a high likelihood of some kind of clean energy legislation.