Experiences of the past
The death of Mao Zedong and the subsequent rule of Deng Xiaoping ushered in an unprecedented process of economic transformation in the Middle Kingdom. Over the course of more than 30 years, the Chinese managed to make an amazing transformation – from a backward, agricultural country, their homeland transformed into a leading global economy. The measures taken in the early 1990s were short-lived – the rulers were keen to build an economic position based on massive exports relatively quickly while radically minimizing production costs. Thus, the solutions adopted in the energy sector were bound to lead in time to a crisis not only in energy security or sustainable development, but also in environmental protection.
Rapid growth in the number of citizens, coupled with rapid economic development created an almost unlimited demand for energy. China’s economic transformation was characterized by the need to act rapidly. The country’s industrialization lifted millions of people out of extreme poverty, but the industrial sector was based on coal, a tried-and-true and relatively inexpensive solution, while energy security or ecological issues were certainly not paramount at the time. Now, with China aspiring to become a global leader, short-term thinking has become not only unprofitable, but downright dangerous – which is why the dilemma between environmental protection and energy security is only apparent. In fact, renewable energy sources can make the most effective contribution to solving the Asian giant’s problems.
A look into the future
According to estimates, thirty years of China’s transformation has increased energy demand fivefold. Total consumption has risen from 54 million tons in coal equivalent in 1953 to 1,678 million tons in 2003, while expected energy demand in 2040 is likely to be as much as total demand from 2008 to 2016.
The key issue of China’s energy policy is therefore to answer the question of what course of development to take in the face of rising energy demand. This question is crucial, as it seems that for the first time the qualitative aspect has begun to dominate over the quantitative. It is possible that the energy hunger of China’s dragon will be satisfied in the future by photovoltaics and wind energy, among others.
Energy security
The reason why China is being forced to make changes in energy policy – in addition to growing energy demand – is energy security. Trying to maintain economic growth at all costs poses both political and economic risks, which China, nowadays as a country aspiring to become a global superpower, can in no way allow. Energy security means both independence from energy suppliers and the ability to adapt quickly to changes in the economy, technology and society. In doing so, the energy development strategy should include not only the creation of an independent energy infrastructure, but also the expansion of foreign energy markets and the growing awareness among political elites of the continued depletion of the world’s energy resources and their impact on economic development.
The essence of energy security, therefore, is to consider it from three aspects – availability, attainability and acceptability. Availability (including in terms of price) understood as the ability to use electricity by as much of the population as possible, achievability as obtaining energy from sources that do not outgrow the country in terms of technological challenges, and acceptability, i.e. achieving energy policy goals in harmony with the natural environment and, consequently, the opinion of both society and (more importantly in the case of China) the international arena.
Translating the above development goals into practical terms, it must be said that in order to fully achieve energy security, China’s further development should be carried out on the basis of the following principles: use of advanced technologies, low consumption of raw materials (thereby reducing the energy intensity of the economy), less pollution of the environment and economic efficiency. For all these goals of the Middle Kingdom, only one common denominator can be found – the development of renewable energy sources.
Profit and loss account
Beijing’s political support in recent years has made the cost of generating energy from renewable sources (primarily obtained from photovoltaic panels) the lowest of all available sources. Energy generated by wind or solar is successively increasing its share in China’s energy mix and is expected to total 40% by 2040. Moreover, medium-quality photovoltaic panels have already become a cheaper solution than building any other type of power plant.
By 2040, the cost of generating electricity from new solar panels is also expected to be lower than the projected cost of maintaining existing coal-fired power plants today. This trend, which completely contradicts previous ones, will not only have a huge impact on the energy policies of countries around the world, but also calls for fundamental market reform.
It seems, therefore, that investment in renewables is the best choice not only for ensuring China’s security, but also for the profitability of the whole project.
In China, the far-reaching interference of the state in the sphere of citizens’ lives and the economy effectively eliminates the problems that may arise in the process of change. The direction of change, set in the close circle of the ruling elite, must be realized in a certain shape. Moreover, the size and strength of China’s economy allows it to allocate almost infinite resources to the implementation of renewable energy projects. Chinese megalomania manifests itself in this area as well. Currently, in the east of the country, in Anhui province, the world’s largest photovoltaic power plant is being built on an artificial lake (created, ironically, by a collapsed coal mine). Its cost is estimated at more than $150 million. When built and connected to the transmission grid, it will provide 150 GWh of electricity annually, saving more than 50,000 tons of coal per year. However, the biggest current threat to China’s power development – transmission – is emerging.
Transmission and storage
China’s Energy Policy White Paper, published in 2012, shows that China has built a comprehensive energy supply system including coal, electricity, oil, natural gas, but has neglected renewable energy production and transmission infrastructure.
The gradual shift away from coal-fired power plants, and thus the growing number of investments such as wind turbines, hydroelectric turbines and solar panels, is no longer surprising. A major problem, however, is the issue of energy transportation. The construction of new power plants has not been aligned with the creation of an efficient system for transporting and distributing the energy produced. This is because it should be noted that it is the western part of China that has the greatest potential for generating energy from renewable sources. At the same time, the greatest demand for energy can be seen in the heavily industrialized eastern provinces, particularly on the coast. Official figures presented by the State Energy Administration show that the percentage of wasted energy at wind farms in Gansu and Xinjiang (Xinjiang) provinces should drop to 30 percent this year, and in Jilin, Heilongjiang and Inner Mongolia provinces to 20 percent. These figures are huge if more than a third of the energy produced is lost through inefficient transmission.
For the development of renewable energy sources in China to be effective, it must be combined with the modernization of existing transmission infrastructure and the construction of new, modern grids. According to Greenpeace, China’s wasted renewable energy in 2016 could have powered Beijing for all of 2015. Already today, about 15% of China’s wind and solar electricity is lost because the current infrastructure is not designed to store it.
Mr. Blue Sky?
For many years, the Chinese public has been blocked from accessing information about environmental pollution caused by rapid industrialization. This was particularly true of air pollution. In the current situation, with the majority of Chinese citizens living in large cities, smog has become a political issue that Communist dignitaries believe could lead to destabilization. For this reason, moving away from coal seems to be the only just solution. The pollution problem was not seen as a threat by the Chinese authorities for a long time. However, the situation has changed in recent years, as the dire state of the environment is now having a real impact on the health and satisfaction of citizens as well as the country’s image. Beijing has realized how devastating the consequences can be if it continues to ignore the problem.
China’s growth, built on decades of coal and oil burning, has taken a huge toll on the shape of the environment. Urban air quality has become inversely proportional to the amount of pollution. According to the central government, measures leading to a decarbonized economy and in smog reduction will make Chinese citizens able to see blue skies by 2040. Air quality in many major cities has been at abysmal levels for several years. The authorities’ promise to make the skies blue again is a big challenge, but in view of the fact that this is one of Beijing’s main goals and concrete steps have already been taken in this direction, it is expected that the Chinese government will keep its word to its citizens.
In addition, eliminating smog and airborne dust will also eliminate the threat to wind farms. Despite the development of technology, windmills remain extremely complex technical devices, whose usefulness can be significantly reduced as a result of clogging or particle ingress. Blue skies will also allow more efficient use of photovoltaic panels, which will receive more sunlight.
China’s enigma
To paraphrase a saying familiar to economics scholars, a good sinologist is one who will convincingly explain why his or her latest forecast about the direction of Chinese policy has failed. The number of expert opinions and analyses that have turned out to be wrong, which are supposed to predict the effects of the solutions implemented in China, is enormous. This is to some extent due to the phenomenon of the Middle Kingdom, which seems to show against the opinions of many scholars: “it can be done!”. Will this still be the case in terms of the renewable direction of energy change? It seems that in the long-term calculus, China cannot lose on renewables – the scale of investment is a guarantee of success. In China, the future starts today.