Rhein on Energy and Climate

By 2010 latest China will have overtaken the USA as the biggest emitter of C02. That is inescapable, as its emissions keep rising with the ultra-rapid increase of its GDP, while those of the USA have started flattening thanks to slower growth and rising energy efficiency. Both countries combined account for around 40 percent of global C02 emissions.

It was therefore appropriate that the recent high-level talks between the EU and China in Beijing – with one third of EU Commissioners present – focused on energy and climate issues.

For the first time, China has expressed its willingness to take on board international commitments at the forthcoming climate agreement, provided advanced countries like the EU put in place an effective financial mechanism to help China to facilitate the “technology transfers” needed for the huge investments in renewable energies – some € 100 billion annually from 2008 to 2020.

Of course, China will also make its commitments dependent on ambitious commitments taken by developed countries, the USA in particular.

An international commitment hardly changes the substance of China’s action. The country has adopted a fairly ambitious strategy for sustainable development as of 2004. By 2020, it wants to cover 15 percent of its energy consumption from renewable sources. That is quite impressive, compared to the EU target 20 percent.

China has, indeed, no option but to focus on higher energy efficiency and renewable energies.

Domestically, it will run into increasing logistical problems in providing its heavily concentrated population and industry in the south-east with coal from the north and west, several thousand km away. It has rightly embarked on building power plants near to the coal mines.

Though its coal reserves are sufficient to satisfy domestic demand for the coming 50 years, China is already a net importer of coal. Considering its tiny oil and gas reserves China is haunted by the spectre of increasing import dependency, no less than the USA or the EU.

Fortunately, China is extremely well endowed with renewable energy. Here are the estimates for its three major sources:

  • Solar 1000 TW
  • Wind 1 TW
  • Hydro 0.7 TW

Its huge solar potential is sufficient to cover China’s energy demand for eternity, thanks to > 2200 hours/year of sunshine in two thirds of the country and vast desert areas. But solar energy is still not fully accepted for large-scale investment because of the unresolved issue of storage and less experience than with hydro or wind.

In the near future, China will therefore focus on hydro and wind power, for which it masters the technologies.

Its hydro reserves are bigger than those of any other country. The installed capacity of large-scale (e.g. three Gorges Dam) and small-scale hydro will expand rapidly in the next few years.

The expected melting of Himalaya glaciers in the coming decades will force China (as well as India, Pakistan and Bangladesh) to replace a maximum of the natural glacier storage by river dams.

Wind energy will also expand rapidly, though from a tiny base of no more than 1.3 GW, less than 2 percent of the EU’s installed wind capacity.

China has also started investing in clean coal technology. In March 2008, it has signed a cooperation agreement with Australia for the installation of a pilot plant for carbon sequestration and storage: CSS.

If successful, China ought to make CSS mandatory for all new coal-fuelled power stations, if other partners like Australia, USA, EU and Russia went did likewise. That would be a breakthrough on the path to faster reduction of C02 emissions. But in view of the higher production costs of CSS electricity we should not expect this to happen before 2020.

Last not least, China wants to expand its nuclear power capacity, though cautiously.

So what should the EU do to encourage China in its efforts to contain C02 emissions?

First, sustain a regular bilateral policy dialogue with China. That is important per se, but also in view of prodding the USA into a more forthcoming stance on climate policy.

Second, enhance the possibilities for investments under the clean development mechanism (CDM) under the forthcoming climate protocol.

EU companies are already involved in some 500 projects concerning energy efficiency and renewable energies in China. These cover an investment of some € 5 billion. That may sound big, but in view of the € 100 billion China will have to invest annually until 2020, this amount is tiny.

The EU should therefore see to it that the future “Clean Development Fund” be amply funded. Neither finance nor technology should in the future constitute a barrier for any country investing in renewable energies.

The EU should raise also this issue with the GCC at its forthcoming high-level meeting scheduled for May 26-27 in Brussels. They also will have to take commitments for C02 reductions, part of which might be offset by investments in China etc.

Third, accelerate the setting up of the Institute for clean and renewable energy (ICARE), which has been launched at the last high level meeting in Beijing, and get major EU research centres and companies actively involved.

The Institute should put priority on the development of energy- efficient buildings. It is essential that China equips the vast number of office and residential buildings it will have to build in the coming decades with the most advanced technology to reduce the energy needs.

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