Energy in the hothouse

China’s roaring economy is being fuelled by a dangerous cocktail of coal, oil and nuclear power. But as Clifford Coonan reports, there’s also a fast-growing renewable sector – and a rising sense of urgency around efficiency improvements, too.

It’s hard to overstate the importance of the 2008 Olympics in Beijing. It’s a symbol of national pride, and a motor for change. And one of its high profile ambitions — to deliver a “green Olympics” — is being translated into a whole raft of projects to clean up China’s notoriously polluted capital in time for the Games.

Inescapably, renewable energy is a key feature of this drive – with the city providing direct investment or interest-free loans to key projects. Tian Maijiu, deputy director of the standing committee of the Beijing municipal people’s congress, ran through some of the 2008 targets for renewables at a recent seminar:

– 90% of the city’s street lamps running off solar;

– solar heating for 90% of water used for bathing;

– wind power generating 20% of the electricity for Olympic venues, many of which will also feature large solar photovoltaic panels;

– ground source heat pumps providing central heating and air conditioning for an area of 400,000 square metres.

It’s not wholly new ground for Beijing. A pilot project already up and running in Xuanwu Park is using solar PV panels to provide power for electric lighting, plus solar heating and refrigeration. And among the more innovative ideas is a recent proposal to build a “solar street”, where not only the lights, but whole buildings, will run entirely on energy from the sun.

The city’s prestigious Tsinghua University is heavily involved in both research on practical clean energy technologies, and advice on its use to the top economic planning body, the National Development and Reform Commission (NDRC). According to Jiang Ning, director of the Tsinghua-BP Clean Energy Research and Education Centre (launched three years ago by the British prime minister, Tony Blair): “Our goal is to save up to 20% of current energy use by 2008. As the Olympics are approaching, we’re also looking at making the urban energy system more sustainable as a whole.”

But energy savings and renewables on this scale can only be a small part of the solution. The lion’s share of the Tsinghua-BP Centre’s work is focused on coal. Which is as it should be – for coal is so dominant in the overall Chinese energy picture that there can be no serious overall sustainability policy without tackling how it is used. Coal provides some 70% of China’s energy needs, and every week to 10 days, another coal-fired power plant opens somewhere in the country.

The Worldwatch Institute’s State of the World 2006 report puts this staggering growth in a global context. “The biggest energy questions facing China and India”, it says, “are how much higher their coal use will go, and what other energy sources they will use to power their futures. The answers will have a big impact on the quality of life in [these countries], but since they will almost certainly be the world’s two biggest markets for new energy technologies, their decisions will help set the 21st century energy course for the world as a whole.”

Within China, at least, there’s a growing awareness that coal’s environmental costs are unsustainable – and that, as a minimum, three things need to be achieved:

– a step change in energy efficiency, as a key goal of investment in modernisation

– a radical clean-up of the way coal is burned, drastically cutting sulphur dioxide pollution and sequestering carbon emissions

– a determined pursuit of alternatives, to cut the overall share of coal in the energy mix to something more like 40% by 2030.

Targets for improving energy efficiency feature strongly in the latest five-year plan, and that’s not surprising, since the need for action on this front could hardly be more acute. For every dollar of GDP, China currently expends three times the world average of energy, and 10 times the Japanese level. Hence the NDRC’s goal of saving the equivalent of 240 million tonnes of coal during the next five years, cutting overall energy intensity by 20%.

Cleaning up coal use is equally crucial. The NDRC vice-minister Zhang Guobao told the China Power 2005 conference in Beijing that the country’s coal-fired plants emitted more than 13 million tonnes of sulphur dioxide in 2004, and were headed for 16 million tonnes in 2005. A key constituent in urban smog and acid rain, SO2 remains one of the greatest pollution challenges for China.

The Tsinghua-BP centre’s polygeneration programme is out to change this. It uses “gasification” techniques to convert coal to gas, which is then used in gas turbines within the same plant to generate electricity. Sulphur is removed as an integral part of gasification. The process also produces valuable liquid fuels – methanol, which can be used for vehicle fuel, and dimethyl ether for cooking and heating in the home. Jiang Nin says the centre’s tests in the city of Zaozhuang — which faces the typical problem of fuelling rapid expansion while still reliant on high-sulphur coal – show that polygeneration could fulfil more than a quarter of its electricity needs by 2020, while drastically cutting sulphur emissions.

But it is coal’s high carbon-dioxide emissions, rather than its sulphur pollution, which are the focus of a new EU-China project: the “near Zero Emissions Coal” (nZEC) scheme. The United Kingdom is leading the first phase, a three-year feasibility study — with £3.5 million funding from the Department for Environment, Food and Rural Affairs (Defra) and the Department of Trade and Industry (DTI) — to assess different ways of capturing the carbon emitted during generation, and then storing it underground in China. It’s part of a wider initiative, aimed at delivering a practical demonstration of coal-fired generation with complete carbon capture and storage, in both China and Europe, by 2020. For a coal-rich country like China, such a development could be priceless.

Meanwhile, with its hothouse economy showing few signs of cooling, China reckons it needs all the energy sources it can get. In the long view, this encompasses hydrogen fuel cells and nuclear fusion, two areas where Chinese scientists — at Tsinghua and elsewhere — are keenly engaged in research and in international collaboration. More immediately, and less sustainably, it is projecting a continuing rise in oil use (implying increasingly sharp competition for oil purchases on the world market), and planning much greater exploitation of its natural gas reserves.

Then there is its highly controversial programme of massive dams for hydroelectricity. Construction of the biggest of these to date, the Three Gorges, was completed in May. It should have a capacity of 22 gigawatts (GW) when it is fully operational in 2009. The dam has drawn a storm of criticism from environmentalists and human-rights activists. Millions will be displaced, historic sites destroyed, and, it is alleged, lasting damage caused to the whole Yangtze ecosystem, all by a technology whose long-term efficacy is questionable, they say.

For its part, the Chinese government insists the plant will bring huge benefits in the form of low-carbon energy, regional development and flood control. Overall hydro capacity is set to rise from 108 GW in 2004 to 246 GW by 2020 — contributing about a quarter of total Chinese electricity.

Equally controversial is the government’s plan for a massive five-fold expansion in nuclear power capacity from the current 6.2 GW to 32GW by 2020, using the latest (substantially “home-grown”) pebble-bed reactor technology. This allows for smaller units, which, in theory, can be brought on line more rapidly. China’s nuclear ambitions have caused concern on both environmental and security grounds – and its expansion will place increasing pressure on world supplies of uranium, already a potential trigger for conflict. But faced with a looming energy deficit and growing concerns over climate change, the government argues that nuclear has a vital role to play.

But the real excitement comes over China’s new-found enthusiasm for renewables. Indeed, they feature more prominently in the country’s energy plans than nuclear: China’s new renewable energy law sets a goal of generating 15% of its electricity from renewables by 2020.

Eric Martinot, a senior research fellow with the Worldwatch Institute and senior visiting scholar at Tsinghua University, believes that China’s huge spending in renewables shows it is taking the target seriously. Excluding large hydropower, it invested £3.3 billion in renewable energy last year. That, says Martinot, makes it one of the biggest investors in renewables in the world.

“I’m very optimistic here,” he says. “In China, introducing renewables is a good industrial development strategy.” And it’s not climate change that’s driving it – it’s local air pollution. “Ordinary people just don’t accept this kind of pollution.”

The renewables law is central to progress here. Li Junfeng, secretary general of the Chinese Renewable Energy Industries Association (CREIA), describes it as “the basis of all our work”. He stresses that different regions lend themselves to different types of renewables. Wind power, for example, is especially suitable for the remote, economically underdeveloped north and west. So CREIA launched major wind farms in Inner Mongolia and Jilin – while promoting solar and biomass in provinces such as Hebei and Jiangsu.

China still has some 70 million households without any electricity at all, which opens up opportunities for small-scale solar in particular. The northwestern city of Xi’an, for example, is the base for a new company in which BP Solar and China Xinjiang SunOasis will pool their capabilities to supply 25 MW of sustainable power to remote rural areas.

But it is wind power which holds out the best hope of generation on a really substantial scale. Capacity increased by two-thirds in 2005 alone (to 1.27 GW), and is now set to soar: to 4GW by 2010, 10GW by 2020. And this could just be the start. A new wind power assessment centre calculates that onshore turbines could provide as much as 250 GW of electricity (over 10 times that from the Three Gorges dam). And even that is dwarfed by the potential from the winds that blow across China’s coastal waters. The centre estimates that offshore wind farms could produce around 750 GW. It’s fairly speculative stuff – but if met, it means wind could meet virtually all China’s electricity needs. This is wind power on a scale unimagined anywhere else in the world.

In the short term, Jiangsu province in the Yangtze delta has been singled out as having particularly good wind resources, and is aiming to build one fifth of China’s total installed capacity of wind power by 2010 – including a wind farm at Rudong which aspires to be the largest in Asia. According to its engineer, Zhao Shengxiao, its 430 turbines will each produce 2MW.

Chinese law currently demands that wind power projects must contain parts that are at least 70% locally made. So major western manufacturers are rushing to expand local capacity. GE in particular has big plans here, and recently opened its first turbine assembly plant in the country in Shenyang, in the northeastern province of Liaoning. Spanish turbine maker Acciona has set up a plant at Nantong, in the eastern province of Jiangsu, which will turn out 900 turbines a year, while Denmark’s Vestas Wind Systems, which had 15% market share in China last year, is planning a new generator factory in the eastern coastal city of Tianjin. The dominance of western companies is a contentious point, says Martinot, but while Chinese companies have a good record in small-scale hydro and solar, they are lagging behind on wind.

Investment in renewable generation only happens, of course, if the incentives are there – and the Chinese government took a vital step in February this year by setting minimum “green electricity” quotas for power companies. Zhang Guobao told a press briefing in Beijing that any such companies with an installed capacity of over 5GW  will have to ensure that 5% of their output is powered by renewables (specifically not including large hydro) by 2010. This figure will rise to 10% by 2020. The 15 or so companies that meet this criterion account for more than half the country’s total generating capacity. To sweeten the pill, they will be allowed to charge higher tariffs for supplies sourced renewably, and given tax breaks and subsidies to offset investment costs.

Zhang struck an optimistic note. “It will be a new business attraction, with huge market potential and lucrative returns.” And, significantly, the country’s top power companies, including Huaneng, Datang and China Power Investment, have already included renewable energy development in their long-term business growth strategy.

So far, their portfolios may be tiny; Datang, for example, currently relies on coal for more than 99% of its electricity generation. But it plans to cut that to 75% by 2014 and, according to its spokesman Zhang Shaopeng, is “looking at a slew of wind farm projects across the nation”.

The author: Clifford Coonan is China correspondent for The Independent (London)

This article will appear in “Greening the Dragon: China’s Sustainability Challenge”,a special supplement produced by Green Futures magazine, to be published in September 2006.

Homepage photo by Chris Webster