China’s lead in renewable energy?

17 Apr

As the world’s largest carbon emitter (nearly a quarter of the worlds total emissions) due to their reliance on coal for energy and after much criticism internationally over the dangerously high levels of pollution experienced in the capital especially, China has committed to boosting energy production from renewable sources and thus sought to ‘clean up their act’.

They have mainly achieved this through investment in renewable energy, where China has overtaken the US as the number one investor in renewable energy. Primarily focusing on their solar energy and wind turbines, investment rose 20% in 2012 to $67.7 billion despite a fall in worldwide levels of investment in renewable energy.

A recent article in the financial times states that China is to become the world’s largest producer and installer of solar panels after the Chinese government has bought foreign firms investing in new technologies for solar panels.

This seeks to demonstrate how China wants to be viewed as a ‘responsible great power’ (Jintao) by taking the lead in areas such as sustainable energy.

However due to China’s economic reliance on the use of fossil fuels for growth, it has been weary of taking the lead on climate change, as Messrs Mattoo estimates a fall in emissions by China of 30% could lead to a fall in production by 6-7%.

Although China lost its lead to the US as number one investor in clean energy in 2011 due to new subsidies imposed by the Obama administration, it regained its title in 2012 after the sharp 20% increase in investment.

Glancing at the figures, one would on first impression suggest that China’s renewable energy sector is a force to be reckoned with growing at a vast pace, investing billions of dollars. Through subsidises provided by the government, energy companies have been able to leapfrog technology-wise to the top of the world’s wind and solar industries. However, a recent article has uncovered that China actually imports a large majority of their ‘clean technology’ from the US. Recent figures demonstrate that the US is $1.63 billion in trade surplus in this area. Whilst China may have a competitive advantage in manufacturing and assembling products, the US has the competitive advantage in research and development and thus the innovation of such products. The US therefore supplies Chinese ‘clean energy’ companies with high tech products such as polysilicon and fibreglass for solar panels.

Therefore despite China overtaking the US as the world’s largest investor in renewable energies, this highlights their dependence on the US for the technologies needed and thus shows that China is not quite in a position to be overtaking the US as the most powerful country in the world and leading hegemon just yet.

As analyst Michael Liebrich of Bloomberg new energy finance states this has created a relationship of interdependence between the two giants, rather than competition between the two. With such a contentious issue as climate change, I think it is vital that the two most powerful countries in the world are in a state of interdependence rather than competition, as global warming and sustainable energy are collective problems and consequently need collective solutions.




China retakes renewable investment lead:

China solar industry aims to shine out:

China and India take the lead:

Renewable energy: cleaning up


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