Green energy is energy security
(appeared in Sep 2014)

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Technology is turning China from carbon villain to carbon messiah, says S.Ananthanarayanan.

The Kyoto protocol on reducing CO2 emissions came to an end in 2012. Most member countries have reported success in achieving reduction targets, but global greenhouse gas emission has grown faster than before. While emissions continue to grow, a series of articles in journals the world over has reviewed what has gone wrong. But China, the greatest emitter of them all so far, is now showing the way to reverse the trend.

One trouble with the Kyoto protocol was that it set emission cap targets for developed countries but gave developing countries a free hand. This is why the USA, after first having signed the treaty, refused to ratify it and stayed out of the protocol. The treaty was left with 37 members, USA, then the largest emitter of CO2, not among them, and emitter giants, like China and India, were without any emission reduction targets. The graph, Carbon Climb, would show that the Kyoto protocol had no effect on global emissions.

The emission reduction achieved by developing countries was partly by reduction in manufacture and generation and partly by the economic crisis during the period. But the reduction was also illusory - what developed countries did not produce, they imported from China – the same carbon was still burnt, only somewhere else. Power intensive industry in the west relocated to China and India, who celebrated ‘Foreign Direct Investment (FDI)’, as reflecting the confidence of investors in political stability, and in the west it was business as usual, with full marks for reducing carbon emission. “The reasons for the ineffectiveness of the Kyoto protocol are in its architecture,” says Dieter Helm, economist and professor of energy policy at the University of Oxford, “It is based on carbon production, not carbon consumption.”The energy-intensive goods that China and India export to Europe and the USA make up about 50% of the world’s GDP, Helm says. China is now an importer of coal and accounts for The expansion of the renewable sector in China is also reducing the need to import oil and natural gas. Achieving the 2017 targets of water, wind and solar power, Mathews and Tan reckon, would lead to a 45% reduction of the oil and gas import bill. The expansion of the sector has also created a huge market for the sector’s many components, like wind turbines and photovoltaic panes, and the economy of scale has brought prices down. From 2010 to 2013, the solar generation capacity in China has gone up from less than a GW to 8 GW, a 22-fold increase, while the global market, which was already at 40GW increased only to 140 GW. The economics of supplying the domestic and international markets has then benefitted solar power users the world over.50% of the world’s coal trade, producing more coal than four times the oil produced in Saudi Arabia, he said in November 2012. But a review by John Mathews and Hao Tan, from Australia, just published in the journal, Nature, describes China’s current energy initiatives, which may change China’s profile from being polluter No 1 to the world leader in switching from coal to renewable energy sources, like wind turbines or solar cells.

China’s economy grew by giant strides since 2001, when it joined WTO, with new railway lines, manufacture, megacities and most of all, ample electric power, mostly from coal fired plants. Today, China generates more than 5 trillion units (kWh) of electricity, which is a trillion kWh more than USA. And China consumes 23% of the world’s coal production for electricity. But fossil fuels alone cannot provide all the power that China needs and since the mid-2000s, she has invested heavily in hydro-electric, wind, solar and nuclear power generation. Between 2008 and 2012, the Mathews-Tan review says, investment in this sector increased by 40%, while the share of investment in fossil fuel based facilities fell from 50% to 25%.

“As a result, China’s wind power capacity has increased five-fold. And in 2013, the generating capacity from new water, wind and solar sources surpassed that of new fossil-fuel and nuclear facilities,” the review says. Along with increasing wind farms and area under solar panels, China has also created means to integrate electricity from these sources with the existing electric distribution network, and is an exporter of ‘intelligent grid’ technology. ”Zero carbon sources now contribute 9.6% of the energy used in China, up from 5.6% in 2000,” the review says. “In 2013 China hit its target – two years early - to generate almost 30% of electricity from renewables. No other country is investing so much money or generating so much renewable energy.”

The expansion of the renewable sector in China is also reducing the need to import oil and natural gas. Achieving the 2017 targets of water, wind and solar power, Mathews and Tan reckon, would lead to a 45% reduction of the oil and gas import bill. The expansion of the sector has also created a huge market for the sector’s many components, like wind turbines and photovoltaic panes, and the economy of scale has brought prices down. From 2010 to 2013, the solar generation capacity in China has gone up from less than a GW to 8 GW, a 22-fold increase, while the global market, which was already at 40GW increased only to 140 GW. The economics of supplying the domestic and international markets has then benefitted solar power users the world over.

The transfer, so vigorously pursued in China, from fossil to renewable, is not only a change to carbon-free energy, it is also an assurance of secure energy sources. Fossil fuel resources are limited and as they get depleted, developing economies urgently need alternatives. Conversely, sources of water, wind and solar energy are perennial – all one needs is for wind and solar is vacant land. Creating renewable capacity further supports manufacturing and frees the state from dependence on markets and imports.

The Kyoto protocol, now past and to be replaced in 2015 with a new international understanding, has been Europe-centred and has relied on mechanisms like taxes and trading in carbon credits. Creation of a low carbon regime through market forces may take too long, given the rate at which the economies of China and India are growing – they are slated to double by the year 2020. A regime based on consumption of carbon, rather than on creation, would clearly address the relevant concern more directly. Import levies on products would also be a restriction, though tax on their production would help the producing nation benefit, rather than the importers’ government.

But a more direct route to low carbon would be through technology and creating competitive renewables. This is what is happening in China, with the growth of the wind turbine and the solar panel market. The understanding that manufacture in China is largely based on coal driven power has brought about a misguided import levy on Chinese photovoltaic cell panels. This is most counter-productive, as use of coal based power, howsoever harmful, to manufacture solar panels is vastly more productive than use to manufacture the many consumer goods that developed countries import from China and India.

The regime of carbon pricing and trading is viewed as the only way incentivize investment in low carbon technology. But effective state policy to leverage technology and increasing the market for renewables would change the perspective and it is for using other means that one would need incentives. Yes, China gained the dubious distinction of being the world’s greatest polluter, but now China is showing the way, politically and socially, to go for renewable energy and reduce carbon.

Local communities trading in carbon savings could often be creating illusory economics. The true villain of CO2 generation is coal and what counts is ways of burning less coal. An instance of real carbon saving is the investment that the Mumbai suburban railway, India, made to switch over its 88 year-old traction network from 1,500 V DC to 25,000 V AC. This single change, which is more easily spoken of than executed, reduced transmission loss and enabled regenerative braking of trains, which recoups energy, and saved 40% of the power consumed.

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