China may implement new law to demand use of clean energy

Jun 21, 2004 02:00 AM

A worsening power shortage has been forcing China to speed up national expansion of renewable energy sources and is considering making it compulsory for power grids to buy electricity generated from small hydro, wind, solar and bio-mass power projects.
Beijing is drafting a law to increase the country's installed renewable energy generating capacity to about 60 GW by 2010, about 10 % of total power capacity. Currently, renewable energy only accounts for 5 to 6 % of total power capacity, while smoke-belching, coal-fired power accounts for more than 70 %.

Two government-appointed committees are drafting the Renewable Energy Development and Utilisation Promotion Law. The draft will be presented to the National People's Congress at the end of the year and aims to be implemented by 2005.
A crucial clause will force power grid firms to buy renewable energy and make end users share the costs, according to Li Junfeng, secretary-general of the Chinese Renewable Energy Industries Association. Li said renewable energy has become the government's top priority to increase power supply.

China has been slow in developing renewable energy because it is 20 % to 50 % more expensive than electricity generated from conventional resources. It costs 0.35 yuan (33 HK cents) to generate every kWh of electricity from coal, while wind-generated electricity costs 0.50 yuan per kWh. Li said power shortfalls have left the government with no alternative but to make laws to expand renewable energy. In the first four months of this year, China's demand for electricity increased by 16.1 %, while demand rose by 15 % in 2003 year on year.
"Now people are getting richer and are using more and more electricity," said Li. "The demand will continue to rise but the energy resources are limited."

China's oil reserves would be exhausted in 15 years, said Li, while natural gas reserves would last 30 years. Li doubts nuclear power is viable a solution. China recently proposed an increase in its nuclear capacity by nearly fourfold from 8.7 GW to 40 GW by 2020. Li said the country's total power capacity increases by 40 GW every year. And China needs at least 300 GW to satisfy its current electricity need, which means at least 300 nuclear generators need to be built.
"Nuclear power won't solve the essential problem," he added.
China aims to increase wind power capacity by more than 13-fold from 350 MW per year to 5 GW and to raise solar power capacity 10-fold to 30 GW by 2010.

Aside from power shortage, China also wants to be more energy independent and utilise its "fantastic renewable energy environment", according to Tessa Tennant, chair of the Association for Sustainable and Responsible Investment in Asia. China's potential hydropower capacity is 379 GW, potential wind capacity 253 GW, while geothermal energy could generate power equivalent to 3.16 bn tons of coal.
"China's administration understands the environmental challenges facing the country," Tennant said. "The concern still remains the degree to which Beijing policy can be effectively implemented across the country." She said the key to develop renewable energy is the purchasing commitment.
"That remains the reality of the market place. That's what's really profound about this new renewable energy law," she said.

Chinese regulators travelled to different countries to learn about legal framework for renewable energy, especially the public purchasing policy in Germany's scheme. Li said the government will need to set a fixed price within a timeframe to be shared by all end users.
Currently renewable energy projects are small scaled, with a capacity of under 100 MW per project. The size needs to be increased by 100-fold at least, Li said. China aims to build renewable energy power plant with 60 GW capacity by 2010. The government has no intention to set aside funds to kick-start the national renewable energy plan, it needs to set an attractive price to lure investors, according to Li.

Li said all players are waiting for the law to be handed down. Many domestic and international power firms and investors such as Huaneng Power and General Electric are preparing to invest in renewable energy in China. It takes up to two years to build a windmill or small-scale hydro-electric project. Tennant said the renewable energy market is very diverse and many people can profit from it.
"Here in Hong Kong, the city has not truly woken at all to the scope for financing renewable energy in the mainland," Tennant said. "But the changes will happen very quickly here."

Source: The Standard
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