In March 2013, the National Energy Administration (NEA) of China issued a Notice to urge development of wind-to-heat projects in northern China. This practice aims to reduce the waste of wind power and cut emissions from the coal-fired central heating system. Experiments have been carried out and the approach is going to be scaled up, but further innovations are needed to really shake the dominance of coal.

The niche for large-scale wind-to-heat

Figure 1. China’s installed wind power generation capacity, and average operation hours of the turbines from different sources (click image to enlarge graph).

According to the Chinese Wind Energy Association (CWEA), China’s total installed capacity of wind power jumped to 75.3 gigawatt (GW) by the end of 2012, while the annual installed capacity was 13 GW, nearly 27percent lower than that of 2011 (See Figure 1). This may reflect bottlenecks, such as growing wind curtailment, faced by the industry.

Since 2010, the operating hours of wind turbines have been decreasing (See Figure 1). Combined with growing generation capacity, wind curtailment in 2012 reached 20,000 gigawatt hours(GWh), nearly doubled the curtailed production of 2011.

Jilin Province is a region with one of the highest curtailment rates. Winter nights see high wind speed but low electricity demand, and the local grid’s flexibility for peak electricity management is limited. As a result, wind farms in Jilin Province, which have a total generation capacity of 3.3 GW, were generating for only 1,420 hours in 2012. This was much lower than the industry-adopted economic minimum of 1,900 hours.

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In the first two months of 2013, there were only 58 requests (according to the United Nations Framework Convention on Climate Change, UNFCCC) to register  Clean Development Mechanism (CDM) projects in the world, compared to 280 requests in January and February 2012. CDM is one of the three flexible mechanisms defined in the Kyoto Protocol that provides for emissions reduction projects with Certified Emission Reduction (CER) units, essentially credits that can be traded in emissions trading schemes. Developed countries can fulfill their commitments to reduce emissions by buying CERs from developing countries, which, in turn, achieve sustainable development by building emissions reduction projects.

The CDM provides a solution for financing low carbon projects in developing countries, as CDM projects can derive revenue from two sources: operational revenue, such as selling electricity or decomposition product, and selling the CERs from the project to Annex I (industrialized) countries under the Kyoto Protocol. For example, a wind power plant can sell its generated electricity to domestic grid companies while gaining extra income from selling CERs after achieving a certain amount of CO₂ emission reductions.

However, as shown by the lack of new CDM projects, the mechanism is failing. Due to oversupply of CERs, the price for each unit is falling rapidly. Two years ago, the CER price was above €12/ton of carbon dioxide equivalent (tCO2e) (US$15.46/tCO2e). At present, it is less than €0.5/tCO2e (US$0.64/tCO2e) (See Figure 1).

China is especially hard hit as it dominates the CDM market with the largest investment of CDM projects in the world ($220 billion, or 61.8 percent of total registered CDM projects globally). These Chinese CDM projects have supplied 738 million CERs, or 61.2 percent of all 1,200 million CERs issued from 2005 to present.

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On March 15, Suntech Power Holdings Co., one of China’s largest solar photovoltaic (PV) manufacturers, failed to pay its US$541 million convertible debt, causing its stock price to bottom out. (See Figure 1.) Three days later, eight Chinese banks filed a petition asking for the company’s main operating subsidiary, Wuxi Suntech, to be declared insolvent and proceed to restructuring. With Wuxi Suntech owing the banks 7.1 billion RMB (US$1.14 billion), the company was forced to declare bankruptcy on March 20.

Figure 1: Stock price of Suntech Power Holdings Co. (Unit: USD) (Source: Google Finance)

There was discussion about whether the Chinese central government would rescue the former star of China’s solar sector, but the National Development and Reform Commission (NDRC), abiding with its new policies for renewable energy, said the government “wouldn’t and shouldn’t intervene.”

This put the municipal government of Wuxi, in China’s Jiangsu Province, in a dilemma. On the one hand, Suntech had become a model enterprise showcasing Wuxi’s sustainable development success; it would be extremely difficult for the local government to let it go. In 2012, a proposal from Suntech Power to shut down Wuxi Suntech had distressed the local government so much that the municipality made an effort to save the company, securing an additional 200 million RMB ($32.2 million) loan from the Bank of China.

But this time around, having lost the creditworthiness to receive strong support from state banks, government bailout options were limited. Wuxi Guolian Development Group, a financial company controlled by the municipal government, was expected to take over Wuxi Suntech. On March 20, a former senior executive of Guolian was assigned to be the new president of Suntech Power. This marked the official entry of local government into the restructuring process for the suffering Chinese solar company.

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Wind farm in Xinjiang welcomes a new dawn. (Source: Flickr user zhouyousifang)

Last year, China was the world’s top investor in renewable energy, and the country has expressed even greater ambition for 2013. But before it can realize its planned additional 49 gigawatts (GW) of clean power, it needs to first lead its clean energy industry out of the swamp of overproduction and low-end manufacturing. China’s recent embrace of a set of revised renewable energy policies might bring new hope for the industry’s—and the country’s—ambitions.

Controlling reckless development

In the last decade, in order to increase the share of clean energy in the overall energy mix, the Chinese government released a series of laws and subsidies to give the industry a boost. While such efforts significantly ramped up China’s clean energy equipment manufacturing and renewable energy installations, they also led to reckless development that caused severe overproduction and wasteful investment practices and resource use.

To address these issues, the government has been taking regulatory and policy steps. In August 2011, the National Energy Administration (NEA) issued a new regulatory policy on wind power, requiring that all new projects, including those with installed capacity less than 50 megawatts (MW), be reviewed and registered at the NEA before they can receive government approval or subsidies. Such restrictions are aimed at containing the over-construction of small-scale wind power projects under 50 MW. (See Worldwatch’s earlier post on this issue.)

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Smog in Beijing recently reached record levels. (Source: Flickr user michaelhenly)

China recently announced that it would be joining the International Renewable Energy Agency (IRENA), as a global leader in terms of installed capacity and investment. This acknowledgement of its status as a clean energy leader may come as a surprise to some, given the recent headlines about the country’s astounding air pollution. But in 2012, China invested US$ 68 billion on developing renewable energies, 55 percent greater than U.S. investments, making it the largest clean energy investor in the world. Installed capacities for hydro and wind power rose to 249 and 63 gigawatt (GW), achieving another two global “top spots.” Looking into 2013, with aims to add 21 GW of hydro, 18 GW of wind and 10 GW of solar power in a single year, it seems that nothing can stop China’s clean energy ambition.

However, what matters to the energy sustainability is not only the scale of clean energy products, but also the environment-friendly approaches through which the sector is built and operates. While clean energy is certainly not to blame for the large portion of pollution problems, China’s efforts to develop renewable energy so quickly have generated some environmental problems, too. A lack of effective environmental policy-making and regulation has led to unsustainable practices in the renewable energy sector that cast a shadow on those “top spot” numbers.

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I visited Berlin a week after President Obama’s reelection, and came away envious of the strategic clarity and political consensus that mark Germany’s new energy strategy. After months of watching Democrats and Republicans bash each other with vacuous and contradictory rhetoric about where our country’s energy future lies, it was refreshing to see that one of our key allies has a plan—and is implementing it.

Despite having a relatively weak solar resource, strong domestic policy has enabled Germany to dominate the global solar PV market (Source: REN21).

In 2012, Germany got more than 25 percent of its electricity from renewable energy, up from 5 percent in 1995 and 10 percent as recently as 2005. Since 1995, the U.S. share of renewable electricity has hardly budged—going from 10 percent to 11.5 percent.) At the same time, Germany has rapidly increased its energy efficiency, and reduced its carbon dioxide emissions and dependence on imported fossil fuels. Government plans are even more ambitious—at least 80 percent of the nation’s electricity is to come from renewables in 2050.

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There is ample reason to praise President Obama’s engagement with a diverse collection of world leaders; in particular, the administration’s “pivot to Asia” indicates recognition of an evolving geopolitical landscape, a recognition that will hopefully continue in his second term. But one region in particular has been noticeably absent from the administration’s agenda: sub-Saharan Africa. And this oversight could have long-term implications for the energy future of the sub-Saharan African region, and even the economic future of the United States.

No region suffers from energy poverty more than sub-Saharan Africa, where nearly seven out of ten people lack access to reliable and affordable electricity.

Sub-Saharan Africa is a region full of contradictions. On the one hand, it is home to six of the ten fastest growing economies between 2001 and 2010; on the other, 14 of the 20 states Foreign Policy’s Failed State Index deems “critical” are located in sub-Saharan Africa. Throughout the region, one of the largest obstacles towards widespread and equitable economic development is the crippling degree of energy poverty. The most recent data suggests that a lack of access to reliable and affordable electricity leaves nearly 70 percent of sub-Saharan Africans in the dark every day.

With the re-election of President Obama, the time is ripe for the administration to realize that, for all of the region’s struggles, reaching out to sub-Saharan Africa is within the United States’ self-interest. Prioritizing the alleviation of energy poverty is one way to strengthen efforts to improve the quality of education, reduce illness and disease, boost incomes across the region, and also to lay the groundwork for budding economic partnerships. 

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By Wenna Wang and Haibing Ma

Source: EIA | Distribution of China's shale gas basins.

On June 27^th, 5 shares of shale gas reached their daily limits at Shanghai Composite Index, the largest stock market in China, lifting the whole Oil & Gas sector above the otherwise decreasing Chinese stock market. This was stimulated by a signal from the nation’s Ministry of Land and Resources: the second round of shale gas exploration rights is expected to open for bidding in September, and this time it will be open to private investors.

Shale gas, which is natural gas found in hydrocarbon rich shale formations, is one of the most important unconventional sources of natural gas and represents a rapidly expanding trend in onshore gas exploration and production today. The deposits are mainly extracted through hydraulic fracturing and horizontal drilling. Though it is not an ideal alternative to conventional energy sources, shale gas can be a key to energy independence and a lower carbon footprint, since it produces 43 percent and 30 percent less carbon dioxide emissions than coal and oil per thermal unit produced, respectively. However, not everything about shale gas is an improvement, as its extraction process may contaminate ground water and release volatile compounds into the soil, while the use of shale gas will still lead to greenhouse gas (GHG) emissions. The main mining techniques used for extraction, horizontal drilling and hydraulic fracturing, have been linked to various problems like water shortages, groundwater contamination, methane gas seeps, micro-earthquakes and coal fires. Sample surveys show that methane concentrations were 17-times higher on average (19.2 mg/L) in shallow wells located in active drilling and extraction areas than in wells located in non-active areas (1.1 mg/L on average). In addition, there are studies showing properties with shale gas wells were valued down due to the fracturing.

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As I discussed in a previous blog, renewable energy trade disputes are becoming a particularly contentious issue between many nations. The United States and China are facing off in one of the most publicized of these disagreements. Further action was taken last week as the U.S. Department of Commerce made its second ruling of the year on this issue, placing tariffs on solar photovoltaic (PV) imports from China.

A Suntech Power Holdings employee at a Chinese solar PV manufacturing facility. The Commerce Department ruling placed a 31.22% tariff on Suntech products. (source: China Daily)

The previous Department of Commerce ruling from March 2012 placed countervailing duties on solar PV imports in order to balance what the department determined to be illegal subsidies to solar PV manufacturers from the Chinese government. The initial tariff rates, which were set between 2.9 and 4.73 percent, came in much lower than what was expected by most experts.

The new preliminary ruling comes in response to the second set of claims by the Coalition for American Solar Manufacturing (CASM) that Chinese solar companies have been dumping their products in the U.S. market at below market value. The coalition, led by SolarWorld USA, looks to level the playing field for U.S. solar manufacturers against what they see as artificially cheap imports coming from China.

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By Haibing Ma

Guangdong is releasing a series of policies to ensure a green future. ©nfdaily.cn

According to media reports, Guangdong province has taken the lead in becoming the pioneer of low-carbon practices in China. Guangdong is one of 13 pilot regions—including five provinces and eight municipalities—that the Chinese government has selected to explore low-carbon development. So far, it is the only pilot region that has issued a comprehensive plan for this development and had it approved by the central government.

In January 2012, the National Development and Reform Commission (NDRC) reviewed and then “approved with positive comments” Guandong’s “Implementation Plan for Low-Carbon Pilot Programs.” Although this plan has not been made public, it reportedly lays out eight “key actions”:

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