China’s strategies towards renewable energy resources

The natural resources, especially non-renewable energy resources have been in use since generations and the world faces a threat of consuming all the existing energy resources. China’s over-reliance on thermal power generation, especially coal-fired power stations, is well-documented. Coal is considered the best option for nuclear power. China’s strides in renewable energy are unprecedented. The Chinese government has included some new amendments to the Renewable Energy Law, first declared in 2006, which attempts to rationalize the regulatory regime dominating wind, solar, hydropower and biomass projects in China, currently charged with inadequate interconnection and tariff shock issues.

More importantly, the People’s Republic of China (the “PRC”) is driven by the idea of improving their economic growth by utilizing their renewable energy resources which is moved by the growing demand for energy resources. There is also a need to address the country’s energy security and environmental concerns. It has been a regular observation that China imports more than 55 percent of its oil demand despite being the world’s fifth largest oil producing country.

Renewable energy, its availability and development helps a nation to incorporate its source of energy production within itself. The People’s Republic of China alone is driving 87 percent of the coal and oil production for its people. The more usage of these natural resources corresponds to more emission of carbon dioxide into the atmosphere, thus, the annual per capita carbon dioxide emission by the PRC was at 4.3 tons in 2005, which was already approximately one-third of the level of high-income economies. Due to the rising demands for energy, because of the over-utilization of the existing resource, PRC government has to sit back and develop a legal framework and policies which will, in turn, help align the growing concern over this segment of energy consumption which aims at addressing the country’s challenges, to provide a secure, affordable and environmentally sustainable energy.

Administrative Machinery
By looking at the way the PRC government is functioning, the previous State Power Corporation in the year 2002 has conglomerated the PRC power sector. With the introduction of the Electric Power Industry (State Council [2002] No. 5), the monopoly adhered to by the former State Power Corporation came to an end. With this restructuring:

China has already transferred the transmission assets from the former State Power Corporation to two national grid companies. These companies are namely, State Grid Corporation of China and China Southern Power Grid Company Limited.

Looking at the past, the China power sector seems to have greeted a number of foreign investors that also included, Independent Power Producers basically from Europe and major utilities from Asia and the West. This was early in 1990s. Several dozen power-related joint ventures and wholly foreign- owned enterprises were subsequently established. Though there were establishments from foreign owned enterprises, this is also caused a decline in the power usage on a global scale. Moreover, due to the impact of the Asian financial crisis, way back in 1997, many foreign-invested power producers have renounced the Chinese power sector.

In view of the reform plans applied by the Electric Power Industry, Following the Plan for the Reform of the Electric Power Industry, the PRC government has made certain efforts to diversify the sources of energy shifting from the traditional dominance of coal to cleaner energy sources. The efforts incorporated by the Electric Power Industry included the revamping of the energy management structure at the national level. The State Electricity Regulatory Commission (SERC), the independent power regulator, was established in March 2003 as part of the restructuring. The National Development and Reform Commission (NDRC) have been assigned the task of national policy maker for the PRC energy sector.

Apart from NDRC, another department National Energy Administration (NEA) which was originally established to replace NDRC’s energy bureau, plans on generating policies and strategies for the management of PRC’s energy industries and approving foreign energy investments. China has been exploring all the avenues in order to strengthen its energy sector. One of the key steps it had taken towards strengthening the country’s energy sector management, is the formation of the National Energy Commission (NEC) which coordinates energy development within the PRC and discusses major energy security and development issues.

Renewable Energy Policy
Out of the many important meetings conducted in lieu of the Climate change, the National Development and Reform Commission (NDRC) have issued the first PRC policy statement on climate change in June 2007. This policy statement was made with reference to the United Nations Framework Convention on Climate Change (UNFCCC), providing general guidelines and principles to tackle climate change in China. Against the initial output, China had first set a target of raising the proportion of renewable energy to 10 percent of the primary energy supply by 2010.

Along with setting up of an initial target, NDRC also has set a future target (Year 2020) of 15 percent of China’s total energy generation to be produced from renewable energy. The policy document also specifies targets for various renewable energy sources. The targets, we are talking about here, work on the theory of installed capacity rather than the actual amount of electricity connected to the power grid.
 

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