China Environmental Law

A discussion of China’s environmental and energy laws, regulations, and policies

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Trouble in Paradise?

January 27th, 2009 · No Comments

When you hear someone tout China as “the world’s leading renewable energy producer,” remember to put this fact (which includes lots of environmentally unfriendly hydro by the way) in context: China’s energy growth is primarily fired by coal.  Although there appears to be a slight shift from coal in the energy project investment numbers for 2008, statistics released by the State Electricity Council (SEC) last Wednesday reveal that “the weight of renewable energy in China’s total installed electric power capacity and total electricity production decreased by 1.37 and 1.23 percentage points respectively in the past two years.”  Did you get that?  Here in the happy green valley, renewable energy’s share of China’s total electricity production and capacity has fallen over the last two years.

How can this be?

According to the SEC

The decreasing weight of renewable energy in the past two years indicates that in spite of strong government support to development of such energy, the sector still has some problems in power generation construction and power distribution.

The on-grid electricity price of some renewable energy power generation projects going into operation before Jan. 1, 2006 is relatively low, and the subsidy for renewable energy generated electricity price and the quota trading scheme stay far behind the development of renewable energy power generation.

Besides, there is no unified industrial standard for biomass generation.

Therefore, the Stated Electricity Council suggested further improving the pricing mechanism and working out fiscal and tax policies in favour of renewable energy development.

There was a flurry of policy and regulatory activity following the effective date of the Renewable Energy Law three years ago, but this activity appears to have sputtered to a halt lately.  Some obvious gaps in the system have not been filled and some problems that have cropped up have not been fixed.  Project development and grid connection issues exist as well.  There is a need for a renewed focus on completing the renewable energy regulatory framework.

In the meantime, when someone tells you that China is “beginning to unleash a low carbon dragon,” remind them that dragons are mythical beasts.

Tags: energy policy · renewable energy

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