China’s Big Plan to Win the Clean Energy Race

July 7, 2009 | Teryn Norris,

By Johanna Peace, with Leigh Ewbank and Devon Swezey, Breakthrough Fellows

Historically, the United States has been the nation with the capacity and determination for large-scale investments in promising new technologies--but not this time. Now it's China's turn. In the coming weeks, China will unveil an unprecedented multi-billion dollar investment in renewable energy.

The details are sketchy, but China is reportedly developing a massive renewable energy investment plan. While little is known about the precise level of expenditure the Chinese will commit to research, development and deployment (RD&D), if it's anywhere between the US $440-660 billion over ten years reported by AFP and the Center for American Progress then it'll be an unprecedented investment in the new energy economy.

What Do We Know About China's Investment Plan?

A Chinese Energy Administration official has confirmed that the investments will number at least $440 billion over 10 years. However, there is still uncertainty about the range of investments and the date when the Chinese Government's renewable energy plan will be revealed. A report by the state-run news service Xinhua identified China's top economic planning body, the National Development and Reform Commission, as responsible for drafting and implementing the plan. According to Shi Dinghuan of the Chinese Academy of Sciences, NDRC has already produced a draft of the renewable energy stimulus, though Breakthrough research has turned up no publicly available copy.

Meeting Ambitious Targets for Renewables

The money from this new renewable stimulus package will undoubtedly help China meet its ambitious goals for the deployment of clean energy technologies. Last month, NDRC vice-chairman Zhang Xiaoqiang said that China would easily meet its renewable energy standard (RES) of 15% by 2020, a target set by the Renewable Energy law of 2006. He predicted that China's renewable capacity could reach as high as 20% by that time.

On technology-specific targets, too, China is plowing ahead of schedule. Estimates say that China's installed capacity of wind power by 2020 could easily triple the previous target of 30 GW. Meanwhile, a recent Chinese announcement said the nation would surpass its previous 2020 goal of 1.8 GW solar PV power as early as 2011, on the way to a dramatically higher new target of 20 GW by 2020.

Investments Currently Underway

When details are released, the massive $440-660 billion spending package will come in addition to substantial existing investment in renewables by the Chinese government. According to The Climate Group, China invested $12 billion in renewable energy in 2007--second only to Germany.

On its way to blowing past previous wind energy targets, China will begin construction this month on its biggest wind power station yet. The "Three Gorges of Wind Power" development, valued at US $17.6 billion, will generate 20 GW of power by 2020. The government is also considering enhancing deployment incentives already in place to encourage the growth of the Chinese domestic solar market.

Looking Ahead

The US is yet to respond to China's expanding lead in renewable energy investment.

While climate change advocates like Al Gore hail the Waxman-Markey bill as a display of leadership, the bill fails to provide sufficient investments in renewable R&D and increase deployment above business-as-usual scenarios. Breakthrough Institute analysis shows that "the House climate legislation would invest just $800 million to 1.4 billion in R&D" with "total investments in clean energy... likely to be just $6-9 billion annually between 2012-2025."

Not only does the scale of US investment pale in comparison to China's proposed US $44-66 billion per year, it also falls short of the investments that energy experts recommend to spur innovation to meet the climate and energy challenge. It's time for America to join the race.