18 September 2009 00:00 [Source: ICB]
A ROCKETING manufacturing sector has propelled China into a new era of prosperity, but it has also polluted the air and threatened to elevate the nation to top spot among greenhouse gas emitters. Faced with a domestic health crisis and the international campaign to stave off global warming, yet anxious to feed its ravenous growth engine, China sees its future as becoming the world’s leading producer and consumer of renewable energy.
In 2008, annual renewable energy investment in China increased 18% to $15.8bn (€11.1bn), compared with global growth of only 5%, according to Linda Yan, consulting manager, energy and power systems practice for consultancy Frost & Sullivan China.
“China’s rapid growth is expected to continue,” says Yan. “Facing the problems of less liquidity and a shrinking global market, China made $67.2bn of stimulus allocations available through its state-owned banks to support the [renewable energy] industry and encouraged the growth of the domestic market,” she adds.
According to an August report from global consulting firm Ernst & Young, China rose to tie with Germany this year in its Renewables Country Attractiveness Indices as a result of China’s latest government focus on wind and solar.
China’s 2020 targets for solar power have risen to 9GW – 75 times the current solar capacity of about 120MW, and Chinese wind energy development continued to accelerate, following recent stimulus announcements and increased capacity targets of 100GW by 2020, says Ben Warren, Ernst & Young’s head of renewable energy.
“China is now aggressively developing its domestic solar market, and there is also the likelihood of Chinese wind turbine manufacturers becoming significant players on the international supply stage,” he adds.
SOLAR INVESTMENT STILL HOT
Backed by the Chinese government’s total stimulus package of yuan 4 trillion ($585bn), Chinese businesses are now among the top producers of electric vehicles, wind turbines, solar panels and energy efficient appliances, according to a report released last month by London-based The Climate Group, a nonprofit coalition of governments and businesses, including BP and Dow Chemical.
"70% of the equipment needed for wind power plants must be made domestically"
The Climate Group
“Most Chinese photovoltaic enterprises are in the mass production category, where the technology is not advanced,” the report notes. “The global recession, however, has negatively affected the Chinese PV industry, which exports 98% of its output. The potential is for large-scale expansion of PV in China’s domestic market supported by government subsidies to reduce price barriers thus overcoming the problem of consumption abroad, pollution at home.”
One area in which China is the undisputed leader is the solar water heater industry, which had sales last year of around $2.6bn, says William Brent, head of the clean technology practice at global public relations firm COFCO entered into a partnership with Sinopec, the major Chinese oil and energy company, to develop a commercial-scale process for producing corn stover-based ethanol.
“We are hoping Chinese authorities can encourage the development of non-food feedstock-based ethanol as this is a big opportunity out there,” says Christiansen. “In a study that we did, cellulosic ethanol can reduce 10% of China’s imported gasoline by 2020, corresponding to a 90m ton reduction in annual carbon dioxide [emissions], as well as creating an additional 6m domestic jobs.”
The Novozymes study also estimates that China can produce cellulosic ethanol at the cost of $2.50/gal by 2010 and $1.50/gal by 2015, based on China-specific costs, including raw material collection and transportation, ethanol production, midstream logistics and downstream distribution.
Building the cellulosic ethanol industry in China represents a $13bn business opportunity, of which Chinese companies will capture more than 75%, says Novozymes.
In 2008, China consumed around 1.5m tonnes of first-generation bioethanol, made primarily from corn, according to Novozymes. The Climate Group estimates biodiesel production in China at 300,000 tonnes/year, made from cottonseed oil, waste oils, wood oil and tea oil.
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