New Procurement Opportunities in China's Emergence as a Producer of Renewable Technology

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Today China is an acknowledged early leader in pursuing green economic development. From having an almost non-existent renewable energy industry in the early 2000s, China is now a leading exporter of renewable energy equipment and machinery. Here we highlight three factors contributing to the explosive growth of China’s renewable energy industry.

Active government support

Renewable energy will be a key focus of the 12th Five Year Plan and of China’s plans to achieve energy independence and reduce pollution. The 11th Five Year Plan already mentioned natural resource depletion as a challenge and up to 40% of China's RMB 4 trillion economic stimulus package is targeted at green projects. Not surprisingly, China is now the world’s largest investor in renewable energy. In 2009, China invested close to USD 35 billion in clean energy, almost twice that of the US. Today, renewable energy accounts for 4% of China’s total energy capacity and close to 20% if we include hydroelectric power. Still, despite the impressive progress, China still has a long way to go before boosting renewable energy capacity to 10% by 2020 and hence we can expect continual government investment in this sector for the foreseeable future.

International and domestic pressure

Despite China’s impressive developments in clean energy technology, the fact remains that China is now the world’s largest emitter of greenhouse gases. In 2007, China released over 6.5 billion metric tons of carbon dioxide into the atmosphere, about 23% of the world total. China was also blamed by some for the breakdown of talks at the 2009 Copenhagen Climate Conference. More than ever, there is mounting international pressure calling on China to curb its carbon emissions and act like a responsible superpower when it comes to climate change.

Aside from international pressure, there is also growing domestic pressure for China to ‘clean up its act’. Presently, about 80% of China’s energy is supplied through burning coal and the demand for coal keeps rising every year. The result is that air quality for many of China’s cities has turned into a toxic soup of hazardous chemicals and cancer rates have risen dramatically. As the Chinese become accustomed to a better standard of living, more people will begin questioning whether the pursuit of economic growth is worth the cost of environmental degradation.

Partnerships with international companies

As China continues to pour money into developing its renewable energy capabilities, more multinational companies are setting up shop in China, building state-of-the-art facilities and transferring their technologies. Vestas of Denmark has built the world’s biggest wind turbine manufacturing complex in northeastern China, and transferred the technology for the latest electronic controls and generators. Bosch of Germany has spent USD 42 million in expanding its wind turbine manufacturing facilities in Beijing and Changzhou. This arrangement benefits both sides. Multinational companies are able to take advantage of China’s low labour costs and huge demand for renewable energy, while the Chinese benefit by receiving more foreign investment and foreign technology, which creates more jobs and raises the quality of the Chinese renewable energy industry. 

From these factors its a safe bet that renewable energy in China will continue to be a growing industry with the rest of the world taking notice.

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