Chinese President Xi Jinping has recently presented a proposal for the next coming five-year plan (14th, 2021-2025), featuring a new model for the internal and external markets.
‘China will continue to contribute to production for the international market, but that may no longer be the main focus for the renewables industry’, says researcher at the Fridtjof Nansen Institute (FNI) Iselin Stensdal. Her research is shedding light on the enormous shift China has undergone in terms of renewable energy.

‘It’s very impressive’, Stensdal continues. ‘The development of renewable energy in China has been fast-paced, and so much has happened in such a short time.’

China is racing ahead

In the 1980s and ‘90s, there were some small-scale development programmes for solar and wind power in China, but Germany, Denmark and the USA were the pioneering countries. Now China is in the lead, and it is involved in the entire value chain, from research and development to distribution and service. As late as 2009 en estimated USD 450 million was paid from China to Europe and the US in royalty fees for using foreign patents, so it has been in the interest of China to develop its own technology. 

‘When I started to look into this sector ten years ago, many people said "yes, it’s all very fine that China makes wind turbines, but the Chinese turbines are just spinning. They’re not connected to any power grid.” That is no longer the case today, Stensdal explains. Most of the capacity that is developed is now connected to the power grid. The challenge today is curtailment. The power grid must be balanced to ensure a balance between power production and consumption. If, for example on a windy day more power is produced than is used, it is necessary to limit how much power is fed into the grid.

Heeding the consequences of climate change

Stensdal continues: ‘Under the UN Framework Convention on climate change (UNFCCC), China is defined as a developing country. Before 2007, talk of domestic-level climate cuts was a sensitive topic in China. Beijing supported the UNFCCC under which the developed countries had promised to reduce their emissions, while giving developing countries the opportunity to develop.

‘In social research, ten years is often not considered as a long time. But what was written about China and renewables in 2010 is really outdated now!’, laughs Stensdal.

China's climate policy has levelled-up dramatically since it was first acknowledged as a national priority in 2007. Now the giant country is taking climate seriously, and has set a goal of becoming climate neutral by 2060. ‘The government realized that it was in their self-interest to take climate seriously’, Iselin Stensdal explains.

Moves market focus home

The Chinese state itself has been the strongest driving force for large-scale investment in renewable energy. A new renewable energy law came into force as early as 2005. Climate goals are updated every few years, and subsidies to the industry as well as own investment funds have secured financing. Further, international events have played a role in installing more domestically produced wind turbines and solar panels in China instead of exporting them. 

The financial crisis in 2008 and restrictions on imports from China that the EU introduced in 2013 have shifted the market focus from the international market to the domestic market.
‘When the Chinese talk about clean energy, they are not talking about renewables, but non-fossil energy more broadly. That includes their nuclear power, but it is not a dominant part of the non-fossil energy pool. 

Hydropower production in China has always been greater than the production of wind and solar energy combined, and still is.

Chinese Longships

‘The Norwegian government chose to call its large investment in carbon capture and storage Langskip, or Longship, in honour of our Viking heritage. Norwegians may think this is a bit funny choice of name’, smiles Stensdal, ‘but such language goes straight into the Chinese concept discourse. Beijing has launched the idea of China becoming an "ecological civilization". This is about how China's economy and society will be further developed. Far more consideration will be given to the environment and climate in the years to come, rather than the previous focus on economic growth fuelled by energy intensive and high emission industries.

‘It may sound grandiose to Norwegians, but ecological civilization is a concept that Chinese politicians and bureaucracy are working to fill with content’, says Stensdal.

Massive amounts of coal replaced by natural gas

Renewable energy has experienced tremendous growth in China, but is still a minor part of the country's total energy mix. Coal is still the dominant source, although its share is declining. Much of the coal has been replaced with natural gas, not renewable energy. 

‘China has set an ambitious goal of carbon neutrality by 2060. That means the country now has a vested interest in achieving the emissions peak as quickly as possible, as there will be a long way down from this peak’, notes Stensdal.Consumer-driven economy on the way 

‘China has extensive cooperation through the UN and the World Bank, and bilaterally with many countries. Among other things, there are major collaborative ventures with the USA and Japan in battery research and development. China’s ambition for the new energy vehicle (NEV) industry, which includes battery electric, plug-in hybrid and hydrogen fuel-cell vehicles, is to account for about 20 % of overall new car sales by 2025’, Research Professor at FNI Gørild Heggelund adds.

‘China has had an export-driven strategy and has generated large revenues from its exports. Now the strategy is changing, moving towards becoming a more "ordinary" country. China is developing a more consumer-driven and technology-driven economy, as opposed to its traditional investment-driven economy’, explains Per Ove Eikeland, political economy researcher at FNI.  

Iselin Stensdal and colleagues at FNI are now working to find out more about the Chinese renewable market through the research project TIPPING. They will map China's global revenues on renewable energy, identify key players and their market positions, and investigate who owns the new technology that is being developed. 

‘In the course of only a few years, the number of players was slashed to the half. Now we will try to find out exactly what happened’, concludes Iselin Stensdal.