Joel Eisen, Professor of Law, University of Richmond School of Law
Professor Eisen started his presentation with a question, what is the point of discussing China’s efforts in renewable energy? If China began to use as much energy as we do per capita, they will put a lot of demand on resources that generate electricity.
Chinese resist caps on their greenhouse gas emissions. They rely on domestic measures – one of which is the ‘Renewable Energy law.’ We must consider the effectiveness of that law to understand how effective they will be at reducing their emissions.
China currently has something in place that looks like the renewable portfolio standards. China is on their way toward being both the greenest and the blackest place on earth. They are leaders in wind and solar technology. Their domestic system, that looks like ours for bringing renewable energy onto the electricity grid. If they do a good job bringing renewable energy onto the grid, they will rely less on fossil fuels and coal and decrease the effects of global warming. China has used a lot of the mechanisms that we have, because they look to the US and Europe as models of how renewable energy should look. China is going to have an enormous amount of their electricity made from renewables eventually. Their current renewable portfolio calls for 20% by 2020.
A lot of the information about energy use in China is considered to be a state secret and it is difficult to get good data. China is the most polluted nation on earth. China’s polluted water and air result in 750,000 premature deaths each year. 70% of China’s electricity is generated from coal, which is much higher than the US.
Law in China is fundamentally different. The law originates from Beijing in a top down structure. The national government makes the law and then local governments have to implement it. There is not any cooperative federalism–the national government dictates that something must happen. Local enforcement of environmental law in China is virtually non-existent. We take it for granted in the US, that state regulators will implement environmental laws.
China has said that they won’t accept greenhouse gas emission caps. They will use the new law as a cornerstone of what they are doing. China says that they will implement the new law, but a lot more is going to be necessary.
Chinese passed the Renewable Energy Law, which made renewable energy a priority for the government. The grid companies were told in this law that they had to buy renewable power from countries that established renewable energy generation. The problem was that not all of these generators were hooked up to the grid. The Renewable Energy Law is regulated by a number of different agencies. It wasn’t a renewable portfolio standard type of target – it wasn’t a mandate. The government went to the utilities and said that they will generate a certain percentage in renewables. The targets were much more ambitious than the resources that were put in place.
The NDRC in China issues regulations about grid space purchased. They require that provinces buypower and interconnect it to the grid. For wind, it was done by a bidding system. The company would put out a bid, ask who wants to generate renewables, and ask how much they should pay for generation. The only regulation was that the bidding couldn’t exceed more than what could be generated locally. The problem is that there is no way to make wind cheaper than coal generated power. But, because this isn’t a free market, it is clear that these are not the conditions under which Dominion purchases power. There is wiggle room in the bidding system. The bidding system has been replaced by feed in tariffs. NDRC is now saying that for four different regions of the country, wind developers will be paid a consistent amount of money for what they generate.
A feed-in tariff says that if you generate renewable energy you get paid for it. You can get paid up front or the price of whole-sale energy. The system focuses on paying the generator a specific price for the amount that you generate. It has nothing to do with demand.
Chinese have implemented direct subsidies to people who use solar power or who generate renewables. So far, installed solar capacity has sky rocketed. The law has had enormous impacts in increasing wind capacity sense 2006.
China is planning a 10 giga watt turbine cluster in Gansu province, which is almost the size of the capacity in the whole world. There are problems with bringing this about, however. Like the United States, the windiest parts of the country are very far from the power grid, which is the same problem in China. The windiest sites are nowhere near where they are needed. China may have the installed capacity, but it isn’t going anywhere.
Local and provincial companies, the people who actually push the button to decide what source of electricity is used were actively discriminating against renewable power producers. They didn’t want to buy energy from producers that were outside of the province. In China, there is no dormant commerce clause to protect against this problem.
At the same time, the Chinese have implemented a strengthened smart grid system. The Chinese are planning to spend 87 billion by 2020 on smart grid system. China doesn’t have to worry about federal and local jurisdiction and they will relocate anyone who gets in the way of the transmission line.
Accountability is an enormous problem. At the national level, there is a complete lack of transparency. The national energy council reshuffles their energy bureaucracy on a whim. When China says they will spend $87 billion on a grid, we have to take their word for it because we really don’t have anyway of knowing for sure. At the local and provincial level there is no way to ensure that grid companies buy renewable power.
Don’t believe the hype. They have a very aggressive program to bring renewable energy online, except that if you look at it, you see that there are a lot of challenges that remain to implementing this new law. It is a more subtle and complex issue than the headlines present it to be, so the US will have to closely monitor China’s development in renewable energy portfolios .