Properly using funds for greener energy

China Daily Updated: 2005-11-14 05:18

Going green has become a new consensus among the government, corporations and the public, and initiatives are being taken by major developed countries to shift to a more diversified energy consumption portfolio.

Calls from the Beijing International Renewable Energy Conference 2005 (IREC) last week best illustrate that consensus. The world has realized the danger of relying primarily on fossil energy when the environment and global energy security are both undergoing fast changes.

The fact that one topic of bilateral talks between President Hu Jintao and German leaders is renewable energy is the latest sign of North-South co-operation in the field of new energy sources, as called on by the IREC.

For China, tapping into new energy alternatives is important for improving its air quality as its coal-centred energy consumption is a danger to public health. It will help relieve the poverty of 30 million farmers in 30,000 remote villages that do not have access to electricity. And it will help the country better cope with the world's oil crisis in the wake of continual rises in global oil prices.

Despite the enticing prospects, however, the use of renewable sources is much more difficult than it seems. The introduction of foreign support and co-operation is, while important, far from enough for the country to shake off its traditional focus on coal-centred energy and turn to a new, renewable mode.

The claim seems bizarre as China has abundant new energy resources, such as wind, water and geothermic heat. But having access to these sources is one thing and tapping into them is another.

Geographic and natural limitations for tapping renewable energy - wind turbines, for example, need a windy environment to generate electricity - are not the key problem.

Limited technological levels are a tall hurdle for China to leap over in its efforts to develop renewable energy resources. In using wind to generate power, China cannot yet manufacture large-scale and high-tech wind turbine generator systems. As a result, the cost of electricity generation is higher than that of electricity generated in traditional ways, affecting the market promotion of renewable energy.

On the other hand, traditional energy consumption does not pay towards the cost of the environmental deterioration it causes.

Although an environmental tax or fee is being considered to balance environmental issues and the tapping of traditional resources such as coal, before it becomes a reality, renewable sources of energy will continue to be at a disadvantage in the price-based market competition of fossil fuels.

The government has decided to spend a total of 1.5 trillion yuan (US$185 billion) on renewable energy development by 2020 so that its percentage of the total primary energy supply will rise from today's 7 per cent to 15 per cent.

However, it is not the colossal amount of money, but how the money will be used, that will decide whether we can work to that timetable.

Technological upgrading must be a focal point of the investment since it will decide costs and ultimately the price of the final products being sold.

The money should also be used to offer discounts and subsidies for renewable energy projects so that they can temporarily reduce the price of energy products before the technology becomes mature.