China drives renewables technologies’ costs down by betting on scale
Chinese thirst for secure sources of energy is having the positive effect of cutting down costs of renewable technologies. Who would have thought? China has invested more than the US and the EU countries combined in renewable energy in 2013.
China’s rise to become the world’s largest power producer and source of carbon emissions through burning coal is well recognized. But the nation’s renewable-energy systems are expanding even faster than its fossil-fuel and nuclear power. China leads the world in the production and use of wind turbines, solar-photovoltaic cells and smart-grid technologies, generating almost as much water, wind and solar energy as all of France and Germany’s power plants combined. Production of solar cells in China has expanded 100-fold since 2005.
As the scale of Chinese manufacturing has grown, the costs of renewable-energy devices have plummeted. Innovation has played a part. But the main driver of cost reduction has been market expansion. Germany and South Korea are following similar paths. In short: industrialization can go hand in hand with decarbonization.
Too many countries have yet to take notice. The United States and European Union are pursuing counterproductive policies, such as increasing trade tariffs on imported Chinese photovoltaic panels. Restricting global trade in renewable devices will only slow the rate at which costs decrease and will decelerate the world’s retreat from fossil fuels.
(…) Private finance must also play a part. The Kyoto-process negotiators have so far considered that financing for climate-related initiatives should come from tax-based public finance rather than from private or even government-backed development banks. This emphasis needs to change. Green bonds lower the costs of capital and facilitate the scaling up of investments. One example is the $500-million bond issued by the Export-Import Bank of Korea last year allocated exclusively to finance green projects around the world.
China is leading the way. By placing the emphasis on production scale and market growth, it is contributing more than any other country to a climate-change solution. Its build-up of renewable-energy systems at serious scale is driving cost reductions that will make water, wind and solar power accessible to all