Renewable energy development: Can China follow Germany?

Germany has proven that a transition to renewables is feasible. If China wants to follow, it will need strong political commitments to reconcile economic development and sustainability, argues Zhao Ang.

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China needs to reconcile economic and environmental goals. (Photo by the Danish Wind Industry, CC BY-NC 2.0)

Decoupling the increase in energy consumption and economic growth is the systematic approach to addressing many kinds of environmental challenges, including global warming, air pollution and ecological degradation. German lessons of how to develop renewable energy serves as an important test case for the rest of the world. In Germany, the share of renewable electricity doubled from 3% in 1991 to 6% in 2000, and lies currently at 28%. This growth in renewables has meant a sea change for German industry, where renewables – after twenty years of investment security – are playing an ever increasing important role in ensuring steady economic growth in the country.

As the largest energy consumer, greenhouse gas emitter and second biggest economy in the world, China aims to pursue a green economic development model by enacting a series of policy incentives and financial resources, such as a feed-in tariff scheme for wind power and solar electricity, to push its domestic renewable energy industry, particularly wind and solar PV. Still, China’s renewable energy development is far behind that of Germany when it comes to actual renewable energy contribution to the electricity mix. In 2012, renewable energies generated only 2.14% of the country’s total annual electricity generation, despite the rapid growth of wind power in 2005-2012 and the new renewable star, solar PV, since 2011 according to China’s Annual Statistics Briefing of Electricity Consumption 2012.

The economic benefits that Germany has obtained from a long-term commitment to renewable energy development could inspire China’s policy makers to take far-reaching policies to gain more ambitious and effective renewable energy growth in the next decade. From 1991 to 2012, German GDP per capita grew from US$22,600 to US$ 42,600 (computed based on the data from World Bank’s World Development Indicators), while the share of renewable electricity consumption in national electricity generation increased from 4.2% to 23.5% (computed based on the data from Energy Information Administration). In the meantime, German greenhouse gas emissions have been reduced by 22% since 1990. German renewable energy industry provided 371,400 jobs in 2013. Besides job creation, the renewable sector has brought many other significant benefits: it has prevented environmental damage, reduced energy imports as well as having positive public health impacts. After taking into account the initial cost of developing renewable energy, the net benefits exceeded 7 billion euro in 2011, representing about 0.2% of Germany’s GDP that year.

For China, it will not be easy to follow Germany’s ambitious renewable energy development. The main reason being the important differences between the two countries when it comes to their respective economic and energy structure. By 2030, China will probably still be in a process of industrialization with an increased energy demand, while Germany will have become a typical post-industrial economy with a well developed service sector and high-end manufacturing. China has an unhealthy share of coal in its power mix – a share that is still increasing – while Germany has a diversified energy system. However, time is running out for China to make a similar energy transition, particularly when the vast or unbearable social and environmental costs resulting from the economic boom from three decades are taken into account. The ongoing and deteriorating air pollution in so many large cities seem the most prominent warning for China to develop renewable energy more quickly and strongly. In the end, China might be not short of capacity but short of willingness to follow Germany’s example to transform its energy system away from one that is based on traditional fossil fuels.

Author:Zhao Ang

Categories: Blog

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