Greening Economies - China

February 2011 | € 5.00 A New Europe Special EditionIssue # 923

EUROPENEWCHINAGREENING ECONOMIES

2NEW EUROPE

February 20-26, 2011GREENING ECONOMIES

CHINA

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Dennis Kefalakos

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A bright futureChina has now overtaken Japan as the world's secondlargest economy. Within a decade and a half, we are told,it will be the biggest. The momentum, it would seem, isunstoppable. But with this undoubted success comes addedpressure; with increased industrial activity comes increasedenergy use. It is a simple equation, but one which Chinamust address as it moves forward: if more industry equalsmore energy, how can China continue this economic mo-mentum while preserving the natural environment andprotecting the health of its 1.3 billion citizens?Some people have reacted with a certain amount of scep-ticism to this prospect, suggesting that China's contin-ued reliance on coal-fired power plants undermine itsefforts to clean up its energy sources. However, as Green-peace note, the future need not be so bleak; a restructur-ing of the existing tax structure to give incentives to thedevelopment of green energy sources could break the coaldependency. This is not outside the realms of possibility. Some formof cap-and-trade policy is expected to be included thenext 5-year economic plan, and the Chinese governmenthas been working on the development of green technol-ogy. The government has committed itself to reducingCo2 emissions per GDP by 40-45% by 2020 and is look-ing at ways to conserve resources, and improving resourceefficiency, through changes in tax and fiscal policy, as wellas the strengthening of existing regulations, and the con-trolling of pollutants through industrial restructuring andextended recycling and waste management schemes. China, like Europe and the US, has come to see that thedevelopment of green technology, as well as benefitingthe environment, can boost the economy, or, in China'scase, keep that forward momentum going. China's greenindustry has grown significantly in the past number ofyears, and will continue to do so in the future. China'snew model for economic growth will be based on the up-grading of traditional industries, the development of al-ternative energy sources, and the promotion ofenergy-saving, environmentally-friendly polices. As ZhouShengxian puts it on page 4 of this special: “We will es-tablish a benign circle between socio-economic develop-ment, resources, and environment, guide enterprises tovigorously develop green technologies and products, anddevelop sustainable use of resources and continuous im-provement of the ecological environment”. Finally, many companies from Europe are beginningto see China as a partner in business. A willingness forentrepreneurs and businesses to exchange ideas andlearn from one another is one of the key ways in whichthe economies, and the environments, of both territo-ries, can continue to grow and develop. Mutual under-standing needs to be promoted; and mutual respect andco-operation is the way in which China and the EUcan benefit from each other, while giving their citizensa better future.

The Green Risk for ChinaSuicide in the Name of the Environment?

by Alexandros KoronakisChina's theorized Greentransformation is notwithout risks for China- and the rest of theworld. Having visitedChina recently, “GoingGreen” was certainlyvery high on the agendasof political, academic,and social spheres, but

the mantra comes not without the harsh reality thatGreening has a high cost. In 2009 the EU imported €215 billion worth ofgoods from China, providing 18% of EU merchan-dise in trade. In 2010, the EU became China’s biggesttrading partner; European citizens have become in-creasingly dependent on Chinese production.It is without a doubt that China has become theworld’s production and manufacturing centre. Thevery simple reason for this is that China has been pro-viding corporations with such opportunities at alower total cost than many other countries; and herethe word cost incorporates all elements, from wagesto political stability, to lax environmental regulations.But it is important to remember that production inChina is not done for the sole benefit of the Chinese.The green transformation of the Chinese economy,therefore, comes with a significant risk. Consumers,at the end of the day, care very little about how envi-ronmentally friendly the production process of theirtoothbrush, or t-shirt, or laptop has been. Though caring about the environment on a local andglobal scale is becoming a fashion in European coun-tries and the United States of America, the value at-tached to a green product still does not offset theadditional expense required to procure it (and henceproduce it). It is here that lies China’s great green risk.If China goes green too fast, hence increasing the costof manufacturing, corporations will simply move to adifferent country, setting up manufacturing and pro-duction plants where the total cost is lowest. Whetheror not China should be the world’s production cen-tre is significant debate in itself, but one element re-mains undeniable: the need for a greener China is theresponse to a need for a Greener world.However, if China becomes significantly Greener andmost production simply moves to a different country,as may be economically beneficial to manufacturers,China will have simply committed economic suicidein the name of the environment.

3NEW EUROPE February 20-26, 2011

Zhou ShengxianPromote greendevelopment, upliftecological civilization

Page 4

Dennis KefalakosGreen finance shouldstem from sweat, notfrom paper

Page 5

Arnaldo AbruzziniEurope’s SMEs: keyplayers for China’smove from blue-collarto green-collar

Page 13

David MacleanChina has the smarts onenergy

Page 17

Zhang XinGreen economy, weare already on the way

Page 10

Ambassador SongZheDevelop greeneconomy for a betterfuture

Page 7

Anna-Karin FriisA greener China - notas evident as it wouldseem

Page 8

Elizabeth EckertChinese green energyadvances

Page 9

Guoyu TaoWhen yellow shakeshands with blue

Page 11

Dr. Zhou FengqiChinese green economy

Page 15

Cillian DonnellyA wind energy future forChina

Page 16

CrescenzioRivellini MEPThe rising greendragon

Page 6

James MoellerThe rise of greenchina

Page 12

Professor Zhu DajianExperiences of greeneconomic developmentfrom european countries

Page 14

Tristan EdmondsonWaste to energy – workingwith chinese governmentsto find european solutions

Page 23

Graham WatsonMEPThe EU, China and thegreen economy

Page 18

Anna-Karin FriisGreenpeace: Taxing carbonto force power companiesgo cleaner

Page 19

Anna-Karin FriisThe environmentalchallenges in China's FarWest

Page 22

Bert De GraeveBest Practices fromEuropean companies inChina

Pages 28-29

Cillian DonnellyBetter mutualunderstanding key tobetter EU-China businessrelationship

Pages 24-25

Elizabeth EckertSolar energy pushesforward in china

Page 26

Cillian DonnellyEnergy efficiency: the newbubble?

Page 27

Dr. Marco GemmerChina’s year of the rabbitinherits the tiger’s droughtand frost

Page 30

Features Contributions

GREENING ECONOMIES4CHINA

NEW EUROPEFebruary 20-26, 2011

The development of human civilization has beenable occur while contacts between people, man andnature, as well as man and society have been re-sponded to and overcome. The pace of develop-ment after industrialization was faster than at anyother time. Massive material wealth has been cre-ated while a huge environmental cost has been paid.The consequence of the sole pursuit of economicincreases will likely be that the people who have notbeen entitled to enjoy the benefits of industrializa-tion are driven to the corner as the result. Due to in-tensified conflicts between man and nature,development has encountered unprecedented ob-stacles that have thus given rise to a rude awake-ning of awareness of environmental problems aswell as exhibited the need for in-depth explorationof environmental protection endeavors.

During the response to the international fi-nancial crisis and then during the post-crisis era,many countries have recognized the value of greendevelopment. Green development has increasin-gly become an important trend in global deve-lopment. It has been generally recognized thatdeveloping a green economy could effectively pro-tect the environment, make use of resources, andexpand the market demand while providing newjobs. It has made itself an important convergencefor protecting environment and developing eco-nomies. Promoting green development is both anecessary and conscious action for China. Chinahas 1.3 billion people and with its rapid indu-strialization, urbanization, and development ofnew countryside, the discharged amount of majorpollutants has exceeded its environmental carryingcapacity. The environmental issue has become abottleneck constraining both economic and so-cial development. The fundamental approach toaddressing the increasingly bitter conflict betweensocioeconomic development and the resource andenvironment constraint is to vigorously develop agreen economy, expedite the shift of economic de-velopment mode, and explore a new path to en-vironmental protection featuring low costs, soundefficiency, low emission, and sustainability in orderto uplift ecological civilization.

Based on the factual reality and oriented intothe future, the Chinese Government has identi-fied development targets and blueprints for the

next five years as set out in the recommendationson the 12th Five-Year Plan for National Econo-mic and Social Development. It will take scienti-fic progress to accelerate the shift of economicdevelopment to create a society with a focus onresource conservation and environmentallyfriendly policies. The shift of economic develop-ment to focus on a green economy is a profoundreform that will affect both economic and socialdevelopment. To achieve this shift, there must bestrong, supporting external forces, similar to theintense external conditions that turn graphitestructure into a diamond. Further strengthening ofenvironmental protection could provide such astrong force.

The environment and economic develop-ment go hand in hand. In nature, environmentalissues are economic in nature. To talk about en-vironmental protection while ignoring economicdevelopment is like “climbing a tree to catch afish”. To talk about economic development whileignoring environmental protection is like “drai-ning the pond to catch the fish”. Positive econo-mic policies can also be positive environmentalpolicies. Green development is the reflection ofbeneficial economic and environmental policies.Environmental protection has the role of “gui-ding”, “optimizing” and “expanding” economic de-velopment. “Guiding” means clearly identifyingecological functions of the region and then assi-sting enterprises to develop the economy whilebearing in mind what should be developed, en-couraged, limited, and prohibited. “Optimizing”means utilization of the “target driven mechanism”to facilitate industrial restructuring and shift of de-velopment mode. “Expanding” means expansionof environmental carrying capacity by further pro-moting pollutants emission reduction to createconditions for sustained economic development.Giving full attention of the comprehensive rolethat environmental protection has in optimizingeconomic development will strongly promotegreen development in China.

Presently and in the years to come, China willactively promote green development and makeunremitting efforts in the following areas:

First, proactively address global climate change.

Climate change is an environmental and adevelopment issue. The Chinese Government hasannounced that the CO2 emission per unit GDPwill be reduced by 40%~45% by 2020 in compa-rison to 2005 levels. The Chinese governmentwill firmly promote the industrial structure, pro-duction pattern and consumption mode condu-cive to conservation of energy, resources, andprotection of the environment by adjusting theenergy consumption structure, increasing the per-centage of non-fossil fuels, continuously promo-ting afforestation, raising forest coverage, andenhancing the capacity of carbon stabilization.The statistical and monitoring system for gree-nhouse gas emission and energy saving and pol-lutants emission reduction will be established andimproved. A carbon emission trade market willbe gradually set up. Adhering to the principle of“common but differentiated responsibilities”,China will shoulder the carbon emission reduc-tion responsibility and obligations meeting Chi-na’s development stage.

Second, intensify the pollution treatment and re-duction of pollutant emission.

The amount of major pollutants that will becontrolled will be increased from two to four kindsof major pollutants, including chemical oxygen de-mand, ammonia nitrogen, sulfur dioxide, and ni-trogen oxide. The pollutant emission reduction tobe achieved by adjusting the structure will be putto a more outstanding position. The pollutantsemission reduction will be achieved by implemen-ting stronger corresponding projects and takingadministrative measures. The construction of se-wage and garbage treatment facilities in cities andtowns will be accelerated, and the treatment rateof sewage will be increased. The prevention andtreatment of water pollution in key river basins willbe further enhanced. Urban air pollution will beeffectively controlled. Desulphurization in coal-fired power plants will be continuously strengthe-ned. Concrete actions will be taken to strengthenthe de-NOx in power plants. Vehicle exhausts willbe rigorously controlled. The working mechanismfor joint prevention and control of air pollution inregions will be structured. A new social norm forenvironmental protection will be established and

the entire society will be mobilized to work for thereduction of pollutant emissions.

Third, vigorously develop circular economy. Aiming at improving resource efficiency, the

planning and support of fiscal, taxation and fi-nancial policies will be strengthened, the laws andregulations will be improved, the extended pro-ducer responsibility system will be implemented,and the development of circular economy in eachlink of production, circulation, and consumptionwill be promoted. We will accelerate the develop-ment of resource recycling industry, intensify com-prehensive utilization of mineral resources,encourage recycling of industrial wastes, improverecycled resources recovery system and classifiedrefuse collection system, and facilitate the indu-strialization of recycling of resources. We will de-velop and apply technologies for waste reductionat the source by recycling, re-manufacturing, wor-king towards zero emission within the industrialchains the circular economy.

Fourth, accelerate and foster strategic and emer-ging industries including the energy-saving andenvironment-friendly industries.

China’s environmental industry has maintai-ned an average annual growth rate of more than15% over the past few years with greater prospectsin the coming years. We will foster a new econo-mic growth engine characterized by low-carbonemission, adjust and upgrade traditional industries,and develop emerging industries featuring alter-native energy, energy-saving and environment-friendliness. We will establish a benign circlebetween socio-economic development, resources,and environment, guide enterprises to vigorouslydevelop green technologies and products, and de-velop sustainable use of resources and continuousimprovement of the ecological environment.

Fifth, establish and improve mechanisms con-ducive to environmental protection.

We will quicken our steps in developing themacro-strategic scheme for environmental protec-tion, an overall pollution prevention and controlplan, a sound and effective environmental trea-tment plan, and an improved scheme of environ-mental laws, regulations, policies and standards.We will work towards developing a mature envi-ronmental management scheme and promote so-cial action that our citizens can fully participate in.We will focus on market tools, speed up the esta-blishment of eco-compensation mechanism, com-prehensively reform the resource taxation system,initiate environmental protection tax, and improveenvironmental protection economic instrumentssuch as green tax, green securities, green procure-ment and green trade. We are now standing at ahistorical point of the development of green eco-nomies while building the future of a conservationculture with great hopes and prospects. We are wil-ling to work with other countries throughout theworld, to deepen communication and broaden co-operation so as to obtain fruitful achievements th-rough our combined efforts while contributingeven more to the welfare of our people.

Promote green development, uplift ecological civilization

by Zhou Shengxian

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Zhou Shengxian

A visitor takes a rest while sitting beside a poster showing high-tension power lines at an alternative energy convention in Shanghai, China on 19 No-vember 2009. China is heavily investing in its solar power sector as it announced that the government has decided to subsidize 294 solar power plantswhich will generate 642 megawatts of power. The subsidies are part of China's "golden sun" plan, a project meant to find alternative energy sources.

GREENING ECONOMIES 5CHINA


Chinese President Hu Jintao’s most recent visitto the US must have made clear to him, thatplaying banker to Americans helps make oneheard in this modern Babylon that has becomeWashington these days. Only a few years agoon a similar visit to the U.S., Hu’s former host,George W. Bush had offered him a mere wor-king lunch. This time however President Jintaowas offered full honors and a State dinner at theWhite House. There is no question, in today’sworld whether it be capitalist, communist, orotherwise there remains an exceptional place forbankers. It is not a small thing to have a capitalof almost three trillion dollars. Currently, it isalso not an easy task to find trustworthy borro-wers, especially between governments. Manygovernments, although deep in debt are tryingto save capitalism by over indebting their tax-payer’s. As a result, those who have received thebankers “benediction”, are really recognizant.

No doubt this last great credit meltdownof the western financial markets in 2008, pro-ved that no matter how you define your eco-nomic system, if you take care not to spendmore that what you earn, it pays dividends inthe long run. It is not sufficient to be an an-cient people in order to understand this con-cept. The Greeks are probably more of anancient people than the Chinese, but for de-cades they have been spending more than theyhave earned. Today they ask others to savetheir souls from drowning in their sea of debts.On the contrary the Chinese people, a race asold as Greeks, have discovered the positiveoutcome of hard work and saving. This has notcome easily though. They themselves oscillatedbetween words and deeds in the past, and wat-

ched to their dismay their country result incomplete destruction during the Cultural Re-volution. This was an unforgettable lesson forthe Chinese, laymen and leadership alike. Sothe path to become the world’s banker wasborn with endurance by the average man andwoman in the streets of the main cities and thecountryside. Even today there are hundreds ofmillions of Chinese people living on subsi-stence conditions, but at the same time thereother hundreds of millions which enjoy livingconditions comparable to developed worldstandards. What is even more important is thatnobody is starving as in the aftermath of theCultural Revolution.

The Chinese society is recognizant of theprodigious economic growth achieved. It is forthis reason that China shows such a strong so-cial and political coherence. On more than oneoccasion the west has tried to challenge thiscoherence, with those attempts repelled by the

strong and decisive governing structure withinthe country. Of course there were times whenthe authorities, or rather the regime, resorted toviolence at disproportional dimensions, eitherin suppressing political insurgency or in imple-menting with an iron hand massive investmentprojects. In any case, the system still works ef-fectively.

On the financial front now Beijing is verycareful to use its powers in a balanced way.The government does not want to be seen asexploiting its position as the banker of theworld to serve political goals. Everybodyknows that Washington is up to its neck inChinese debt, so there is no need for Beijingto underline this fact. Western public opinionwould be appalled if China tried to derive po-litical gains, and not just a logical pecuniaryreturn out of those credits. Bankers should al-ways expect only positive interest to theirloans. If Beijing wants to retain the advanta-

ges of its position in the long run, it must becareful not to be seen as having other non-economic goals. In view of this, China doesnot want to oppose western public opinion.

In this line of thinking, Beijing also wantsto drastically change the image of not payingattention to the environmental side of indu-strial or energy projects. However a greenereconomy is not only a matter of reducing theCO2 release in the atmosphere. It is also astrong marketing tool to promote the newgeneration of products in many sectors, andmainly in transportation. Green cars andbikes are now the largest products in this field,and Beijing wants to spearhead these newmarkets.

On top of the leading position that Chinahas acquired in the money markets, by accu-mulating the largest financial reserves, it hasopened the way to create a base for a large andcompletely green Chinese industry. Being thelargest creditor on earth, why would the Chi-nese let the American, British, German, Frenchand Japanese banks control the world moneyand capital markets from New York, London,Frankfort, Paris and Tokyo? Why should theynot make Shanghai the largest financial centrethe world ever knew? But in this field tooChina is not exerting pressure. Last year theShanghai Stock Exchange surpassed the rest ofthe world’s stock markets in Initial Price Of-fers. It is obvious that China will not ask for alarger stake of the world, if this does not occurnaturally.

Green finance is finance created by the realsweat of people and not by issuing paper assetswithout value, as is the practice in New York.

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Green finance should stem from sweat, not from paper

by Dionysis Kefalakos

However a greener economy is not only a matterof reducing the CO2 release in the atmosphere.It is also a strong marketing tool to promote thenew generation of products in many sectors, andmainly in transportation

photo credit:EPA/HU HAO

Dennis Kefalakos

Chinese stock investors check the price changes on computers at a stock trading center in Wuhan in central China'sHubei province 08 November 2007.



With $51.1 billion invested in 2010, a 30%increase in investment compared to 2009,China is now a central player regarding re-newable energy. In particular in the pho-tovoltaic solar sector, the overallproduction of models for this kind ofpower plants have exceeded the 8 GW(GigaWatts) throughout the whole 2010year in China. Consequently, more thanhalf of the total production of solar panelshas come from China last year. This pro-duction volume is quite extraordinary, con-firming that China's mentality is gearedtowards renewable energy and attests theemergence of an almost incontestable lea-dership in China.

China's Five-Year Plan 2011-2015 alsodemonstrates that China is aiming to raisethe proportion of renewable energy and isforeseeing to implement its 40-45%carbonintensity reduction target first announcedin Copenhagen and recently formalized inthe Cancun Agreements. In the frameworkof the new Five-Year Plan, China willadopt a 17.3% energy intensity reductiontarget and by 2015 China should add 38GW of nuclear power capacity (nowadays

it is equal to 10 GW), 140 GW of hydro-power capacity (nowadays it is equal to 200GW) and 90 GW of wind power capacity.

In order to achieve these targets Chinais preparing itself to launch a huge inve-stment plan in the energy sector, whichcould inject an estimated $753 billion inthe development of alternative energy inthe next decade. It is easy to guess howimportant it is for the EU Member Statesto try to increase the cooperation with theChinese colossus in the development of te-

chnologies with low energy consumptionin particular by investing in China.

China is indeed open to European in-vestors. The aim is to attract investmentsfrom small and medium enterprises thathave a strong expertise in the green tech-nology sector in order to have an exchangeof technological know-how, which is use-ful notably for improving environmentalconditions. Indeed, if China keeps develo-ping at the current rate of growth, thenumber of vehicles on China's roads will

more than double to at least 200 millionby 2020. Moreover according to a study, ifChina's economy continues to expand ra-pidly and rely heavily on coal and otherfossil fuels until the middle of the century,its power demands could exceed what theentire planet can withstand. This perspec-tive leads both China and the EU to theconclusion that a new and sustainablemodel of growth is essential and shouldencourage European companies to have astronger foothold in China's growing cleantechnology market.

In this framework, the EuropeanCommission encourages the EU Mem-ber States to move towards the Chinesegreen economy by implementing a set ofconcrete actions such as the developmentof instruments or packages of policieswhich are meant to facilitate the setting-up and the activity of European smalland medium enterprises in China.

Various bodies on the EU side playindeed a crucial role: the EuropeanUnion Chamber of Commerce in China(EUCCC), the EU Chambers of Com-merce and Eurochambers.

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The rising green dragon by Crescenzio Rivellini MEP

It is easy to guess how important it is for the EUMember States to try to increase the cooperationwith the Chinese collosus in the development oftechnologies with low energy consumption, inparticular by investing in China

photo credit: EPA/ADRIAN BRADSHAW

Crescenzio Rivellini

Visitors to an exhibition on nuclear energy view models of various power stations on stands of industry representatives from all over the world in Bei-jing, China, 25 March 2008. China's energy requirements challenge both fuel resources and capacity to build power stations of all kinds with one largeplant coming on line each week on average.

GREENING ECONOMIES 7

CHINANEW EUROPE

February 20-26, 2011

The Chinese government is fully committedto resource conservation and environmentprotection. With sustainable development asone of its national development strategy,China has made enormous progress in envi-ronmental undertakings. We have fulfilled theemission cut target for the 11th Five Year Plan(2006-2010) ahead of schedule, and are ex-pecting to meet the target for energy conser-vation on time. By the end of last year, we havesuccessfully reduced energy intensity of GDPby 20% off the 2005 level and major pollutantdischarge by 10%. As a lower middle incomeeconomy, we have covered huge grounds onthis cause, and what we have accomplished isthe strong evidence of the commitment ofboth our people and the government to a bet-ter global environment.

Today, the development of the green eco-nomy has become a popular policy choice forgovernments around the world. Like manycountries, China puts great energy in the de-veloping green industry in an effort to pro-mote more effective economic restructuring.From this year on, China will begin to imple-ment the 12th Five Year Plan (2011-2015),opening a new chapter for the growth of ourgreen economy. In the proposed 12th FiveYear Plan, the Chinese government will acce-lerate the shift of growth pattern, adjust eco-nomic structure, actively respond to globalclimate change, and develop circular economy.We will remain committed to a resource con-serving and environment friendly society thatappreciates the importance of green and low-

carbon development. We will exercise strongermanagement of resources, intensify environ-ment protection, incorporate green economicgrowth across all sectors of our national eco-nomy, and do all that we can to boost our ca-pacity for sustainable development.

On the part of the Chinese government,we have already put in place a bunch of poli-cies with massive investment support to pro-mote new energy, energy conservation andenvironment protection. In response to the in-ternational financial crisis, the Chinese go-vernment has adopted a 4 trillion RMB Yuanstimulus package to promote domestic de-mand. 210 billion of this fund goes to energyconservation, emission cut and ecological en-gineering. We have promised that by 2020, wewill cut carbon intensity per unit of GDP by40-45% off the 2005 level, and increase theshare of non-fossil fuels in the primary energy

consumption to around 15%. We plan to in-crease the forest stock volume by 1.3 billioncubic meters and the forest coverage by 40million hectares, equivalent to the size of tenplus Belgiums.

The development of green economy be-nefits not only China, but also the wholeworld. As the pressure for energy, resourcesand environment continues to push up aro-und the world, efforts of China to grow greeneconomy will help promote rational distribu-tion and use of global resources. We are con-fident that through balancing the interests ofdifferent regions, pursuing sustainable use ofresources, and constantly improving ecologicalenvironment, we will be able to bring abouthealthy recovery and sustainable growth of theworld economy. China is a responsible mem-ber of the international community. Our en-gagement and efforts at the Copenhagen

Conference and Cancun Conference are thebest proof. In the Durban Conference, Chinawill continue to work together with all othercountries to promote international coopera-tion in meeting climate change.

Both China and the EU have made en-vironment protection and green economypart of our future development strategy. Suchan idea provides us with enormous prospectfor cooperation. The EU 2020 Strategy andChina’s 12th Five Year Plan share a lot of si-milar grounds. For instance, there is huge op-portunity and potential for our cooperationin the development of green economy. Eu-rope has been the forerunner of green energyresources and is home to the world’s largestgreen industry. Europe has advanced tech-nologies, while for China, we need advancedtechnologies. More importantly, we have arapidly growing market for environmentprotection industry, which will soon becomethe world’s biggest. If China and Europecould cooperate in this area, we can give fullplay to the complementarity of our indu-stries, promote favorable engagement, andachieve win-win progress as we jointly pur-sue green growth. In fact, the ship of our co-operation has already gone out sailing. Lastyear, as a signature project of our cooperation,we have jointly launched the China-EUClean Energy Center. We look forward tostrengthening ties with our European coun-terparts. And we are fully confident thatgreen economy will grow into another high-light of China-EU cooperation.

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Develop green economy for a better future

by Ambassador Song Zhe

We are confident that through balancing theinterests of the different regions, pursuingsustainable use of resources, and constantlyimproving ecological environment, we will beable to bring about healthy recovery andsustainable growth of the world economy

photo credit:EPA/JEAN-CHRISTOPHE BOTT

Ambassador

Song Zhe

Johann N. Schneider-Ammann, left, Swiss Federal Concillor and Chen Deming, right, Minister of Com-merce of the Republic of China, shake hands after signing a memorandum of understanding to launch nego-tiations on a China-Switzerland free trade agreement in Davos, Switzerland, 28 January 2011. China has beenworking for closer relations with Europe, including clean energy relations.



Nothing would indicate that China's re-liance on coal can be broken. Although theshare of renewables in the energy mixgrows, and grows not only as percentage ofthe increased energy consumption but ofthe total, the energy intensity remains highand it is questionable whether the 'greener'energy means cleaner energy.

The abundance of coal in China and thereliance on coal for 70% of the energy pro-duction has lead analysts to conclude thatcarbon emission will peak in the decadebetween 2030 and 2040. Others set thepeak of emissions later, in 2050.

China's 12th five-year economic planwill boost the use of renewables, such aswind, solar and hydropower, to help reducethe reliance on coal. Analysts estimate thatthe aim is set for 11.4% of China's fuel mixby 2015. By 2020 that share may be 15%.However, Chinese government-linkedthink tanks have also hinted that it wouldbe unrealistic to expect that China wouldshift its heavy reliance on coal to alternativeenergy any time soon. It seems renewablescannot replace coal as the main source ofenergy. Despite large-scale wind power ge-neration and the ever more frequent use ofsolar panels, only a reduction in the growthof emissions through power generation canbe achieved, as energy use is constantly onthe increase. A curb of the rise in energyconsumption could only be achieved by in-creased energy efficiency, which still seemsto remain very much a challenge. There is,

however, serious discussion among scientistsand environment authorities on the need ofputting a ceiling on the coal consumptionin order not to exhaust that resource.

Jonathan Watts, formerly correspondentfor The Guardian in China, relates in hisbook 'When a Billion Chinese Jump' thescepticism of the carbon capture and sto-rage technique. He refers the work done atChina's National Laboratory for CleanEnergy in Dalian; director Li Can is of theview that burying carbon dioxide is expen-sive and energy-intensive in itself, apartfrom being potentially dangerous in termsof contamination and ruptures in storage fa-cilities. The laboratory for clean energy isdeveloping techniques to convert carbondioxide into other chemicals that can beused. The efficiency of coal is improved th-rough conversion to natural gas; in the same

process polluting emissions such as sulphurand carbon dioxide are dealt with by con-versions into fuels such as methanol.

Analysts quoted by The South ChinaMorning Post on 14 February, 2011, cau-tion against what they consider a current ir-rational expansion of the clean energysector. The government's push for cleanenergy is even seen as a 'strategic error' anda huge waste of investment, as the renewa-ble energy capacity in reality has not beenturned into safe and reliable sources of cleanenergy. Wind power is not stable and fairlyexpensive and considering China's relativelylow price of electricity, connecting it to thepower grid has proven an obstacle. Most ofthe photovoltaic solar panels are producedfor exports. Moreover, environmentalistswarn that the Chinese production of poly-silicon causes toxic pollution. Experts note

that it seems the push for growth in the re-newable energy sector follows China's tra-ditional model of growth at the expense ofthe environment and natural resources.

The cost of China's reliance on the useof coal in terms of damage to the environ-ment, human health and the social impact isa controversial figure. Some set that cost at7% of GDP, counting air and water pollu-tion, ecological degradation, health costsand mining accidents, but not the impact onclimate change.

The central government's plans to in-crease hydropower capacity by half withinfive years is equally controversial. The in-tention is to continue the dam-building thatcame to a halt due to environmental con-cerns and public criticism. However, offi-cials in charge of pollution control dorecognize that hydropower potentially cau-ses more severe pollution than coal-firedpower plants, as the dams not only threatenthe ecological balance and carry a geogra-phical hazard, but also carry the social costof resettlement. Critics point to the hydro-power industry using the pollution reduc-tion targets for 'greenwashing' their energyproduction.

Independent Chinese climate expertssay the country should shift the focus fromtarget-setting to the quality of developmentand the reform of the energy and pollutioncontrol sectors, as well as attempting a ch-ange to systemic problems and the mindsetin this regard.

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A greener China - not as evident as it would seem

by Anna-Karin Friis

A curb of the rise in energy consumption couldonly be achieved by increased energy efficiency,which still seems to remain very much achallenge

Anna-Karin Friis

The sun sets over Beijing, but will the dawn be green?


CHINANEW EUROPE


The world’ most populous country of 1.3 bil-lion people, the largest coal consumer, and thelargest emitter of green house gasses in theworld, has also became the world’s leading re-newable energy producer.

In 2006, China surpassed the United Sta-tes to become the largest emitter of greenhousegasses, according to an environmental researchgroup, the Netherlands Assessment Agency.The following year, the BBC reported thatChina was building an average of two coalplants per week. Currently an estimated 70%of electricity in China is powered by coal.

But China’s reliance on coal may be chan-ging. A renewable energy law introduced in2006 and updated in 2011 calls for 15% ofenergy to come from non-fossil fuel sources by2020, comparable to the European Union’s2020 Plan which calls for 20% of energy to ge-nerate from non-fossil fuel sources.

As electricity demand and consumption inChina rapidly outpaces the rest of the world,the shift of focus towards green technology andrenewable energy does not come as a surprise.

Wind and solar power energy sources havebeen making headlines across the world asChina begins to invest in clean energy. We-stern nations, particularly the United States andthe EU love to criticize China for its heavy coalconsumption and greenhouse gas admissions.

But Chinese investment in green techno-logy has already surpassed the rest of the deve-loped world and the country has become thecurrent leader in renewable energy investments.In 2009 alone, China’s investment in renewableenergy technology was approximately $34.6billion, almost double the amount of the Uni-ted States, according to New Energy Finance.

China has strong incentives to invest in

clean technology. Domestic demand for elec-tricity is rapidly increasing by 15% per year, na-turally surpassing the size of markets in othercountries.

New energy plants need to be built becauseof increasing demand, and developing cleanenergy sources instead of relying on coal is onlyto China’s advantage. It is estimated that cur-rently there are over 1.12 million jobs in the re-newable energy industry in China, with thepossibility of an additional 100,000 jobs beingadded per year in the sector.

In 2010, China became the country withthe world’s largest wind power capacity, accor-ding to the Official Xinhua News Agency. 16gig watts (GW) of wind capacity were instal-led last year, compared to only five GW in theU.S.

The Global Wind Energy Council repor-ted that by 2010, wind power replaced 150 mil-lion tons of coal consumption with thepossibility of wind power becoming China’smain energy source.

China is expected to outpace Europe forwind power by 2013.

China’s domestic wind turbine manufactu-ring industry is the largest in the world. Thewind turbine market is encouraged by friendlygovernment policies towards renewable energysources. The government began actively pro-moting renewable energy sources in 2004, andofficial policies are often cited as being respon-sible for outstanding growth in the markets forrenewable energy products.

The Renewable Energy Law of 2006 bro-ught momentum to clean energy development.Since the law was passed, there has been 100%growth of the Chinese wind market each year.

This law also established a RenewableEnergy Fund, designed to subsidize the costsof integrating renewable energy sources forChinese grid companies by mandating a cer-tain share of electricity come from clean energysources.

Solar energy is also on the rise in China’sgreening economy. In 2010, China owned 43%

of the global sun panel market, exporting eno-ugh energy to power 2.6 million homes in theUnited States.

The increasing demand for energy has mo-tivated manufacturers to produce clean energyproducts on a mass scale, resulting in a less-co-stly production process. Increasing demand aswell as a high amount of subsidies availablefrom the Chinese government has lowered theselling cost of these goods.

Chinese government subsidies have givenpower to the renewable energy sources market.In 2010, the Chinese Development Bank lenta combined $17 billion to the three largest Ch-inese firms producing clean energy products,Yingli, Suntech, and Trina.

The central government’s program, Gol-den Sun was developed to provide subsidies tosolar energy businesses. It is estimated that70% of solar projects are subsidized by the Ch-inese government.

A Chinese investment research company,Pacific Epoch reported in January 2011 thatChina renewed the Golden Sun programwhich was supposed to expire in 2012. Theprogram was extended in order to support anadditional installation of one GW of photo-voltaic capacity.

By the end of 2011, the Chinese govern-ment is expected to have approved 150 addi-tional projects eligible for subsidies from theGolden Sun program.

The high amount of Chinese subsidies hasbeen a controversial issue in the EuropeanUnion and the United States. Unable to com-pete at the Chinese level, both have resorted tocriticism of Chinese energy policies, rather thantake recognition of the dramatic steps the na-tion has taken to clean up their energy sector.

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Chinese green energy advancesby Elizabeth Eckert

It is estimated that currently there are over 1.12million jobs in the renewable energy industry inChina, with the possibility of an additional100,000 jobs being added per year in the sector

photo credit:EPA/ADRIAN BRADSHAW

Elizabeth Eckert

Two men rest from the summer sun next to solar powered water heaters in a display at the International Energy Saving and EnvironmentalProtection Exhibition in Beijing, China 10 June 2007. As environmental degradation and energy costs become a major political concern of theChinese leadership hundreds of firms have stepped up to address the challenges with creative and cost effective solutions for the global market.



Beijing Normal University is one of the mostfamous universities in China, located bet-ween the second Ring and third Ring ofNorth Beijing, the most valuable location ofthe capital city. Her historic and tasteful stylecomforts this old city’s rich culture and civi-lization very well. There are 20,000 studentsstudy in her narrow space; I am one of them,coming from the only directly governed cityof western China, Chongqing City.

In school, studying is not the whole ofmy college life. I devote myself to social ac-tivities, keen to us the knowledge I have le-arned in different ways. In April 2009, severalstudents and I founded the Group of Che-mistry and Society of BNU (GCS). In GCS,we went to universities, middle schools, ju-nior high schools and social groups to holdpresentations on environmental, health andlife issues. Therefore, the green economy inthe context of Chinese development is not anew concept to me.

The development of China’s green eco-nomy has achieved large increases in deve-lopment during the past several years,attracting attention from all over the world.The third World Protect Meeting in Chinain 2010 was held according to our country’stheme of 2010: China’s Green Economy. Inthe same year, the use of different kinds ofrecyclable materials and the practice of low-carbon theory during the Expo 2010 Shan-ghai China won the world’s praise andattention.

In my opinion, powerful control at the

national level, useful government actions, andthe attention of Chinese society have allmade positive contributions to the success ofthe development of China’s green economy.In the summer of 2009 at the Davos mee-ting, China’s Premier Wenjiabao declaredthat our country would accelerate the deve-lopment of low-carbon and green economytechnologies and policies, and that we wouldtry our best to take a leadership role in theworld in these practices. Of course, that wasnot the first time China took notice of theimportance of a green economy. Several yearsago in the national development plan, Chinanoted the significance of the development ofgreen economies. In Chinese, we say we aredeveloping in scientific ways and developingconstantly. In the history of China, the greatthinker Lao-Tzu, a Chinese philosopher, saidthat if we catch all of the fish, we will no lon-

ger have fish to eat, and people should cutdown trees with a time plan because we mustleave some time for the trees to grow . Sofrom one perspective, we can see that thehuge development of the China’s green eco-nomy is not an accident but also influencedby historic reasons. The government’s actionshave placed the development of the China’sgreen economy into a high speed circle. Inmy hometown Chongqing, the governmentput out 5-Chongqing development plans,with the Health Chongqing, Forest Chong-qing and Livable Chongqing plans all rela-ting to green economy development closely.Every time I return from Beijing to Chong-qing after I finish my university term, I no-tice changes that have occurred. There aremore trees along the road, the air is cleanerand the noise is reduced. As a result, manyother cities of China use the city of Chong-

qing as a development model. Society’s at-tention to developing a greener economy na-turally lets progress occur. For example, everycollege has student organizations which havegreat relationship with environmentally andhealth friendly practices in Beijing universi-ties. They organize activities to teach collegestudents more about green technology and agreen environment. These organizations mayalso go to middle schools, to teach themwhat they can do as individuals to make acontribution to the development of a gree-ner economy. As we know, the youth are thehope of the future. If all of the youth regu-larly practice habits to save water and elec-tricity, refuse to use one-used paper, recyclewasted bottle by others and many other en-vironmentally friendly practices, this countrywill have a very bright future.

A green economy is China’s dream forthe 21st century. We can see that the deve-lopment of China’s economy has gone in thatdirection in even just the past year. Thoughour world is facing a difficult economic si-tuation right now, if every country workedhard on developing a green economy, thisdream would not be so far away. Since this isit the dream of 1.3 billion Chinese people, ithas gained the attention of 1.3 billion people.In the words of our Premier Wenjiabao, “aproblem divide into 1.3 billion is not still aproblem.’’ I believe that the Chinese dreamof a green economy will come true in thenear future without a doubt. Let us wait forthat day!

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Green economy, we are already on the wayby Zhang Xin

A green economy is China's dream for the 21stcentury. We can see that the development ofChina's economy has gone in that direction ineven just the past year.

Zhang Xin

Members of the Group of Chemistry and Society of BNU (GCS) in discussion with professorMartin King Whyte of Harvard University



“Starry starry night” is not only a dream ofVan Gogh; Zuying Song, a popular Chinesesinger, also sang about “blue blue sky” as part ofthe depiction of Shangri-la, implying thatmoney accumulation doesn’t fill our dreams andwe now endeavor to seek a balance betweeneconomic growth and environment protection.On this account, green economy, a new econo-mic growth pattern that combines environ-mental optimization with social boom, seemsto be an appropriate direction.

As we can see, China is an emerging na-tion with impressive eco-growth rate. But at thesame time, it is also a nation of 1.3 billion peo-ple and of limited resources, which force us totake both the status quo and future possibilitiesinto consideration when issues about overalleconomy and society development are raised.How to achieve the highest growth at the leastcost, how to aggrandize our GDP while enh-ance the life quality of every of our citizens byproviding them with sufficient electricity, cleanair and tracts of pastures for entertainment areour real concerns. Therefore, for sure, green eco-nomic transformation is a mountain peak wewill and must conquer. It is comforting to seethat some big cities like Hong Kong, Guang-zhou have already taken the lead and madesome achievements. However, Shanghai andGuangzhou are facets of China. Our north-west area is still in considerable poverty withchallenging weather condition and fragile en-vironment which can’t endure even slight da-mage, reminding us of the urgency andnecessity of our task that economic progress sh-ould be made and would be made in a low-car-

bon way. It is never a piece of cake, and, of co-urse, China shouldn’t do it alone.

Fortunately, China is not alone. Globaliza-tion not only affords us the joy of appreciatingthe charm of Gucci but also provides a chancefor us to find a good partner - Europe. It is wi-dely known that “green economy” was first bro-ught up by a European environmentalist, DavidPierce, who alerted us to the tolerance limits ofnature and advocated the sustainability of so-ciety. What is more, Europeans’ consistent ex-ploration on this subject has led to abundanceof experience and technological advancement,which would offer admirable assistance to Ch-ina’s economic transformation.

Undoubtedly, bilateral cooperation is a two-way road. Hence, it is essential for us to realizethat confronting the varying world, we perhapsembraces respective benefits which set us intotwo sides, but most basically, we are so smalland sometimes helpless contracting with de-

creasing water availability and quality, oil crisis,soil erosion, forests degradation, the economiccrisis that broke down thousands of enterprisesas well as the dreams of millions of our honestand hard-working citizens overnight, the glo-bally increasing temperature that brings aboutrising sea level, melting glaciers in Europe’sGlacial areas, and reducing species of plants andanimals, etc, that we have to join forces to ach-ieve or maintain prosperity, and to turn ourglobe into a more sustainable place for our de-scendents’ survival. Nothing can list ahead ofcooperation when challenges are to be over-come and chances are to be grasped and madethe best of.

In fact, collaboration would not be so at-tractive if a win-win result can’t be expected.China has large domestic demand, and it hasappeared as one of the most potentially magne-tic places for investment in green technologiesworldly with its massive investments in rene-

wable energies and energy security. At the sametime, Europe, China’s largest trading partner,controls superior technology in various areassuch as CCS, clean transport, S&T innovation,green energy and managerial expertise. It is alsoreported that off-shore wind farms, which couldthen be established in China, are being develo-ped in Europe at present. On the basis of suchhuge market demand, there are possibilities thatprofits are attained by European companieswhile progress and devotion are made to Chi-na’s further development on the condition of ourbilateral collaboration. Further more, a strategicpartnership is more than mere economic coo-peration. Political understanding and mutualtrust, making our voice more powerful on glo-bal issues and providing a desired environ forboth of us, is the foundation of profound andsustainable economic cooperation. Now, China-EU relations have become the most importantpair of bilateral relations in the world. And wehave every reason to aspire that this strategicpartnership will get further expansion in a be-neficial way along which we can march on ulti-mate win-win result.

In other words, China’s development is nota threat but should be a chance, which leads tomore exports, faster development, more sup-port in global issues by our collaboration basedon mutual respect and trust, for Europe. It maybe no more than common sense for us that yel-low represents utmost authority as well as re-spectability in China and blue, representing thewest, is the bottom color for the Flag of Eu-rope. Magically, when yellow shakes hands withblue, green emerges.

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When yellow shakes hands with blue

by Guoyu Tao

Now, China-EU relations have become the mostimportant pair of bilateral relations in the world.And we have every reason to aspire that thisstrategic partnership will get further expansion ina beneficial way along which we can march onultimate win-win result

photo credit:EPA/PETER PARKS / POOL

Guoyu Tao

An overview of the third EU-China High-level Economic and Trade Dialogue at the Diaoyutai State Guesthouse inBeijing, China on 21 December 2010.



While the geopolitical and economic rise ofChina has been hailed as one of the momen-tous occurrences of the late 20th Century, therise of “Green China” in the first half of the 21stCentury may eclipse it in terms of lasting im-pact on the planet.

China’s rapid economic growth has exac-ted a significant environmental toll. In the firsthalf of 2010 alone natural disasters left 3,514people dead, 486 missing and caused approxi-mately $31.19 billion of direct economic loss,according to the Ministry of Civil Affairs. Ab-normal droughts and floods affected at least 44different areas in 2010. Air quality in the majorcities, especially Beijing, is frequently at dange-rous levels.

Yet while the West struggles to recoverfrom the economic crisis, failing to a large de-gree to embrace the link between long-termprosperity and a green economy, China has seta clear course toward becoming the leader ingreening their currently very gray economy.

Why? It’s not because of a sudden heart-felt embrace of Al Gore and the principles ofclimatology. The shift is based on a calculatedvision of the future – one in which innovationand growth will hinge on green technology athome and abroad.

With its massive central planning and de-veloped educational and engineering infra-structure, China has the ability to leapfrog theWest in terms of rolling out quality, price-com-petitive alternative energy products.

Consider that, according to China Daily,China invested a total of $301 billion in effortsto save energy and reduce emissions during its

last Five-Year Plan (from 2005-2010). In 2010alone, China boosted spending on low-carbonenergy by 30 percent to $51.1 billion, “by farthe largest figure for any country,” according toBloomberg New Energy Finance.

At the World Economic Forum in Davoslast month, Christiana Figueres, Executive Se-cretary of the UN Framework Convention onClimate Change, stated “China is going toleave all of us in the dust. They’re committedto winning the green economy race.”

If indeed this is true – if it is a race and ifChina is poised to win it – what does that holdfor the West as we slowly emerge from reces-sion?

As with most momentous shifts, there areopportunities and significant challenges – forboth sides. While policy and business decisionswill drive the pace and size of the shift, com-munications will play a major role in determi-

ning winners and losers.For China, the stakes couldn’t be higher.

Their ability to continue their upward econo-mic and social trajectory is dependent upon sol-ving their environmental issues. Importantly,their place as an undisputed global leader alsorequires a serious effort to improve their ownenvironment and to play a constructive role onglobal climate issues.

Based on the investment levels and policyinitiatives likely to be included in the 12th Five-Year Plan (2011-2015) that will be unveiledlater this year, it is clear that China is takingvery concrete steps toward developing a truegreen economy. According to China Daily, TheNational Development and Reform Commis-sion (NDRC) has significant plans for drivingChina’s green industry, including energy savingand environment protection, new energy deve-lopment and ecological construction.

The Five-Year Plan is the key economicblueprint that government at all levels followvirtually to the letter. The reported emphasison the green economy is a concrete demon-stration of China’s growing commitment.

China also took important steps at themost recent UN Climate Conference in Can-cun in December 2010. Unlike one year earlierin Copenhagen at COP 15, when China wasseen by much of the international communityas intransigent on key climate issues, in Can-cun, China offered to adopt a binding UN re-solution on carbon emissions and was viewed asplaying a constructive role in the talks.

But too frequently perception lags realityand this is certainly the case with China’s com-mitment to environmental issues. For manyWesterners, the enduring image of China isone of a coal-fueled economy scouring theglobe for natural resources to stoke their unfet-tered growth.

The emerging reality of China as “com-mitted to winning the green economy race” willneed to be cultivated and communicated con-sistently and credibly by the Chinese govern-ment and Chinese businesses. Without thiseffort, China’s environmental image will conti-nue to lag.

Greening Brand China will require morethan a slick marketing campaign, however. Theconcrete commitments and achievements willneed to be communicated directly to key sta-keholders and influencers around the globe ina transparent fashion. Credibility will have tobe established through ongoing dialogue andcommunications between policymakers,NGOs, business leaders and civil society.

China has a good story to tell and nowneeds to tell it. In a shift, this will require wor-king with stakeholder groups that might beconsidered strange bedfellows – standing side-by-side on the need for investment in green te-chnology. Already we have seen budget slashingfinance ministers putting an end to feed-in ta-riffs subsidizing alternative energy from Spainto Germany.

For the West, the rise of a “Green China”should be embraced. It is obviously importantfor the environment and also for global security.The West needs to make clear to China thatthey are prepared to assist and support theirgreening.

Western businesses need to ensure thattheir priorities in China are aligned with thegovernment’s commitment to the green eco-nomy and they need to aggressively demon-strate and communicate that fact.

The color of growth in the 21st century isgreen – for the West and China. Transparentand honest communications on both sides canhelp ensure that the rise of China’s Green Eco-nomy is greeted with the enthusiasm it deser-ves and does not create greater global economicdisparity and mistrust.

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The rise of green chinaby James Moeller

With its massive central planning and developededucational and engineering infrastructure,China has the ability to leapfrog the West interms of rolling out quality, price-competitivealternative energy products

photo credit:EPA/LAURENT GILLIERON

James Moeller

Chinese Minister of Commerce Chen Deming (L) is seen prior to an informal meeting withtwenty-five Ministers responsible for the World Trade Organization WTO, on the sidelineof the 41st Annual Meeting of the World Economic Forum, WEF, in Davos, Switzerland,on 29 January 2011.


CHINANEW EUROPE


The future looks green: China, after havingfaced fierce criticism that its fast and reso-urce-intense economic development wouldcost the Earth, is sending clear signals thatit will change its growth model. The 12thfive year plan, to be released in March 2011,is expected to bring a shift from the current“growth at all cost” philosophy towards “in-clusive growth” which is supposed to bene-fit all Chinese citizens, aiming at decreasingthe income gap, redistributing wealth andincreasing general welfare, especially in theless developed inland. This new growthmodel, which also addresses points like theuse of resources and new energy, would leadto a growth which is slower in pace butmore sustainable, in economic, ecologicaland political terms.

The plan not only refers to energy con-servation and environmental protection assuch, but also identifies key sectors to be de-veloped to facilitate a sustainable growth,namely clean energy, new materials, cleanand low energy automobiles, advanced ma-nufacturing, etc.

These sectors will benefit from specialsupport and will require not only know-how for building new infrastructure andproduction plants but also for the manage-ment of those: software for running theproduction, solutions on how clean energycan be fed into the grid, how grids can besmartened up, how waste can be recycled ormanaged safely, etc.

European companies, and in particularsmall and medium-sized ones (SMEs), pos-

sess very advanced, if not world market le-ading solutions for these challenges. Ha-ving been faced with rather strictenvironmental legislation since an earlystage, they developed innovative solutionsand eco-friendly technologies for manyareas and specific niches.

The developing green economy inChina and the need for advanced solutionsthus offers huge growth potential for EUcompanies – an opportunity they cannotmiss considering the stagnation of their do-mestic markets. But a lot of them are stillhesitant as they cannot adequately judge therisks related to entering the Chinese mar-ket: the protection of their intellectual pro-perty is at the core of their concerns andsome SMEs have paid dearly their attemptto get a foot into the market without an in-depth research on the legislation in their

specific cases. The Chinese government’sinitiatives to promote indigenous innova-tion leave European companies with thedoubt to what extent – and for how long –they would be allowed to really benefit fromthe green growth in China.

Apart from this perceived legal and po-litical uncertainty, European SMEs are alsofacing scepticism as to whether they can re-ally deliver the solutions they promise. Ch-inese large companies, state-ownedenterprises and decision-makers are very fa-miliar with Europe’s top 100 companies butwould mostly not expect that a company ofthirty five people from Eastern Polandmight have developed the solution they arelooking for. Getting in contact with keyChinese counterparts is a serious challengefor European SMEs, even if they have iden-tified a concrete business opportunity.

To be able to take advantage of the op-portunities the green growth in China of-fers, European SMEs need two things:firstly, access to up-to-date information andservices related to market, legislation andprocedures in their specific sector in Chinaand, secondly, a platform which helps thembuild up a certain standing for being takenseriously by their Chinese counterparts.

Concrete initiatives to support SMEsThe European Commission responded

to these needs by launching different pro-jects, directly or indirectly benefiting Euro-pean SMEs eyeing the Chinese market:

- The Understanding China pro-gramme, implemented by EUROCHAM-BRES leading a consortium of 11 partners. It aims at enhancing EU-China policydialogue and increasing the understandingof the Chinese economy among Europeancompanies. One key element of the pro-gramme is a training programme for Chinaexperts in European business representativeorganisations, enabling them to provide hi-gher quality services and up-to-date infor-mation to SMEs throughout Europe.

- The newly-created EU SME Centrein China, managed by a consortium of Eu-ropean bilateral Chambers of Commerce inChina, the European Chamber of Com-merce in China and EUROCHAMBRES,led by the China-Britain Business Council.As of mid February 2011 the EU SMECentre in China will provide market accessinformation and services to European com-panies, with the core areas being of legal ad-vice, standards and conformity assessments,business information and training for en-trepreneurs. The green economy has beenidentified as one of the key fields to be co-vered. The Centre will not duplicate struc-tures already in place but bundle existinginformation and act as a joint platform forSMEs from all 27 EU member states,which can also temporarily use the Centre’soffice space.

Apart from these programmes, Euro-pean businesses also need an enhancedEuropean economic diplomacy in China.Better Intellectual Property Rights protec-tion and enforcement, legal certainty forinvestors, recognition of European stan-dards, etc have to be promoted activelywith one voice uniting the whole Europe,enabling EU companies to compete withconfidence. Shaping a European identitywill help unknown SMEs to enter the Ch-inese market: a joint perceived qualityidentity like “green technology made inEurope” would provide SMEs with a bet-ter standing to get in contact with their co-unterparts – and to actively push the greengrowth in China, with a direct benefit forboth the Chinese and European economy.

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Europe’s SMEs: key players for China’smove from blue-collar to green-collarby Arnaldo Abruzzini

The developing green economy in China and theneed for advanced solutions thus offers hugegrowth potential for EU companies – anopportunity they cannot miss considering thestagnation of their domestic markets

photo credit:EPA/PETER PARKS / POOL

Arnaldo Abruzzini

General view of the 3rd EU-China High-level Economic and Trade Dialogue at theDiaoyutai State Guesthouse in Beijing, China on 21 December 2010. Increasing EU-China relations are seen as beneficial to both parties.



The development of China since its foun-ding in 1949 can be divided into threestages. From 1949 to 1979, we had a poli-tical China. Between 1979 and 2009, wesaw an economic China. In the 30 yearstime from now, what we will see is aChina that focuses more on the wellbeingof its citizens. Our priority in this periodis to improve the quality of developmentby shifting to a green economy. The deve-lopment of a green economy in Europe isof particular relevance and importance, inthat Europe offers both valuable theoriesand practical experiences in this area. As Iunderstand it, in the future bilateral exch-anges and cooperation between Chinaand Europe, China should draw on thedevelopment experiences of the greeneconomy in Europe in three main aspects.

The first concept is of “decouplinggrowth”. Decoupling growth is a coreconcept of Europe’s green developmentapproach. The essence of the concept is toachieve growing economic and social re-sources while reducing environmental andresource consumption. Countries like theNetherlands, Germany, and Switzerlandhave already adopted relevant four-fold or

ten-fold strategies. This concept has muchvalue to contribute to China’s green deve-lopment strategy. If the Chinese economycontinues to grow around 7-8%, our percapita GDP will reach USD15,000-20,000. During this period, China couldset a relative decoupling growth targetcombing the factors of both natural reso-urce consumption and economic growth.Once our GDP has entered that bracket,we can shift to absolute decoupling gro-wth target.

A second important develop concept

is focusing on green technologies thatboost resource efficiency. European coun-tries attach great importance to technolo-gical innovation and believe that in thisnew time period, we should work forlong-wave economic growth patterns thatfocus on increased resource efficiency. Thegoal is to increase productivity and reduceenergy intensity in the manufacturing,transportation, and construction indu-stries through green innovation. Relevantundertakings by European countries willprovide China with valuable insights as

how to shift to green production throughtechnological innovation. Because of therestraints we face in energy, land, water,and ecological resources, it is imperativethat we significantly increase energy effi-ciency in the manufacturing, transporta-tion, and construction sectors in order toshift our economic growth patterns froman extensive kind to an intensive kind.

The third concept is the green policyof a long-term eco-tax. Europe has pione-ered in proposing as well as implementinga long-term eco-tax. This kind of appro-ach is different from both floating marketprice policies and permit system policiesfor total emission allowance. Today reso-urces are considered capital, the scarcityof which may profoundly impact worldeconomic growth. In light of this deve-lopment, a long-term eco-tax could in-tensify efforts to reduce resource andcarbon intensity in production activities.Such a taxation policy would also be dee-med as less personal because it targets atnon-labor factors. These approaches couldbenefit China enormously as we exploremore efficient ways of government inter-vention to promote green growth.

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Experiences of green economic development from european countriesby Professor Zhu Dajian

Because of the restraints we face in energy, land,water, and ecological resources, it is imperativethat we significantly increase energy efficiency inthe manufacturing, transportation, andconstruction sectors in order to shift oureconomic growth patterns from an extensive kindto an intensive kind

photo credit:EPA/QILAI SHEN Qilai Shen

Professor Zhu Dajian

Traffic moving through crowded downtown Shanghai, China on 13 January 2011.



In facing the global climate change crisis andthe increasingly serious energy resource deple-tion, the development of green economy hasbecome the common choice of people aroundthe world. For China, developing a green eco-nomy is not only a need for global governance,or taking international responsibility, but also arealistic choice in the context of Chinese fun-damental realities of large population, unbalan-ced development, the relative shortage ofnatural resources and a fragile ecological envi-ronment, and etc.

The Chinese government has recognizedthe contradiction between the resource and en-vironmental constraints and the rapid econo-mic growth has been posing a serious challengeto Chinese economic and social development.

Developing green economy is the best ch-oice to achieve sustainable development. In thepast five years, China has formulated a series ofpolicies to address climate change problems. Inthe meantime, China is making the greatest ef-fort for its transition into the real green eco-nomy. To some extent, China has effectivelyreduced the energy intensity, achieved the na-tional carbon reduction targets, reduced pollu-tion, and improved people's quality of life.

In the initial stage of “the Eleventh FiveYear Plan”, the Chinese government formula-ted the green development strategic planningon the five key areas of coordinate structure ofland, environment and economy and compre-hensive planning of regional development, re-source protection and conservation, greenindustry and economic development, ecologyprotection and construction, comprehensivetreatment of environmental pollution.

Moreover, the target of decline of theenergy consumption per GDP and the total di-scharge major pollutants were used as the "one-vote veto" restrictive criteria of the assessmentof main leaders of the government. Meanwh-ile, such green policies as green fiscal, green re-source price, green government procurementwere put on the agenda to promote institutio-nal reform of green system of national account,national ecological compensation system, greenfinancing, and etc.

In terms of climate change, China, in 2007,has set up a special leading group and releasedthe "China National Climate Change Pro-gram" to address climate change problem.

In order to make the policy more authori-tative and consistent, the National People’sCongress and its Standing Committee activelylifted the above green concept and practice tothe stipulation of 28 laws and administrativeregulations in the field of environment and re-sources, such as "Recycled Economy Promo-

tion Law", "Cleaner Production PromotionLaw", "Energy Conservation Law", "Environ-mental Impact Assessment Law", "RenewableEnergy Law", "Solid Waste Pollution Preven-tion Law", and etc. Besides, "Civil Energy Or-dinance", "Energy Conservation Ordinance inPublic Institutions", "Genetically ModifiedOrganisms Safety Regulations" and "Imple-mentation Regulations of Forest Law" werealso stipulated.

Through the efforts of the government andthe whole society, the past five years have wit-nessed China's rapid development of its greeneconomy, industrial restructuring, rapid tech-nological progress, the establishment of a num-ber of effective systems, such as binding targets,energy-saving mechanism, exit mechanism ofbackward production capacity and environ-mental policy coordination mechanism.

Moreover, it has achieved remarkable re-sults in environment governance through anengineering way and the environmental super-

vision has intensified than ever. The environmental quality has also been

noticeably improved. Mr. Xie Zhenhua, ViceChairman of the National Development andReform Commission, revealed on the SecondChina Summit Forum on Urban Energy Sa-ving, that it was preliminary estimated thatenergy consumption per unit of GDP fell byabout 3% in the first three quarters of 2010.

The reduction target set in "the EleventhFive-Year" plan was expected to be fulfilled asscheduled while sulfur dioxide, COD and otheremission reduction targets were completedahead of schedule.

According to statistics, during the period of"the Eleventh Five-Year" plan, an average an-nual growth rate of China's energy-saving andenvironmental protection industry is between15% and 20%. In 2009, the whole output valueof energy-saving and environmental protectionindustry, including energy saving, environmen-tal protection, comprehensive utilization of re-sources was 1.9 trillion yuan. Although thedevelopment of China's green economy hasstepped on the right track, a lot of work stillneeds to be done, which requires unremittingefforts. China is still in the process of indu-strialization and urbanization, which indicatesrapid energy consumption, the reliance on coaland oil, and the overall increase in carbon emis-sions will continue for some time. The ChineseGovernment and society should take furthermeasures to gradually establish and improve acomprehensive system of green taxes, earnestlyimprove the market trading mechanism ofgreen economy, strengthen green education andform social consensus on green development.

Quote

Chinese green economyby Dr. Zhou Fengqi

Through the efforts of the government and the wholesociety, the past five years have witnessed China's rapiddevelopment of its green economy, industrial restructuring,rapid technological progress, the establishment of a numberof effective systems, such as binding targets, energy-savingmechanism, exit mechanism of backward productioncapacity and environmental policy coordination mechanism

photo credit:EPA/IRIS SA

Dr. Zhou Fengqi

Photo shows the wind turbines in service at the Dabancheng Wind Power Plant in Urumqi in northwest China's Xin-jiang Uygur Autonomous Region, 20 October 2007. Xinjiang now has five wind power plants in service, the most in Ch-inese provinces, started with foreign help in 1989.

GREENING ECONOMIES16

CHINANEW EUROPE


China, the worlds second largest eco-nomy and most populous country, has, itwill be unsurprising to hear, huge energydemands. To this end, the country hasbeen seeking to diversify its energy mix,away from the traditional, heavily-pollu-ting coal-fired power stations and intodifferent forms of low-carbon, greenerenergy. As with Europe and the US, this isseen as both a way of reducing harmfulCO2 in the atmosphere, and also boostingthe economy. Green technology is seen asthe industry of the future.

Currently, China is the world's largestenergy consumer, most of it still producedby coal-fired power plants, somethingwhich the authorities hope to change asthe years go on.

From 2010 a huge effort has beenmade to increase wind capacity in China,with an additional 62% wind power in-stalled last year, amounting to about 16gigawatts (gw), over 3 times the growthrate of of the US, which increased byabout 5gw. According to the official Xi-nhua News Agency, China now has 41.8gw of installed wind capacity, compared tothe US, which now stands at about40.2gw. There are further plans for 2011;a 5gw wind power project in the Gansuprovince, with additional projects amoun-ting to 5.5gw in Xinjang, the Jilin pro-vince and Inner Mongolia.

In an effort to diversify its energy mix,to move away from coal dependency, andto ensure the momentum of the kind ofgreen technology projects mentionedabove, China passed the RenewableEnergy Law in 2005. Since it took effectat the beginning of 2006, the law has seenmuch support given to the renewables in-dustry, as well as a boost to the kind ofmomentum needed to ensure long-termsustainability. In 2005, there was a 60%growth in wind energy. Between 2006 and2010, after the law can into effect, windhas grown by about 100% each year.

According to the Global WindEnergy council, success in China can beattributed to local content requirements,evenly distributed costs throughout the

provinces for wind power, and a minimummandatory renewable energy market sharefor the big utility companies. In 2009,China represented the largest domesticwind manufacturing industry, as well asglobally the second largest.

In addition to its medium-term goals,China has also begun to take a more long-term view of things; at least until 2020,with the introduction of renewables tar-gets, a targeting of priority sectors, andthe introduction of a national implemen-tation strategy, which has seen govern-ment policies become increasingly awareof the need for environmentally-friendlypolicies in areas such as energy and agri-culture. The long-term vision, which wasset out in 2007, also saw the introduction

of the Renewable energy fund, a centralfund for covering the cost of integrationof renewable energy into the nationalgrid.

The China Wind Energy OutlookReport 2010, compiled by the GlobalWorld Energy Council, makes for encou-raging reading. According to the report,wind power as calculated to have cut aro-und 150 million tonnes of coal consum-ption prior to 2010. More encouraginglyfor the Chinese wind energy market isthat, according to the report, wind has thevery real possibility of becoming the co-untry's main energy source in the longterm. Currently, wind energy resourcesclosely rival those of the US, and outstripother wind energy-friendly nations, suchas Germany and India. Chian is now ex-pected to overtake Europe for wind powergrowth by 2013.

In addition to domestic support, theAsian Development Bank is also provi-ding capital; around €240 million to de-velop wind farms in China, particularly inrural areas which allow for maximum im-pact. Additionally, both Chinese and in-ternational companies, both Europeanand American, continue to invest in windtechnology across the vast country. Thingsare looking up for the renewable energymarket in China, and, in particular, thewind energy sector, it would seem.

Quote

A wind energy future for Chinaby Cillian Donnelly

Currently, wind energy resources closely rivalthose of the US, and outstrip other wind energy-friendly nations, such as Germany and India.China is now expected to overtake Europe forwind power growth by 2013

photo credit:EPA/XIAO LI

Cillian Donnelly

A worker looks at the blades of a wind power generator being pulled up in Nanhui district of coastal Shang-hai Thursday 12 May, 2005. The Nanhui wind power project, consisting of 14 1.5-megawatt generators pro-duced by GE, was completed Thursday. Shanghai plans to increase its wind power to three percent of itselectricity consumption by 2015.


CHINANEW EUROPE


The People’s Republic of China (PRC) hasthe fastest growing economy in the world,but how it is applying energy efficient me-asures including the introduction of rene-wable energy is, on the whole, unclear. Alltoo often portrayed as anti-environmenta-list, it appears, some say, immune to globalmitigation efforts. But is the country reallyasleep when it comes to resource efficiency?A recent decision regarding smart meteringdemonstrates there is a clear positive trendin China towards both a low carbon eco-nomy and furthering of its energy effi-ciency commitment.

In 2009, China announced a plan to so-urce 15% of its energy capacity from wind,solar and other renewable energy sourcesby 2020. According to reports, the ChineseGovernment successfully reduced itsenergy consumption per unit of gross do-mestic product (GDP) by a fifth over thelast five years to hit its 2010 target – but atthe price of shutting down industrialplants.

Two years ago, the country also anno-unced its intention to reduce the intensityof carbon dioxide emissions within the Ch-inese economy by 40-45% by 2020, as com-pared with a 2005 baseline and reportedthis goal to the United Nations FrameworkConvention on Climate Change Secreta-riat in early 2010.

In China’s shift towards a low carboneconomy, the efficient use of energy reso-urces is more crucial than ever. With the

growing implementation of green techno-logies such as wind farms and solar plants,the need to have smart meters capable ofmanaging an entire network is essential.Smart metering provides the ability to mo-nitor and manage energy use, thereby pro-viding the basis of a dynamic energy supplysystem.

The country’s commitment to smartmetering was clear in March last year, in anannual report to the National People’sCongress, Chinese Premier Wen Jiabaocalled for the country to “push forwardwith building a smart grid”.

As the leading global provider of energymanagement solutions, Landis+Gyr sawentering the Chinese market as a naturalstep. Landis+Gyr has operated manufactu-ring and research and development facili-ties in China for 15 years, with more than

300 employees focusing on both domesticand international markets.

Earlier this year, we were selected by theState Grid Corporation of China, the co-untry’s leading power-grid operator, to sup-ply over 10,000 commercial and industrialadvanced electricity meters for upcomingdeployment in six provinces. The companywas the only international smart meter ven-dor to win a contract to supply the polyph-ase commercial and industrial smartmeters, which will provide unparalleled di-gital accuracy and reliability. Twenty-fivemeter suppliers competed in the biddingprocess, widely seen as the first phase in alarger and more ambitious country-widedeployment.

We are delighted at the prospect ofpartnering with the State Grid Corpora-tion to help Chinese businesses and consu-

mers manage energy better in the world’sfastest growing economy. The Chinesemarket is all about opportunities ratherthan risks. In fact, in the next ten years,Landis+Gyr expects China to deploy 200million smart meters, which will makeChina the largest, single smart meteringmarket globally.

When it comes to doing business withChina, there are a few boxes to tick for a suc-cessful commercial relationship. First, it isabout listening to and then understandingthe local Chinese requirements. What arethe drivers for renewables? How can theirrequirements be fulfilled? Companies sh-ould avoid trying to cover the country withother, blanket global solutions, but insteadadjust their offer for each market. A techno-logy that is displayed globally will not ne-cessarily work in China. Local knowledge iscrucial. With smart metering, developinglocal solutions is the key to success.

China represents an opportunity todrive business forward and fulfil global re-quirements, such as supporting utilities theworld over to help their customers achievean energy efficient way of life, without theneed to compromise comfort for efficiency.We believe that everyone should see Chi-na’s commitment to rolling out smart me-ters as the key to realising the full potentialfor renewable energy, essential to the on-going and future smooth operation of theworld energy market – and to helping so-ciety to manage energy better.

Quote

China has the smarts on energyby David Maclean

When it comes to doing business with China, there are afew boxes to tick for a successful commercial relationship.First, it is about listening to and then understanding the localChinese requirements. What are the drivers for renewables?How can their requirements be fulfilled? Companies shouldavoid trying to cover the country with other, blanket globalsolutions, but instead adjust their offer for each market

photo credit:EPA/HOW HWEE YOUNG

David Maclean

The sun rising over the city in Beijing, China on 19 January, 2011. China's economy grew 10.3 per cent in 2010,up from 9.2 a year earlier, according to the National Bureau of Statistics. China’s investments in green technologyare expected to support continuing economic growth for the country.



There is a common perception in Europeand the West that China is not interested inclimate change, the environment or greeningindustry; it wishes only to grow rapidly andindustrialise.

However, this view is not entirely accu-rate. In recent years climate change and en-vironmental concerns have moved up theChinese political agenda. The green eco-nomy featured prominently in the 11th FiveYear Plan for 2006-10 and many expect it tobe the headline issue in the Plan currentlybeing finalised. Ironically, authoritarian go-vernment has also set environmental targetsthat democratic and environmentally consci-ous Europe can only dream of; new buildingswith reduced emissions of 50-65% and 7,467inefficient thermal generators taken offlinesix months ahead of schedule, to give just twoexamples.

The reason for this is not a sense of moralresponsibility for the levels of CO2 in ouratmosphere, but is instead threefold.

The first reason is energy security. Chinarelies heavily on domestic coal supplies andalthough it can continue to do so in the shortterm, this is ultimately unsustainable. In ad-dition to this, China became in the 1990s anet-importer of oil.

Second, and quite simply, the ChineseGovernment has recognised that the greeneconomy represents a huge- €3,500bn peryear- economic opportunity, and is in a posi-tion to act.

Finally, the impact of carbon intensiveindustry is hitting home in China in a way

that it perhaps isn’t in the West. The WorldHealth Organization (WHO) has estimatedthat air and water pollution kills over750,000 Chinese citizens each year. In addi-tion to this, black carbon, of which China isa major source, is accelerating the melting ofice caps in the Himalayas and causing vola-tile regional weather patterns. These effectsare visible and directly attributable to theburning of fossil fuels, making them a do-mestic concern for China.

China’s elite is therefore aware that itneeds to green the economy, and it has madehuge financial investments.

The results are clear. In September, theErnst and Young Renewable Energy Attrac-tiveness index revealed that China had over-taken the US to take the number one spot.Meanwhile, European countries like the UK,Germany and Spain have been struggling to

make gains. This demonstrates brutally thefact that Europe is not winning the race tobecome the global green energy leader. AsChristiana Figueres, head of the UN Frame-work Convention on Climate Change, saidat January’s World Economic Forum inDavos, China is “going to leave all of us inthe dust” because they are committed to win-ning the green economy race.

So we are left with the question not ofwhat “green” Europe can teach China, butwhat stuttering Europe can learn fromChina.

I, along with many others, have long cal-led for Europe to build an integrated “smart”energy grid that will allow electricity fromrenewable energy to be transferred effectivelyacross the continent and thus encourage itsgeneration. China faces a similar challenge,and the government is expected to announce

a $300 billion investment in a smart energygrid.

Although the EU cannot emulate thismammoth state investment, we must find away to make similar investments in ourenergy infrastructure. One proposal on thetable is the issuance of Eurobonds, the reve-nue from which can be used to pay for suchprojects.

However, the contrast with Europe sh-ould not give a false impression of the situa-tion in China. The Economist has pointedout that China and India host 27 of the 30most polluted cities in the world. And theInternational Energy Agency estimates thatbetween 1990 and 2005 China’s CO2 emis-sions rose by 129% with China now widelyaccepted to have overtaken the US as the lar-gest emitter of greenhouse gas in the world.

Nonetheless, as Duncan Freeman andJonathan Holslag point out, on a per-capitabasis China still consumes far less energythan developed nations. This is not becauseof energy efficiency; rather that economicprosperity has yet to peak. As the economycontinues to grow, so too will demand forenergy and unsustainable carbon emissions.

This reality must prompt a change in therationale behind China’s green economy. Itmust be driven less by economic and securityconcerns, and more by a desire to protect theworld as an inhabitable environment formankind. We must breakdown the barriersthat prevent the transfer of technology andexpertise between countries.

The EU’s High Representative CathyAshton has rightly marked the Doha tradetalks as an important vehicle to cut tariffs onenvironmental goods. And intellectual pro-perty right protection and investment rulesneed to be streamlined to allow China (andEuropean companies) to benefit from theon-going research into things like clean coaltechnology. After all 70% of China's energyneeds are satisfied by the fossil fuel.

This must also be matched by politicaldialogue at all levels. I am Chairman of theClimate Parliament, a non-governmental or-ganisation that helps more than 18,000 le-gislators from around the world share policyexperience and best practice. China's greeneconomy might benefit from a similar pro-cess, especially as the government considers acap-and-trade scheme. Whether the coun-try's political and constitutional set-up wouldallow for this is another matter.

And perhaps this point helps us to cometo valuable conclusions about the future ofthe green economy in China. For all the goodthat powerful industrial policy and state in-tervention has achieved, China must now be-come more open. More open politically tobenefit from new ideas, and more open to theforeign companies that will bring the requi-red technology.

Quote

The EU, China and the green economyby Graham Watson MEP

So we are left with the question not of what“green” Europe can teach China, but whatstuttering Europe can learn from China

photo credit:EPA/RAINER JENSEN

Graham Watson MEP

German Environment Minister Norbert Roettgen (L) and Chinese Minister of Science andTechnology Wan Gang (R) shake hands after signing a declaration concerning the project'Climate Change and Electric Mobility' in Beijing, China, 16 July 2010. Various mutual de-clarations were signed in the afternoon.



Greenpeace analysis of China's energy pro-dution is not as grim as it could be. In fact,it is cautiously optimistic, but lets the catout of the bag; embarking on a sustainablelow-carbon path requires the most biggestenergy companies to play along in comba-ting climate change. Greenpeace reckonsthat an energy and environment tax for coalwould both drive the biggest power compa-nies to move to renewable energy and en-sure that coal is used as efficiently aspossible.

China is the world’s largest producerand consumer of coal, with more than 70per cent of its energy needs coming fromcoal. The Chinese electricity sector is Chi-na’s biggest consumer of that fuel. China isthe world’s second largest producer andconsumer of electricity, with a total genera-tion of 3,433.4TWh in 2008, smaller onlythan the United States. The electricity sec-tor plays a critical role in deciding China’sclimate performance. In 2008, these 10 big-gest companies accounted for 57% of Chi-na’s total installed electricity capacity and58% of China’s total electricity output. Bythe end of 2008, the installed capacity ofelectricity generation had reached 792 gi-gawatt. Coal-fired plants account for threequarter of that capacity. Calling for stricterstandards to reduce the average coal con-sumption per energy unit, Greenpeace urgesthe Chinese government to save emissionsby having inefficient power plants under200 megawatt shut down by 2015.

Involving the big tenAny reduction of carbon dioxide emis-

sions, or at least a cut in the growth ofthose emission, depends on a transforma-tion of the energy industry, a powerful

lobby with huge political clout in China.China’s electricity sector is dominated bylarge-scale power companies. Greenpeaceidentifies the top ten power companies interms of installed capacity as China Hua-neng Group, China Datang Corporation,China Guodian Corporation, China Hua-dian Corporation, China Power Inve-stment Corporation (CPI), China ThreeGorges Project Corporation, GuangdongYuedian Group, Zhejiang ProvincialEnergy Group, Shenhua Group Corpora-tion and China Resources Power HoldingsCompany (CRP). Any move away fromthe coal dependency will require the co-opting of the major power companies inthe national environment policy and intoensuring the aims of increased use of rene-wables. By burning 20% of China’s coal in2008, the companies emitted an equivalentof 1.44 billion tonnes of CO2. In 2008, thelargest three (Huaneng, Datang and Guo-dian) together emitted more than the Uni-ted Kingdom’s total emissions in the sameyear.

Towards voluntary emissions trading?There is a great deal of excitement

among energy experts as to what the 12theconomic five-year plan will entail. It seemsa voluntary emissions trading scheme isabout to be introduced with a view to thelater development of a cap-and-trade sy-stem. The question remains whether therewill be a clear timeline and the detailed na-ture of the obligations that may be introdu-ced with the new measures.

"The next five years will see a voluntarytrading scheme. The main goal is to test thefeasibility of carbon markets in China. Itseems China sees the importance of usinga market-based mechanism to meet theemissions control goals", says Yang Ailun,climate campaign manager with Greenpe-ace China.

Pointing to the environmental and so-cial cost of China's overreliance on coal,Yang says the government should make fulluse of existing potential to reduce emissionsfrom the energy industry by obliging com-

panies to install new technologies."What the government does goes is in

the right direction, but there is a need to in-troduce carbon tax and trading to decreaseenergy consumption.

Rather 30% by 2020Non-governmental working on China's

environment would rather like to see a 30%aim for the use of renewable energy by2020. However, there do not seem to beprospects for that yet. Ms Yang with Gre-enpeace China points to the 15% renewa-bles target for 2020 and doubts there will beany more ambitious target-setting, or if so,only some intermediary goals may be pre-sented in the upcoming five-year plan. Yangexpects more emphasis on measures to ach-ieve the energy target of improving energyintensity by 40-45% and points to the needfor effective implementation.

"What normally happens is that Chinatends to achieve and exceed its targets", shesays. "However, so far progress has relied ongovernment administrative orders to shutfactories shut and cut emissions in provin-ces. Such measures are not cost-effectiveand the effect is only short-term. A carbontax would be crucial in order to achieve la-sting change!"

The controversial carbon capture andstorage technology is being flagged as thepanacea for China.

"CCS could play a bridging role bet-ween now and carbon-neutral future", MsYang with Greenpeace China says.

"We cannot rule out CCS as an option.What is important now is to develop a re-gulatory framework for CCS, as it is newand there are risks that people cannot ma-nage yet."

Greenpeace: Taxing carbon to forcepower companies go cleaner

by Anna-Karin FriisAnna-Karin Friis

A haze of pollution engulfs Beijing, but the future does not have to be so bleak, saysGreenpeace

QuotePointing to the environmental and social cost ofChina's overreliance on coal, Yang says thegovernment should make full use of existingpotential to reduce emissions from the energyindustry by obliging companies to install newtechnologies

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Xinjiang, an arid and landlocked region, isChina's stretch into Central Asia that bor-ders eight nations, of them Kazakhstan,Kyrgyzstan, Tajikistan, Afghanistan and Pa-kistan. The province comprises a sixth ofChina's territory. Nowhere on the planet isfurther from the sea. And nowhere else inChina are the effects of climate changemore evident, despite not being due to po-pulation pressure in this still sparsely popu-lated province.

The Xinjiang Institute of Ecology andGeography cites as the aims of China's We-stern Development strategy to shift 'theheavy environmental pressures' from the co-astal regions of Eastern China to the interiorWest. That implies intense usage of water re-sources, excessive land use and constructionthat may further decrease the forest coverageand pollution through investments in infra-structure and the rapid population growth.Ma Ming, professor and researcher withChina Academy of Sciences, recognizes in astudy that the ecology of Western China,especially in Xinjiang, is extremely vulnera-ble. He worries that the Western Develop-ment strategy has irrevocably changed thelandscape and the biodiversity of the region.

Xinjiang's demographic structure is ch-anging rapidly. Historically known as EastTurkestan and populated by the Uighur pe-ople, nomads who established the Silk Road,and also Kazakhs, Tajiks and other minori-ties, Xinjiang (which literally means 'newfrontiers' in Mandarin) has in the last fiveyears seen heavy infrastructure developmentand witnessed the building of entire new ci-ties. The cities will house internal migrantfrom China's densely populated coastal pro-vinces. They come to work on the construc-tion of new pipelines, gas and oil extractionand increased coal production. At present

less than one per cent of Xinjiang's territoryis forested. The forests that previously hostedmany rare species that have degenerated alar-mingly in the last fifty years due to the in-crease in agricultural production, severedesertification and soil erosion. The chan-ging ecology of Xinjiang has resulted in thedrying up of lakes, in rivers retreating andglaciers diminshing at a speed of up to tenmetres a year. Environmentalists warn thattime is running out for the last remaining fo-rests in the nort of the province. The naturalforests that used to form a green corridorsurrounding the Tarim River, one of the twomain river basin areas, have been drasticallydegraded and no longer offer protectionagainst drifting sand from the desert, causingthe population and agriculture to suffer fromsand and salt storms.

The Xinjiang Institute for Ecology andGeography cautions that the most seriousenvironmental problems have occurred dueto the reclaiming of land for agricultural useover the last fifty years. Apart from forests,riverbanks and grasslands were turned intofarmland, destroying vast areas, among them

the Aksu river. Worryingly, the trend of clai-ming land for agricultural use continues, al-though there are government-backedinitiatives that aim at ecological restoration.The land is used for cash crops, mainly cot-ton, that require intense irrigation; as suchhighly problematic in the arid region that in-creasingly suffers from water shortage butstill spends most of its water resources onagricultural production.

Another serious problem is the construc-tion of large-scale water reservoirs. Threelarge reservoirs have been built in the last fi-fteen years in the Tarim riverbasin area andscientists note that such construction thatdrastically alter the ecosystems do not evenappear on maps. Apparently they were builtwith a view to short-term economic gain wi-thout regard to the ecological balance of theriver basins in Xinjiang. These projects havealso had the unfortunate consequence of ca-using a severe lowering of the groundwaterlevel. NGOs, such as the Xinjiang Conser-vation Fund, campaign against the overutili-zation of natural resources and aim atgreening Xinjiang by promoting new ways of

ecological living on the countryside. Furtherreservoir construction together with the mel-ting glaciers and intense irrigation giver riseto official estimates that the waterflow in ri-vers may increase still this decade due tomeltwater, but in ten years time the water le-vels cannot be sustained. Water depletion inXinjiang leads to a shortage of freshwater inother regions in China that depend on large-scale water diversion systems for their wate-rutilization.

There is an initiative for a governmentresponse towards restoring dried-up lakesand aquifers and the policy may involvepaying farmers to cease irrigation, as theshare of the water consumption used foragricultural is alarmingly high. Degradedland, destroyed freshwater system and over-cultivation cause internal migration withinXinjiang and beyond, as farmers cannot su-stain their living. Internal migration resultingin slums in the vicinity of the bigger cities inthe province threatens to further exacerbatesocial problems and ethnic tensions. The si-tuation is worsened by unemployment; newinvestments tend to bring jobs only to ne-wcomers moving in from other regions towork in the companies that hold concessionsfor the extraction of minerals.

There is at the moment increased reali-zation in China of the causes and the extentof the ecological disaster in Xinjiang. Thereare some attempts at restoring the depletedaquifers and at reversing the trend of overu-tilization of water, whereas other planningaims at investing in the extraction of coals instill undeveloped coal reserves. Water may bediverted to mining instead. At the moment,there is investment in liquifying coal to over-come the difficulty of transport. Xinjiangmay be heading towards becoming a large-scale coal producer also by global measures.

Quote

The environmental challengesin China's Far Westby Anna-Karin Friis

The Xinjiang Institute for Ecology and Geographycautions that the most serious environmentalproblems have occurred due to the reclaiming ofland for agricultural use over the last fifty years.Apart from forests, riverbanks and grasslands wereturned into farmland, destroying vast areas, amongthem the Aksu river

Anna-Karin Friis

Xinjiang: the most serious environmental problems have occurred due to the reclaiming ofland for agriculture



China’s local city governments are facing amunicipal waste mountain, existing landfillsites are filling up and finding or building newsites or incineration plants is increasingly dif-ficult. In 2006 about 80% of China’s collectedmunicipal solid waste (MSW) was dumped inlandfills and left untreated, around 16% wasincinerated and only 4% biologically treated.Since Chinese MSW is often contains 70-80% organic matter, it is hard to incinerate buteasy to decompose. With over 5,000 “brown-field sites” from poorly managed landfills andthe likely need for 1,400 additional landfillsover the next 25 years, the issue of municipalsolid waste represents a major land-use chal-lenge in China.

China also faces a serious power supplyproblem. To feed the country’s rapid economicgrowth electricity consumption increased by14.56 percent in 2010 to well over 4.19 trillionkWh, according to the China Electricity Co-uncil. However, in 2010 capacity grew by only10 percent and brown-outs are a common pro-blem in China’s industrial heartlands. The coalprice shows no sign of declining either, and theenvironmental and health effects of burning itare costing China’s economy dear.

Economic growth also means that Chinais importing more and more fossil-fuel basedfertiliser as its agricultural system strains underthe pressure of increasing demand, resulting inincreased global emissions and local environ-mental damage as fertilisers leach into watersystems.

These issues are creating something of a

headache for local officials who are measuredon their environmental performance.

Last year our operations director, EmilisGustainis, was approached by a local govern-ment wishing to use his expertise gained as Li-thuania’s deputy environment minister duringLithuania’s accession to the EU. By deployinganaerobic digesters with combined heat andpower units attached, Emilis described how ci-ties could reduce the amount of landfill, feedgreen power into China’s electricity grid andproduce high quality fertiliser.

Emilis approached myself and Dr Steph-ane Grand to form Mint Power so that wecould develop anaerobic digestion plants acrosseastern China. At the time Dr Grand and Iwere helping to finance energy efficiency pro-jects through his company SJ Grand Financial& Tax Advisory, based in China.

Since then we have been negotiating

with six cities of around one million inha-bitants in China’s eastern provinces. Citiesof this size are more receptive to new ideas,have less bureaucracy and are largely igno-red by Chinese and foreign investors. Wehave found that the reception we receivefrom officials has been overwhelmingly po-sitive, and the already large market for thistype of waste management system is set togrow over the coming years. According tothe World Bank urban areas of China ge-nerated about 190 million tonnes of MSWin 2004, and by 2030 this amount is projec-ted to be at least 480 million tonnes, nearlydouble the amount the United States.

Our chosen methodology is dry anaerobicdecomposition of kitchen waste, and we areengaged in a tender process with a number ofEuropean firms with different digestion tech-nologies. Dry anaerobic digestion is particu-

larly suited to Chinese waste because of itshigh organic content, and is a cheaper solutiondue to its relative lack of moving parts. Anae-robic digestion produces bio-methane whichcan be burnt in combined heat and powerplants of around 2MW in size to gain reve-nues from China’s feed in tariff for bio-energypower. Since December 2009 Chinese gridcompanies must buy biogas electricity at a rateof 0.61 RMB per kilowatt hour, approxima-tely €0.06.

Revenues also come from fees that wouldotherwise have to be paid to the landfill com-pany, and from selling the fertiliser that is leftover after waste digestion. Currently the ave-rage cost in China for waste disposal is 60RMB/ton and 200 RMB/ton in Shanghai.Carbon Emission Reduction credits (CERs)through the Clean Development Mechanism(CDM) provide a bonus layer of income ontop, and decent changes to CDM ownershiprules in China allow Hong Kong investors toclaim CERs for biogas projects. However, thekey to these projects are that they are com-mercially viable without carbon subsidies.

The six proposed 2MW plants are the firststage in a much larger roll out of dry decom-position biogas plants – according to theMcKinsey Global Institute in 2005 there were173 cities in China with a population of 0.5mto 1.5m with 280 such cities expected by 2025.

We are currently looking for bridging fi-nance to enable the projects to be fully develo-ped before being sold to a number of interestedinvestors.

Quote

Waste to energy – working with chinese governments to find european solutionsby Tristan Edmondson

To feed the country’s rapid economic growth electricityconsumption increased by14.56 percent in 2010 to well over4.19 trillion kWh, according to the China ElectricityCouncil. However, in 2010 capacity grew by only 10 percentand brown-outs are a common problem in China’sindustrial heartlands. The coal price shows no sign ofdeclining either, and the environmental and health effects ofburning it are costing China’s economy dear

photo credit:EPA/MARK

Tristan Edmondson

Workers recycle plastic waste at a centre in in Shenyang, northeast China 19 October, 2010. An estimated 10 million pe-ople work in the recycling industry in China, processing upwards of 100 million tons of plastic waste annually.


CHINANEW EUROPE


The continued integration of Europeanand Chinese business practices can “onlyhave huge potential for both markets”,Yin Zonghua, Minister Counsellor of theMission of the People's Republic of Chinasaid in Brussels at the end of January.

He was speaking on the occasion ofthe assessment of five years of the EU-China Managers Exchange and TrainingProgramme (METP), a joint initiative ofthe European Commission and the Chi-nese government, which aims to facilitatethe exchange of ideas and best practicebetween entrepreneurs and business peo-ple form both territories. The programmewas initially set up in 2006, and is due toend in March of this year.

The programme has been highly suc-cessful, says Yin Zonghua, in “giving aboost to a new round of trade between theEU and China”, as well as fostering betterrelations. However, he says, things are stillnot perfect; “there is still an inadequateacknowledgement of each other's culture,and way of doing things”.

Despite these words of warning, theprogramme can lay claim to some succes-ses. Its ethos of promoting bilateral co-operation fits in perfectly with the wantsand needs of both the EU and China. Ac-cording to a METP statement, “While

the EU and China become increasinglyco-dependent trade partners, a growingnumber of Chinese policies still restrictthe investment possibilities for Europeancompanies in China. To successfully enterthis challenging market, comprehensiveknowledge and targeted preparation isvital for European companies and theirmanagers. On the other hand, Chinesepolicies strongly encourage foreign inve-stments by Chinese companies. As inter-national competition for such Chineseinvestments steadily intensifies, Europemust position itself as an attractive inve-stment location in order to be on the re-ceiving end”.

The METP, set up to enhance busi-ness relations between China and the EU,is a ten month programme which focuseson executive management training andwhich takes place in both China and theEuropean Union, where 24 member sta-tes are participants (the three exceptionsbeing Cyprus, Luxembourg and Malta).Since 2006 about 450 managers from Eu-rope and China have participated in theprogramme.

China, which accounts for around7.5% of the global economic activity, hasbeen the EU's largest trade partner since2004, a fact that the METP has been keento capitalise on. Funded to the tune of €23

million by both the EU and China (€17and €6 million, respectively), the pro-gramme bills its long-term aim as an op-portunity to “enhance and sustainablyimprove the EU's relationship with Chinathrough exchange and economic co-ope-ration”. It values the importance of inter-national networks and interculturalknowledge, and understands that “inChina a new generation of enterprises andorganisations is interested in broadeningthe scope of its managerial expertise aboutEurope”.

Fundamentally, says Stefan Hell, anMETP Team Leader based in Beijing, theprogramme is “all about learning”, which,he says, should not be thought of a some-thing “superficial”. Instead, “through un-derstanding language and culture, we canlearn something about China, and also so-mething about Europe”.

The programme, he says, supports thereform process in China, and over theyears has taken in a wide range of enter-prises from sectors including environ-mental protection, renewable energy,computing and IT and agriculture. ForHell, the key to METP is “promoting un-derstanding”.

And it is this promotion of understan-ding that is a “necessity if we are to meet

Quote

Better mutual understanding key by Cillian Donnelly

The METP, set up to enhance business relationsbetween China and the EU, is a ten month programmewhich focuses on executive management training andwhich takes place in both China and the EuropeanUnion, where 24 member states are participants (thethree exceptions being Cyprus, Luxembourg andMalta). Since 2006 about 450 managers from Europeand China have participated in the program

Cillian Donnelly

Participants in the EU-China Managers Exchange and Training Programme, 2007

the demand for EU-China co-operationin improving management and intercultu-ral exchanges”, agrees XU Liang, Directorof the Division of European Affairs atCCPIT and METP Project director inBeijing. As the economy expands, Chinais now the second largest in the world,“there is more of a need for attracting po-tential investors”, he says, particularly Ch-inese investors in Europe.

The economic relationship betweenEurope and China has developed quickly,and must not be allowed to dip in mo-mentum, he says. “The economic bondbetween the EU and China has developedextraordinarily fast. Two decades ago,there was almost no trade at all betweenChina and Europe. Today, we form the se-cond biggest economic relationship inworld”. Therefore, programmes such asthe METP are needed to keep the part-nership fruitful and moving forward,“METP highlights a very importantaspect of the Sino-European relation-ship”, he says. “Confidence in one another.Building that confidence will be the key ifwe are to continue to develop a deep andlasting relationship. International net-works and intercultural knowledge havebecome an increasingly important assetfor successful trade relations. This deve-lopment specifically applies to China and

the European Union”.The EU-China Managers Exchange

and Training Programme builds on workthat begun in the 1980s with Japan, andout of the desire to improve upon mana-gement training programmes that weredeveloped in the late 1990s, explainsFranz Jessen, the Head of the China Unitat the newly-formed European ExternalAction Service (EEAS). For Jessen, pro-grammes like these are “instrumental”building relations between the EU and itstrade partners. Despite the METP co-ming to an end, he says that the European

Union remained committed to focusingon human resources development, espe-cially in the field of language training, inthe context of the EU’s business relationswith China.

In the past 12 years, he says, EU-Chian relations have taken a huge stepforward. Trade, too, was “on differentscale”, about a fifth or sixth of what it isnow. Today around 1.5 million Chinesemen and women come to Europe eachyear either to work or follow the touristtrail. But, despite this evolving relation-ship, which appears to be on the up, there

is “still a need to do much, much more”.With the formation of the EEAS, says

Jessen, comes the “possibility to further enh-ance education and training”. But this kindof education should not just be confined torecent graduates and young entrepreneurs.It can start earlier; “we can get a broad baseof young people, and their skills”, somethingwhich can help close what Jessen calls the“conceptual gap”, and which Jessen definesas “the different things we think aboutwhen we discuss the same issue”. He citestrade unionism as an example. It is, he says,“important to get closer to each other”, andimportant to create a “harmonious society”.

Despite the METP coming to an end,there still exists a desire to maintain andevolve business relations between the EUand China from both sides. Summing upthe work of the METP, and possible futeavenues, Yin Zonghua, argues that “Weshould have more programmes like this inwhich young professionals from Chinaand the EU meet to promote mutual un-derstanding, explore potential businessopportunities, and help deepen further theeconomic and trade relations betweenChina and the European Union”. Thank-fully for the Minister Counsellor, many inEurope, and in China, appear to agree.


CHINANEW EUROPE


to better EU-China business relationship

QuoteThe economic relationship between Europe andChina has developed quickly, and must not beallowed to dip in momentum, he says. ''Theeconomic bond between the EU and China hasdeveloped extraordinarily fast. Two decades ago,there was almost no trade at all between China andEurope. Today, we form the second biggesteconomic relationship in the world

Team building: Entrepreneurs from China and the EU have a lot to teach each other


CHINANEW EUROPE


By the end of 2008 China may have installedonly a total of 140 megawatts (MW) of solarphotovoltaic (PV) energy, but with plans to in-stall 1800 megawatts of solar capacity by 2020,this renewable energy source will help the coun-try meet its rapidly increasing energy demand.

Solar energy is not the leading source of re-newable electricity in China compared to the in-stalled capacities of hydro,wind, and even nuclearenergy sources, but current market conditionswill ensure growth in the solar sector.

Although the goal for installed solar capa-city by 2020 is only 1800 MW, the assistant di-rector for the Energy Research Centre, adepartment of the National Development andReform Commission in China, Wang Zhon-gying, said he believes that China will likely ex-ceed this goal by a great deal, and has potentialto install 10,000 MW or more by 2020 of solarenergy.

Solar energy in China mainly comes fromthe Gobi Desert, in the north-western part ofthe country. Solar energy ranks last in developedrenewable energy sources, but its importance tothe energy sector continues to grow.

As a country with such a large geographicarea and differentiated resources, this gives Chinathe advantage of harnessing different types of re-newable energy. Although solar energy is lar-gely produced in the north-west, it mainlypowers the more populous area of eastern Chinaand the country’s expansive cities, where electri-city demand is greatest.

Solar energy in recent years has taken off inlight of the financial crisis. The cost of develo-ping solar electricity declined by over 50% from

2006-2008 according to RenewableEnergy-World.com. The prices for the raw materialsneeded for production, including PV technologyfell, resulting in cheaper production prices. Thecost of polysilicon, another important materialin the production process fell by a stunning87.5% during the financial crisis. It was duringthis time that solar projects were eagerly beingdeveloped as electricity demand continued to riseand prices continued to fall.

Domestic solar projects in China have alsobenefited from generous government subsidiesprograms promoting solar development such asthe Golden Sun program. Local financial insti-tutions also tend to be friendly with domesticproducers of renewable energy, particularly incomparison with their European counterparts.

Decreasing costs and an increase in globaldemand for solar technologies such as solar pa-nels have allowed Chinese solar companies totake a larger role in the global market as well as

expand into new international markets. China currently owns 43% of the global sun

panel market. Their products cost on average20% less than similar European products.Shawn Kravetz, founder of an investment firmfocusing on Chinese solar companies, EsplanadeCapital, LLC reports that the Chinese proces-sing cost for solar technology is 30% less thanEuropean competitors.

It seems that the Chinese have attained anadvantage in the global market over both theUnited States and Europe through careful inve-stment in solar technologies at the best possibletime in the market for such products.

As the Chinese expand into new markets,exports of solar technologies have risen. 90% ofChinese modules have been exported to theUnited States and Europe. In 2010 alone, $6.6billion worth of solar panels were shipped just tothe United States, where solar companies are fe-eling the pressure from their advantageous com-

petitor. In 2010 the US Congress passed a law ban-

ning purchases of Chinese solar panels by theDepartment of Defense, citing the need to investin U.S. solar energy.

However, US solar energy companies are notinterested in staying in the United States as pro-duction costs continue to rise while the consu-mer cost of their products fall. The third largestU.S. solar panel manufacturer, Evergreen Solarannounced in early 2011 the closing of its USfactory to operate solely in China. They citedthe lack of financial support from the US go-vernment, and loss of profit from the increasingcost of the production process as well as lowerdemand for their products.

The rapidly increasing demand for electricityand energy provisions gives Chinese solar com-panies incentive to produce on a mass scale.Mass production of such products also providesthe advantage in exports and investment abroad.

The state-run Chinese Energy Conserva-tion Investment Corporation has been makingplans to finance and operate solar projects inGermany, Spain and Italy, according to the WallStreet Journal. The public investment body willfinance these projects with lines of credit fromthe Export-Import Bank of China.

As China continues to develop their solarenergy potential, it is likely they will surpass thelevels they have set for installed capacity in thefuture. The energy demand in China has faroutpaced that in Western countries, givingChina an incentive to further produce the vo-lume of clean energy sources that the rest of theworld does not yet have.

Quote

Solar energy pushes forward in chinaby Elizabeth Eckert

As a country with such a large geographic area anddifferentiated resources, this gives China the advantage ofharnessing different types of renewable energy. Althoughsolar energy is largely produced in the north-west, it mainlypowers the more populous area of eastern China and thecountry’s expansive cities, where electricity demand is greatest

photo credit:EPA/QILAI SHEN

Elizabeth Eckert

A visitor takes a rest while sitting beside a poster showing high-tension power lines at an alternative energy convention in Shanghai,China on 19 November 2009. China is heavily investing in its solar power sector as it announced that the government has decided tosubsidize 294 solar power plants which will generate 642 megawatts of power. The subsidies are part of China's "golden sun" plan, aproject meant to find alternative energy sources.


CHINANEW EUROPE


China is currently undertaking its biggest en-vironmental makeover. Its current fiver-yeareconomic plan, the twelfth in all, which runsfrom 2011-2015, contains many an effort toupend its traditional dependency on coal-firedpower, as well as its traditional image as a glo-bal polluter. The government has already de-clared it will reduce carbon emissions by40-45% compared to 2005 levels, which, ac-cording to the National Development and Re-form Commission, will mean ensuring that15% of energy production comes from alter-native sources by 2020. According to the latestestimates, the country is already half-way there.

To achieve its aims, this means China ha-ving to go above and beyond the spending ofthe last five-year plan, a figure which amoun-ted to 1.5 million Yuan. According to estima-tes, this would mean a 45% increase inspending if the stated carbon- reduction goalsare to be achieved. The fear, however, is that abubble – the kind that brought down the we-stern banks – could emerge, as new companies,keen to capitalise on this new venture will cap-size the market.

Those companies which spy money to bemade from energy efficiency technology are ina good mood right now. According to RayCheung, Principal of Dao Partners in an arti-cle published in Caixin Online, Chinese com-panies expound about 30% more energy thantheir western counterparts, which means thatthose who can offer energy saving solutionscan clean up right now. Energy efficiency, hesays, makes a “compelling case” for business in-vestment.

“Energy consumption is a cost and thus

users have an economic incentive to reducetheir energy expenditures by finding ways touse less energy. The potential for energy costsavings is particularly high in China given thatChinese firms have been estimated to consumeas much as 30 percent more energy than theirindustrialized peers for the same economicvalue of output. As a result, estimates for themarket value of China's annual energy savingsare in the trillions of Yuan with one estimate atover 3 trillion Yuan a year”.

To capitalise on this market potential, mayenergy service providers employ what is knownas Energy Service Company Business Model(ECSO), in which companies provide energysaving technologies to their customers at a mi-nimal (or, even, no) cost in return for cash sa-vings on energy bills, through an arrangementknown as an Energy Performance Contract(EPC).

In April 2010, the government announcedthat energy efficiency service providers would

enjoy tax exemptions, leading to a sudden in-crease in start-ups, and a boom in the amountof ECSO companies. The fear, though, is thatthese providers are untested. Potential clientsare, understandably, unsure of how to engagewith this new phenomenon.

According to Ray Cheung: “But as witheverything in China, nothing is as easy as itseems. First, the majority of ESCOs in Chinahave unproven EE technologies. As a result,potential users are not sure whether the pro-ducts and services offered by the ESCOs canactually reduce their energy costs, and are re-luctant to purchase them. Second are the pay-ment risks – in which many users are unwillingto share the energy cost savings with theESCOs even though they gained these eco-nomic benefits at little or no cost. Another ch-allenge is the length of the contracts – manyESCOs require paybacks from the users'energy savings for over 5 years to earn a decentprofit. As a result, the user may be out of busi-

ness before the terms of the EPC are comple-ted. To make things even more complicated,many of the ESCOs are small and mediumenterprises who lack the capital to finance theirEE technologies and services for their users.As a result, they cannot sell their products atscale”.

This makes for a potential future risk,with unscrupulous operators taking advan-tage of market loopholes and uncertainty,which in turn leads to companies failing tomake profits. But, says Cheung, with vigi-lance, and the correct business model, suc-cess can be achieved, and companies neednot be undone by bad business practices:“The keys to success usually include the fol-lowing core qualities: The most importantand obvious one is that the technologiesand services do actually reduce energy con-sumption. This requires that the EE(energy efficiency) companies in some wayguarantee the energy savings for the user.Another is the firm's arrangement with theusers, in which the economic benefits of theenergy savings are enjoyed by the user in adirect manner and create incentives for theuser to report and pay for the large energysavings. To protect itself from paymentrisks, the EE company must have a methodto prevent non-payment, usually throughsome technology solution or a shorter pay-ment schedule. Meanwhile, investors canhelp EE companies they invest in by fin-ding ways to provide some kind of user fi-nance. The EE companies that have suchstrengths will not only survive in China, butwill reap the profits and thrive”.

Quote

Energy efficiency: the new bubble?by Cillian Donnelly

The government has already declared it will reduce carbonemissions by 40-45% compared to 2005 levels, which,according to the National Development and ReformCommission, will mean ensuring that 15% of energyproduction comes from alternative sources by 2020.

photo credit:EPA/SHERWIN

Cillian Donnelly

A worker seen in the maintenance of solar panels in Chongming near by Shanghai, China, 23 October 2009. Withinthe next five years, China's total investment in new energy sector will reach 30 billion euros


CHINANEW EUROPE


European companies have broad kno-wledge of environmental, health and sa-fety issues and long experience inproviding environmental technology de-sign and consultancy services. They areglobal leaders in the field of environmen-tal services. Hereafter follow some bestpractices from our companies in China.

Bekaert and green technologies :drawing from experience…

Bekaert (www.bekaert.com) is a globaltechnological leader in its two core com-petences: advanced metal transformationand advanced materials and coatings, anda market leader in drawn wire productsand applications. Bekaert is present with amanufacturing platform in China sincethe early nineties. The company experien-ced significant growth in China in recentyears and operates 17 sites at 8 locationsthere (Shenyang, Weihai, Jiangyin, Wuxi,Shanghai, Suzhou, Chongqing, Huizhou),including 13 manufacturing plants, anR&D center and Engineering plant, a tra-ding company, and the Regional Head-quarters Bekaert Asia in Shanghai. Atpresent, 10 000 people are working forBekaert in China.

Like China, Bekaert’s activities in theregion have grown at a fast pace and con-

sequently our appetite for energy too.From the beginning we identified energyefficiency as a significant opportunity toquickly enhance the resilience and envi-ronmental performance of our companyand turn it into a competitive advantageeven.

In 2010 Bekaert actually grasped theopportunity of our local expansion tobuild the greenest steelcord plant ever inthe world, and the first of its kind in in-dustry in Shenyang. In order to build thegreenest steel cord plant, we pulled toge-ther the newest technologies for optimi-zed energy conservation, reducedenvironmental impact and enhanced

workspace comfort. Besides applying the newest technolo-

gies for energy-conservation to our ownproduction processes, we also put effort indeveloping products that help our custo-mers and end-users reduce their environ-mental impact. Bekaert’s core technicalcompetences in the areas of metal tran-sformation and coating technologies, ena-ble us to do so.

Several of our products are energy-sa-ving or contributing to emissions reduc-tion. Bekaert’s Dramix® Green steel fibersfor example, which are used to reinforceconcrete constructions, allow a reductionin the energy consumed per square meter

in the construction of industrial floors by43%, when compared to classical reinfor-cement solutions. Dramix® was used tobuild the Beijing and Shanghai PudongInternational airports as well as theCCTV Tower in Beijing, to name a fewexamples. Bekaert’s offering of the higheststrength steel cord enables our car andtruck tire customers to reduce the amountof steel in a tire by more than 10%, the-reby lowering the weight and also the rol-ling resistance of a tire, having animportant effect on fuel consumption. Inaddition, we develop a range of productsthat are used in the solar and wind energysectors.

‘Green innovation’ is indeed a recur-rent and common theme in many of Be-kaert’s research and developmentprograms. Much of the technology deve-lopment executed in our R&D center inJiangyin is aimed at helping our Chinesecustomers in the automotive and renewa-ble energy sector to improve their envi-ronmental performance and their energyefficiency too.

UMICORE - Bringing clean technologies to China

Umicore is a materials technologygroup. It focuses on application areas

Quote

Best Practices from European by Bert De Graeve

'Green innovation' is indeed a recurrent and commontheme in many of Bekaert's research and developmentprograms. Much of the technology developmentexecuted in our R&D center in Jiangyin is aimed athelping our Chinese customers in the automative andrenewable energy sector to improve their environmentperformance and their energy efficiency too

photo credit: . EPA/LUCAS DOLEGA

Bert De Graeve

President of EADS, Louis Gallois (R) delivers a speech as Chinese Vice President On Construction and Materials Frankie Wong(C) and President of Schneider Electric Jean Pascal Tricoire (L) listen while attend the symposium 'Europe/ China: Facing ourcommon challenges' organised by the French directorate-general of the Treasury at Bercy, in Paris, France 16 June 2010

where it knows its expertise in materialsscience, chemistry and metallurgy canmake a real difference. Its activities arecentred on four business areas: Catalysis,Energy Materials, Performance Materialsand Recycling. Each business area is divi-ded into market-focused business units, beit in products that are essential to every-day life or those at the cutting edge of newtechnological developments.

Umicore generates approximately 50% of its revenues and spends approxima-tely 90 % of its R&D budget in the area ofclean technology, such as emission controlcatalysts, materials for rechargeable batte-ries and photovoltaics, fuel cells, and pre-cious metals recycling. Umicore’soverriding goal of sustainable value crea-tion is based on this ambition to develop,produce and recycle materials in a waythat fulfills its mission: materials for a bet-ter life.

The Umicore Group has industrialoperations on all continents and serves aglobal customer base; it generated a tur-nover of € 9.7 billion (€ 2.0 billion exclu-ding metal) in 2010 and currently employssome 14,400 people.

Umicore set up its first commercial of-fice in China in 1982 and has not stoppedexpanding since. It now has an extensivepresence in China, comprising 12 indu-strial plants and 6 commercial officesoverseen by its regional headquarters inShanghai, employing about 2,000 people.

Umicore’s recent investments prove

Umicore’s ongoing commitment to bothChina and environmentally friendly pro-ducts and processes. For example, auto-motive catalysts started being used inChina in 2002, and Umicore launchedproduction in China (at its Suzhou site)in 2005, trippling capacity since. Umicoreis also constructing a technology develop-ment centre in Suzhou, including test ca-pability for heavy duty diesel applications.

Umicore is also expanding productioncapacity for Li-ion (cathode) materials atits Jiangmen site to support not only con-tinued growth in battery materials de-mand related to portable electronics, butalso new applications such as hybrid elec-tric vehicles and power tools.

Umicore’s expansion in China provi-des a perfect fit with the Group’s Vision2015, focusing on such growth drivers asrechargeable batteries, emission abate-ment, recycling and photovoltaïcs.

VITO’s experience in China The Flemish Institute for Technologi-

cal Research (VITO) conducts customer-oriented contract research and developsinnovative products and processes in thefields of energy, environmental protection,materials, and remote sensing and earthobservation processes. It does this both forthe public and the private sector. Centralto all projects are the protection of the en-vironment and the sustainable use ofenergy and raw materials.

VITO counts approximately 600 hi-

ghly qualified scientists from diverse spe-cialisations and collaborates with industrialcompanies within and outside Flanders. In2010 the total VITO budget was 92 mil-lion euro of which the contribution bycontract research was 55 million euro.

While VITO, the Flemish Institutefor Technological Research, may haveFlanders in its title, this in no way restrictsthe research centre's geo¬graphical scope.

In fact, for a knowledge centre such asVITO, internationalisation is not anoption; it is the only logi¬cal path to fol-low. Dirk Fransaer: “VITO intends to be-long to at least the European top in anumber of research areas. We can only layclaim to this title if we attract and developsufficient international and internationallyrecognised talent. Hiring top researchers,however, is only possible if you yourselfare also an international player. It helps ofcourse when the research areas in whichyou are active also have global relevance.In VITO's case, no doubt is possi¬blehere. Cleantech, the common thread run-ning through our activi¬ties, is also thekey to solving many problems worldwide.Think of the fight against global warmingand the evolution of the energy sup¬ply:we have a lot to offer in this area. VITO isable to compete with the large internatio-nal players in a number of research areassuch as sustainable energy and spatial mo-delling. ”

VITO has been taken recently a si-gnifi¬cant step in China with the es¬ta-

blishment of VITO Asia in Hong Kong.The establishment of a subsidiary inChina should be considered as a logicalsequel to former cooperation projects du-ring the last five years in China. All ofthese projects were conducted in coopera-tion with a local scientific partner or alocal environmental authority and co-fun-ded by the EU or the Belgian or FlemishGovernment.

The applied Vito’s expertise was mo-stly about remote sensing technology(agricultural crop monitoring, desertifica-tion monitoring) and air quality modeling(urban air quality management).

“This subsidiary will be par¬ticipatingin two joint ventures with Chinese Anti-pollution (in turn a subsidiary of the Ch-inese hold¬ing ALB, ed.). The firstcollabora¬tive effort concerns environ-men¬tal studies.

The second joint venture exam¬ineswhether sustainable electric¬ity can beproduced at an oilfield in China using ge-othermal energy. In this project, ground-water with a temperature of 130 to 140 °Cwill be pumped and the heat con¬vertedinto electricity. This repre¬sents a nicepoint of contact with the feasibility studyon geother¬mal energy that VITO is pre-sently conducting in the Kempen regionin Flanders.”

These and many more European tech-nologies will contribution to the furtherdevelopment to China’s green innovationdrive.


CHINANEW EUROPE


companies in China

Hungarian Minister of Economy Janos Koka (2-L), Speaker of the Hungarian Parliament Katalin Szili (3-L) and China's top legislator Wu Banggu(4-R) talk during the Hungarian-Chinese Business Forum in the Parliament building in Budapest, 24 May 2007 |EPA/ATTILA KOVACS HUNGARY OUT


CHINANEW EUROPE


Beijing celebrated the official end of the springfestival at full moon with city-wide fireworkson 17 February. In Chinese astrology the rab-bit year started on 3 February and stands forharmonious and quiet months to come. It hassucceeded the year of the fearless but fieryTiger. Many people in China and the North-ern provinces in particular will remember theTiger Year as a dry Tiger, putting the environ-ment and society under extreme, long-lastingwater stress. Unfortunately, the Rabbit has inh-erited the Tigers drought and the frost whichare China’s severe climate and weather risksduring this year’s spring festival period.

Frost in Central and South China has dis-rupted the beginning of the annual Spring Fe-stival travel rush, with temperatures reachingtheir lowest since 1961 in Guizhou, Hunanand Hubei provinces. Spring Festival is themost important Chinese festival for family re-union. People return to their homes, often th-ousands of kilometres away from work orstudy, to have a reunion dinner with familieson the New Year's Eve. Its importance can becompared with Christmas break in Europe orThanksgiving in the US. The only difference:it is often the only paid leave for workers thro-ughout the year and the travel season, or Ch-unyun (spring transportation), is an annual teston China's transportation systems with 300million passengers who spend several days inovercrowded buses or trains. Fortunately, thisyear’s travel season has not been hit as badly asin 2008 when millions of passengers got stuckin railways, buses, or stations for several weeksduring an extreme snow and frost disaster.

Several frost warnings have been publishedby the China Meteorological Administrationthis year for large parts of Central and SouthChina. In January, freezing rain has swept

south China's Guizhou Province, Hunan Pro-vince and Guangxi Zhuang Autonomous Re-gion.

Beijing’s 20 million inhabitants will re-member historical period of no rain. The capi-tal city did not receive any rainfall in nearlyfour months. Since last October, North Chinaand the Yellow-Huaihe River valley have seencontinuously less rainfall up to 90% below ave-rage which led to drought in China’s eight im-portant winter growing areas in Shandong,Henan, Hebei, Shanxi, Anhui and Jiangsu, Sh-aanxi and Gansu and left some 7 million hec-tares or farmland short of water supply. EastChina's Shandong Province, one of the coun-try's major grain producers, recorded the worstdrought in 200 years.

Large-scale drought relief works have star-ted when the meteorological drought becamean agricultural drought this year months ago.China's central and local governments havesupported the irrigation of more than 1 mil-lion hectares of winter wheat farmland by dig-ging more than 10,000 wells and carrying360,000 cubic meters of water.

The reason for the long-lasting drought

can be found in the above-normal strength ofthe cold air which affects China during winter(the winter monsoon) and below-normal moi-sture conditions from the South, in brief byanomalous Arctic Oscillation and La Niña. InJanuary, the atmospheric circulation in themiddle (Central China) and high (NorthChina) latitude areas of the northern hemi-sphere produced the typical winter monsooncold and dry airflow from North to South. LaNiña, the phenomenon describing cold oceansurface temperatures in the South Pacific, ca-used that the subtropical high in the North-west Pacific Ocean was weaker than it isusually in January. Less moisture entered theatmosphere over China from the PacificOcean and the moisture from the Bay of Ben-gal was blocked by the strong cold air flow in-stead of reaching areas North of the YangtzeRiver which would be usual this time a year.

Since February, the atmospheric circula-tions in middle and high latitude areas have ad-justed. The Arctic Oscillation turned to apositive phase and weakened the northern coldair. The moisture from the Bay of Bengal ente-red China which resulted in two rounds of

snowfall between 9 and 13 of February. Theyhave brought some short relief for the drought-hit areas of Beijing, Tianjin, Hebei, Shanxi, Sh-andong, Henan, Anhui, and Jiangsu. The areathat suffered from severe drought has decrea-sed. Although some light rainfall is predictedfor next week, irrigation is further required toavoid larger damages to the winter crops.

China’s climate is controlled by the winterand summer monsoon and the country hoststhe basins of the third and fifth longest riversin the world, the Yangtze and the Huanghe.Drought, flood and other climate or weatherextremes have always belonged to China andhave been reconstructed by quaternary scien-tists for thousands of years and even histori-cally documented for the last two thousandyears by the imperial bureaucracy. However, inthe last Tiger Year, 2010 in Western analogy,China suffered the most severe weather-cli-mate events in decades. Severe high tempera-ture and severe rainfall happened in higherfrequency, higher intensity and in larger scope.Different from historical records they happe-ned more simultaneously. In autumn, only halfof the average number of Tropical Cycloneshas developed in the West North Pacific, butthe double number has made landfall onmainland China. Extreme weather last year ca-used more than 4,800 casualties and resulted indirect economic losses of more than 500 billionyuan (€56 billion).

Climate change is projected to increase thefrequency and intensity of climate and wea-ther-related hazards in China, imposing morerisks to a society that has been emerging on itspath to sustainable development. Many peo-ple hope that the weather conditions developto what the Year of the Rabbit is supposed tobring: harmony, quiet and balance.

Quote

China’s year of the rabbit inheritsthe tiger’s drought and frostby Dr. Marco Gemmer

Climate change is projected to increase thefrequency and intensity of climate and weather-related hazards in China, imposing more risks toa society that has been emerging on its path tosustainable development

photo credit:EPA/DIEGO AZUBEL

Dr. Marco Gemmer

Acrobats perform outside a Daoist temple during a temple fair in Beijing, China, 06 February 2011. Chinese people are celebratingthe lunar year of the Rabbit which began on 03 February 2011

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EU-China Year of Youth 2011

Why?The EU and China have declared 2011 as the EU-China Year of Youth with a view to "further promoting and deepening partner-ship between Europe and China". The Joint Statement of the 12th EU-China Summit held in Nanjing on 30 November 2009 alsofocused on "strengthening exchanges and cooperation on cultural relations" and on pushing forwards the "dialogue mechanism oneducational policy". Youth exchanges cooperation is a key area to strengthen people to people contacts and to promote dialogue, mu-tual tolerance, intercultural awareness and solidarity beyond borders, contributing to break down prejudices and stereotypes andhelping to build up societies based on common understanding and respect. The training of those active in youth work and youth or-ganizations as well as exchanges of experience, expertise and good practices in the field of youth also contributes to promote youthactivities and may lead to the establishment of networks, high quality projects and long-lasting partnerships in the field of youth.

Who?Young people from the EU and China will be participants in the flagship events, but will also be important for the implementationof partnership processes throughout the year.

Where?The flagship events will take place in China(Beijing and Shanghai mainly) and in Europe(Brussels mainly). Other events will be or-ganized by youth organizations throughout the regions and new media tools shall ensure wide participation from both sides.

How?The year will be implemented through five different categories of events.a) Flagship eventsb) Partnership programmesc) Youth highlight programmesd) Youth policy dialoguee) Media and publicity programmes

Tentative calendar of events

Date Location EventJanuary Brussels Opening CeremonyFebruary Beijing Opening CeremonyMay 9-15 China EU-China Youth culture WeekEnd of May Brussels and around Europe European Youth WeekAugust Shenzhen EU-China Youth Festival for UniversiadeSeptember Brussels II Youth Convention on VolunteeringNovember Beijing Closing Ceremony

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Greening Economies - China