Renewable energy laws and policies in China in the context of climate change

Introduction

Surpassing the United States as the world’s largest carbon emitter in 2006, China's energy consumption has increased rapidly in recent decades due to its unprecedented industrialization and urbanization, which shows no sign of slowing down.^[1] The heavy reliance on coal, which accounted for around 60% of China’s primary energy consumption in 2018 and cannot be substantially changed in the near future, has rendered the control of carbon emissions a challenging task for the country.^[2] The trade-off between short-term economic benefits and long-term sustainable development presents a difficult challenge for the Chinese government.

There are three primary reasons for the increasingly widespread acknowledgement of the need to boost renewable-energy development in China. First, with mounting pressure to tackle environmental problems associated with the burning of fossil fuels, such as air pollution and global warming, renewable energy has emerged as a desirable alternative to fossil fuels. The public outcry in recent years against smog has given much urgency to the need for a cleaner growth path in China. It is also indisputable that China needs to be central to any serious global effort to address climate change. Second, the deployment and development of renewable energy can contribute to economic growth, since it brings opportunities for creating domestic jobs and increasing export growth. China and a rising number of other countries around the world have attached strategic importance to enhancing their competitiveness in the renewable-energy sector. Third, the gigantic energy demand and heavy reliance on imported fuels in China make energy security a significant issue that cannot be underestimated. Meeting energy

Renewable energy laws and policies 69 demand with renewable-energy resources will alleviate China’s dependence on foreign energy resources and, thus, its vulnerability to energy disruptions.

In this chapter, the focus is on lawmaking and policymaking by the Chinese central government, which is the key decision-making body in the country’s renewable-energy sector. The aim is to critically review the Chinese legal and policy framework for renewable energy and to explore how it could be improved to facilitate the transition to renewable energy and to mitigate climate change.

China has invested great efforts in developing renewable energy since the beginning of this century; even before that, a number of small-scale renewable energy programmes with the primary aim of addressing energy poverty in the rural regions were established in the mid 1990s.^[3] Particularly in the wind and solar photovoltaic (PV) energy sectors, remarkable achievements have been made with respect to both manufacturing and installed capacity.^[4] The rapid growth of wind and solar energy not only meets ever-increasing energy demand but also reduces carbon emissions that otherwise would have been generated by the burning of fossil fuels. The evolution of the policymaking and implementation processes over the past two decades in China's renewable-energy sector is of paramount research interest. Hence, the aim of this chapter is to analyse those developments.

The next section discusses the rationale for promoting renewable energy in China, consisting of environmental, economic, and energy-security reasons. Although addressing climate change was not the primary motivation for the government's renewable-energy development strategy, its importance has been increasingly recognized and factored into renewable-energy policymaking. A subsequent section details the laws and policies that have been promulgated to incentivize renewable-energy development in China in recent decades. The focus is on central-level laws and policies, which is not to downplay the fact that local governments have been increasingly active in designing and implementing rules and policies to facilitate renewable-energy development. The astonishing increase in wind and solar energy in China over the past two decades makes these two sectors an intriguing focus for an analysis of the evolution of laws and policies.

The rationale for promoting renewable energy in China

China's government has placed strategic priority on the development of renewable energy for a multitude of reasons, which merits an in-depth analysis. This section identifies three primary driving forces that have motivated China’s government to shape an enabling environment for the rapid growth of renewable energy: environmental, economic, and energy-security reasons.

Environmental reasons

Due to its long-standing heavy reliance on the use of coal to meet energy demands and promote economic growth, China has faced acute environmental problems, such as air pollution, which have caused adverse economic and health consequences.^[5] The rising public awareness of air pollution, as reflected in a number of high-profile mass protests, has pushed the need to develop renewable energy as a replacement for coal to the forefront.^[6] The reduction or phase-out of carbonintensive economic activities forms an essential part of China’s environmental action to solve the problem of air pollution. Put differently, reducing the use of fossil fuels, particularly coal, is not only an environmental issue but an important aim for domestic social stability in China.

Another environmental reason is the imperative faced by China to mitigate climate change, which is a worldwide straggle that cannot be advanced without China’s participation. In the commitment made by China in its Nationally Determined Contribution to the 2015 Paris Agreement, the country is to peak its carbon emissions around 2030 while making best efforts to peak early; it is also to achieve 20% non-fossil energy as a proportion of primary energy supply by 2030.^{[7] [8]} In practice, addressing climate change has gradually become an integral part of China’s renewable-energy strategy; and the ability of renewables to produce cleaner energy renders them a significant part of the solution to the pressing environmental problems that China needs to address.

Economic reasons

The development of renewable energy and the transition to a low-carbon economy can deliver substantial benefits in economic terms, such as export growth, employment opportunities, and tax revenue? The manufacturing of renewableenergy equipment, such as wind turbines and solar panels, has been designated as a strategic and pillar industry in China due to its huge potential in increasing economic and technological competitiveness.^[9] China can make use of its sizeable domestic market to achieve scale economies in a rapid manner.

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Sufang Zhang and others, ‘Interactions between Renewable Energy Policy and Renewable Energy Industrial Policy: A Critical Analysis of China’s Policy Approach to Renewable Energy’ (2013) 62 Energy Policy 342, 351.

Energy-security reasons

Serious energy-security challenges, such as energy supply risk and energy price fluctuation, have become acute problems in China. Since the global financial crisis of 2007-08, China has increased its imports of energy resources, and half of the oil that China consumes comes from foreign sources, especially from countries in the Middle East, Africa, and Central Asia.^[10] China has shifted from being an oil-exporting country in the early 1990s to one of the largest oil-importing countries in the world, with an oil-import dependency rate of more than 50%.^[11] Facing high growth in primary energy demand as well as high energy intensity, China’s reliance on foreign energy resources shows no sign of abating in the foreseeable future.^[12] The volatile international prices for oil, gas, and coal have caused renewed concern about energy security in China.^[13]

As an inexhaustible resource, renewable energy can provide a growing and vital contribution to energy security in two ways. First, the deployment and development of renewable energy in China can meaningfully reduce the country’s reliance on foreign energy sources and alleviate its vulnerability to price spikes. Second, China enjoys abundant renewable-energy resources that can be rapidly and efficiently developed. Therefore, facing an urgent need to alleviate dependence on foreign energy supply, China will need to develop renewable energy.

• [1] See ‘BP Statistical Review of World Energy’ (BP, June 2018) accessed 12 August 2019.
• [2] Feng Hao and Tom Baxter, ‘China’s Coal Consumption on the Rise’, China Dialogue (Beijing, 1 March 2019) accessed 12 August 2019.
• [3] Jinghn Fan and others, ‘The Development of China’s Renewable Energy Policy and Implications for Africa’ (2018) 394(4) IOP Conference Series Materials Science and Engineering, 2.
• [4] Christopher Dent, ‘China’s Renewable Energy Development: Policy, Industry and Busmess Perspectives’ (2015) 21(1) Asia Pacific Business Review 26.
• [5] Dominic Chiu, ‘The East Is Green: China’s Global Leadership in Renewable Energy’ (6 October 2017, Center for Strategic and International Studies) accessed 12 August 2019.
• [6] Ibid.
• [7] See National Development and Reform Commission (NDRC), ‘Enhanced Actions on Climate Change’ accessed 12 August 2019.
• [8] For a comprehensive discussion of the economic benefits that renewable energy development can bring, see IRENA, ‘Renewable Energy Benefits: Measuring the Economics’ (IRENA, 2016).
• [9] Kevin Lo, ‘A Critical Review of China’s Rapidly Developing Renewable Energy and Energy Efficiency Polices’ (2014) 29 Renewable and Sustainable Energy Reviews 508, 509.
• [10] Zhang Jian, 'China’s Energy Security: Prospects, Challenges, and Opportunities’ (Brookings Institution, July 2011) accessed 12 August 2019,2.
• [11] Guy Leung, 'China’s Energy Security: Perception and Reality’ (2011) 39(3) Energy Policy 1330, 1331.
• [12] Dent (n4), 33.
• [13] Zhang (n 11), 3.