Columbia International Affairs Online: Working Papers

CIAO DATE: 06/2012

A greener shade of grey: A special report on renewable energy in China

May 2012

Economist Intelligence Unit


Fossil fuels will continue to dominate China’s energy mix, although renewable energy will carve out a bigger role. The large market for clean technology that this provides will give succour to firms in the sector—those, that is, that are able to survive their present difficulties. Most car owners want a vehicle that is responsive, reliable and environmentally efficient. In many ways, China’s aims for its energy supply are similar. Between 2001 and 2011, Chinese energy consumption grew by 136%. This rapid pace breeds concern in Beijing about the security of supplies, particularly oil imports from the Middle East. On top of energy-security worries are the human health and environmental problems that arise from China’s craving for fossil fuels. This is especially true for coal, which provided 66% of China’s gross domestic energy consumption in 2011, according to estimates by the Economist Intelligence Unit. Pollution is now a contentious issue in China’s major cities as the health costs of coal dependence become increasingly obvious. A desire to steal a march on rivals in the emerging clean-technology industry is another spur for China to build markets for locally-produced clean-tech equipment. Thus, China has ample incentives to “green” its predominantly grey energy mix. To this end, it is promulgating laws that climate experts consider progressive and setting a range of supporting targets. Policies are taking new and sometimes surprising directions, even as they bump up against ever bigger obstacles.