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The development of clean energy still relies heavily on government help. The clean energy industry and related technologies are rapidly developing in many countries, whose governments offer favorable policies including financial support. According to the American Recovery and Reinvestment Act, which the United States passed in 2009, the United States will invest $150.7 billion in the clean energy industry from 2009 to 2014, three times more than that from 2002 to 2008. In 2011, U.S. investment in clean energy skyrocketed to $55.9 billion, surpassing that of China. In both 2009 and 2010, China's investment in the clean energy industry and related technology research was the biggest in the world. The development of clean energy also depends on factors such as the international community's growing focus on climate change. The EU, which has a highly developed economy and a keen sense of environmental protection, has set high targets for carbon dioxide emissions reduction and clean energy development. It plans to cut 20 percent of greenhouse gas emissions from 1990 levels and to make renewable energy 20 percent of its total energy consumption by 2020. Moreover, it has established the biggest international carbon emissions trading system in the world. Unfortunately, many EU members, such as Spain, Italy, Germany and the Netherlands, have to reduce government subsidies to renewable energy projects because of the ongoing debt crisis and economic recession. The EU also tried extending its emissions trading system to the aviation industry in early 2012, but the plan didn't go over well due to other countries' objections.
Some countries like Germany and Japan have decided to suspend or shrink nuclear power programs and refocus on other kinds of clean energy development after radiation leaks last March in Japan's Fukushima Daiichi Nuclear Power Plant. But it is impossible to realize clean energy development within such a short time. These countries' demand for fossil energy will inevitably rebound.
Competition in clean energy production and technology research is fierce. Therefore, some countries' growing trade protectionism has become an obstacle to the global clean energy industry's healthy development. Western countries' economic recovery pace is slow in the wake of the global financial crisis. Growing trade protectionism has caused some trade disputes in the clean energy sector. The EU decided to levy anti-dumping and anti-subsidy tariffs against biodiesel imports from the United States in July 2009. The United States has imposed punitive tariffs on Chinese clean energy products such as solar panels and wind towers.
China's green economy has developed very quickly, and clean energy, such as hydropower, wind power and solar energy, occupies a big part of China's energy consumption. The country's nuclear power plants under construction account for about 40 percent of the world's total.
However, there is still a wide gap between China and the developed world in terms of energy use efficiency, service, technology and infrastructure construction. According to The Washington Post, most of China's green energy investment is used to produce green energy for Western countries. For example, China produced 50 percent of the world's solar panels in 2010, but only 1 percent was used domestically. A Citibank study found that one third of China's wind power is not used, and many wind turbines are not linked with the power transmission network.
These facts highlight the need for China to follow a market-oriented approach when developing a green and low-carbon economy. The Chinese Government should also encourage the public as well as private enterprises to participate in efforts to increase energy efficiency and reduce carbon dioxide emissions. The government needs to cut subsidies to clean energy production, while providing more funding for clean energy research. Only by decreasing the cost of clean energy can China increase the competitiveness of its clean energy industry and promote its sustainable development.
The author is deputy director of the Institute of World Economic Studies at the China Institutes of Contemporary International Relations
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