China leads world in Clean Energy spend
OUT AND ABOUT: The clean energy sector has come to prominence through the Federal Government’s Clean Energy Initiative.
It may seem as if it is a new sector but the reality is that it has been around a lot longer than what many of us may realise.
Mention the clean energy sector to most people and their initial reaction would most probably be that they are waiting to see how this fledgling industry comes on.
In world terms the sector has been coming on for some time.
New investment globally in Clean Energy grew from US$52 billion in 2004 to US$186 billion in 2009.
Last year the total spend hit US$243 billion world-wide.
What is probably more surprising to learn is that China is one of the major drivers behind the clean energy space.
In 2009 the Asia / Oceania region overtook the United States in clean energy spending.
That feat was replicated in 2010 when it surpassed the clean energy spending of Europe.
In 2010 China was the number one country when it came to total clean energy investment.
This includes all aspects of the sector ranging from large wind farms to small scale solar cells.
Second was Germany with bronze going to the United States.
“Clean energy is an important part of China’s energy matrix,” Bloomberg New Energy Finance head of research Australia Seb Henbest told The Roadhouse at the Clean Energy Symposium in Sydney.
“They see it as a growth industry, globally in the components that make up that industry in the wind turbines and the solar panels.
“They have been very aggressive in what is, for them, an industrial policy at that level.
“We have tracked US$20 billion of investment, so far this year, in China and US$8 billion in the United States.
“This growth is not just a one-off; it has been going for a few years.”
China is ramping up on the manufacturing side of the industry but it is struggling to establish a foothold in the world market for its wind technology.
The majority of the wind industry happens outside of China ad it wants to sell its technology to the United States and to Europe and to Australia.
Right now though, its technology is not considered to bankable by those countries.
China is trying to demonstrate to the market that its wind technology does work so it is investing in the construction of a great deal of domestic capacity.
The idea behind this is to establish demonstration facilities in places like Australia and South America in order to leverage into the US and European markets.
“Wind turbines are big engineering projects and the Chinese industry has grown very quickly,” Henbest said.
“It is just a confidence in the technology. They are no different, in many ways to any number of wind manufacturers from Europe but they do have a bit of a patchy track record in terms of reliability, which has raised some doubt.
“We don’t think that doubt is going to last forever and once they have been able to prove their technology is as good as anyone else’s, in a global sense then that will also drive prices down.”
Like most things it manufactures, the cost of a Chinese wind turbine is significantly less than the cost of a European wind turbine.
However, world investment banks are requiring project developers to use, what they perceive to be, the more reliable technology to ensure they get their returns and that the project doesn’t fall over from a technology perspective.
As a result, China is working on demonstrating it does have reliable technology that is as good as that from Europe.
The Chinese push into the wind turbine industry is just one aspect that is providing momentum for the clean energy sector.
The benefits to the economy growth of countries around the world and security for the provision of power are also contributing factors.
Energy security is not a great issue for Australia, at this stage, but it is increasingly concerning for Europe and the US.
In Europe it is particularly acute because there are a lot of people using a lot of energy, a great deal of which is currently being generated in the Middle East and Russia causing ructions of instability.
This is a situation Europe is very keen to wean itself off that as much as possible so it can maintain control.
Another obvious factor is greenhouse gas emissions.
Henbest said there is, despite rhetoric to the contrary, global recognition by world leaders accepting scientific data that this is a major issue that needs to be acted upon.