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Congressional Research Service, “China and the United States—A Comparison of Green Energy Programs and Policies,” April 30, 2014

This CRS article was written by Richard J. Campbell, a specialist in energy policy.
April 30, 2014

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China is the world’s most populous country with approximately 1.4 billion people. It has experienced tremendous economic growth over the last three decades with an average annual increase in gross domestic product (GDP) of 9.8% during that period. This has led to an increasing demand for energy, spurring China to more than double its electric power generating capacity in each of the last three decades, growing from 66 GigaWatts (GW) installed in 1980 to 1,100 GW installed as of 2011. Coal currently fuels about 66% of China’s electricity generation. However, the reduction of air pollution (caused in part by the burning of coal for electric power) has become a major public policy focus in China.

China has set ambitious targets for developing its renewable energy resources with a major push of laws, policies, and incentives in the last few years. The wind power sector is illustrative of China’s accomplishments, as installed wind power capacity has gone from 0.567 GW in 2003 to 91 GW in 2013; China surpassed the United States in 2010 with over 41 GW of installed wind power capacity. Notably, however, approximately 18% of that capacity was not yet connected to the power grid in 2013. Plans already exist to grow China’s wind power capacity to 200 GW by 2020. A similar goal exists for the solar photovoltaic (PV) power sector. Installed solar PV capacity rose from 0.14 GW as of 2009 to over 19 GW in 2013, with goals reported for 50 GW of solar PV capacity by 2020. Also, a hold on large- and medium-scale hydropower project development has been lifted, with a virtual doubling of hydropower capacity from approximately 200 GW of capacity to 380 GW planned by 2020. The 12 th Five-Year Plan (FYP) encompassing the years 2011 to 2015 has further formalized the link to green energy with specific deployment goals and investment. China recognizes that developing its domestic renewable energy industry and building its manufacturing capacity will help it meet energy demands at home and potentially win advantages in future export markets.

The key piece of legislation in recent years for advancing renewable electricity in China is the Renewable Energy Law of 2005. The law was designed to “promote the development and utilization of renewable energy, improve the energy structure, diversify energy supplies, safeguard energy security, protect the environment, and realize the sustainable development of the economy and society.” Renewable energy is subsidized by a fee charged to all electricity users in China of about 0.029 cents per kiloWatt-hour, and was originally based on the incremental cost difference between coal and renewable energy power generation.

However, energy efficiency and conservation are officially China’s top energy priority. These are considered the “low-hanging fruit” in the quest to reduce energy use and cut demand. Energy conservation investment projects have priority over energy development projects under the Energy Conservation Law of 1997, with government-financed projects being selected on “technological, economic and environmental comparisons and validations of the projects.” China is the world’s largest market for new construction, and new building standards have been in development since 2005 with national energy design criteria for residential buildings. In the power generation sector, many smaller, less efficient coal-fired power plants have been closed. The 11 th FYP targeted a 20% overall reduction in the energy intensity (i.e., energy consumption per unit of GDP) of the economy. The 12th FYP builds upon this goal, aiming to reduce energy intensity an additional 16% by 2015.

In contrast to China, some argue that the United States does not have a comprehensive national policy in place for promotion of renewable energy technologies, with some observers saying that the higher costs of renewable electricity are not conducive to market adoption. However, for both countries, the reasons for increasing the use of renewable energy are diverse, and include energy security, energy independence, cleaner air, and more recently anthropogenic climate change, sustainability, and economic development.

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