SHEN Lei, CHENG Shengkui, and XU Zengrang

Coal mined in China produces more of China’s energy than any other fuel, but it is not a renewable resource. Hillsides have been stripped by coal mining, depleting the supply, and China’s coal-dominated energy structure has caused substantial impacts on the environment. PHOTO BY JOAN LEBOLD COHEN.

With increasing energy demand and limited conventional energy resources, China is recognizing the need to develop renewable energy. In 2007, the consumption of renewable energy accounted for 8.5 percent of the country’s total primary energy consumption. In order to improve renewable energy development, the government has taken a series of countermeasures and has issued some related regulations.

China is one of the largest energy production countries in the world; it is also one of the largest energy consumption countries in the world. In 2007, China’s total commercial energy production reached 2.35 billion tce (ton-of-coal equivalent) among which coal production accounted for 76.6 percent; crude oil 11.3 percent; natural gas 3.9 percent; and the aggregation of nuclear power, hydropower, and wind power generation 8.2 percent. In terms of consumption, in 2007, China’s aggregate energy consumption reached 2.66 billion tce, 7.8 percent more than in 2006. Of the total consumption, coal accounted for 69.5 percent, while petroleum accounted for 19.7 percent; natural gas accounted for 3.5 percent; and the aggregation of nuclear power, hydropower, and wind power accounted for 7.3 percent (NBSC, 2008). The net imported petroleum reached 184.8 million tons in 2007; the rate of dependence on import reached 50 percent. As a result of increasing energy demand, the share of coal in total energy consumption was increased by 0.1 percent from 2006 to 2007.

The United States is the world’s largest energy producer, consumer, and net importer. It also ranks eleventh worldwide in reserves of oil, sixth in natural gas, and first in coal (EIA, 2008c). In 2007, primary energy production in the United States reached 2.58 billion tce: coal accounted for 32.8 percent, natural gas 27.7 percent, crude oil 15 percent, NGPL (Natural gas plant liquids) 3.4 percent, nuclear electric power 11.7 percent, renewable energy (including hydropower, geothermal, solar/PV, wind and biomass) only 9.5 percent. Primary energy consumption reached 3.66 billion tce: coal accounted for 22.4 percent, natural gas 23.3 percent, petroleum 39.2 percent, nuclear electric power 8.3 percent, renewable energy (including hydropower, geothermal, solar/PV, wind and biomass) 6.7 percent (EIA, 2008b). The United States imported about 58 percent of the petroleum, which includes crude oil and refined petroleum products, that it consumed during 2007 (EIA, 2008a).

Challenges and Opportunities

China is facing many challenges concerning the production and use of traditional energy, which in turn are yielding great opportunities for expanding sources of renewable energy (Asif and Muneer, 2007). Energy, on one hand, is an important foundation for the development of China’s socio-economy. Since implementing the reform and expanding market policies in the early 1980s, the nation’s energy sector has made great achievements. Over past three decades, China’s energy supply has generally kept pace with the demands of the growing national economy.

The long-term energy bottleneck issues, on the other hand, have always existed in China. Since the sixteenth Chinese Communist Party Congress (CCPC) put forward the goal of building a well-off society, the initiative of all communities to promote economic development rose to an unprecedented level, and the pace of national economic development accelerated. As a result, since 2002, energy supply-and-demand problems have emerged again. For example, the coordination between the transportation, supply, and the demand for coal, electricity, and oil have become a great challenge. The phenomenon of “limited power supply” is occurring over large areas around the country owing to the shortage of coal power. Oil imports have increased greatly. It is widely acknowledged that the energy shortage has become a critical factor, limiting the nation’s socioeconomic development. In the long term, the energy issue will be one of the most serious problems facing China.

In terms of the current energy supply and demand, China is facing three main problems:

1 Extremely limited energy resources: China’s total proven reserves of conventional energy sources is about 820 billion tce. Its proven remaining exploitable reserves are 150 billion tce, about 10 percent of proven remaining exploitable reserves in the world. In terms of average energy consumed per capita, the China uses only 70 percent of the world average, while the petroleum consumed per capita is 10 percent of the world average, and natural gas consumed per capita is 5 percent of the world average. China’s hydropower resources are relatively abundant. Both the total theoretical capacity and economically exploitable capacity of hydropower are the largest in the world. It should be noted, however, that the exploration of hydropower resources is tremendously restrained due to the environmental impacts, floods loss, migration, and many other issues.

2 Dependence on coal, which is causing serious environmental problems: China is the world’s largest coal consumer, accounting for 40 percent of world consumption in 2007 (EIA, 2008b). Coal meets nearly 70 percent of China’s primary energy needs. At present, the coal-dominated energy structure has caused substantial impacts on the ecological environment. China ranks second in the world to the United States in carbon dioxide emission, while China’s emission of sulfur dioxide is estimated to be first in the world. Clean-coal power-generation technologies must be developed to gradually reduce the proportion of coal consumption in the overall energy structure.

3 Low technical levels in energy utilization and low efficiency of energy use: China’s fast economic growth is, to a large extent, dependent upon the great amount of consumption of various physical resources. The energy consumption per unit output in China is clearly much higher than international advanced levels. Coal consumption from coal-fired power plants per unit output, for examples, is 22.5 percent higher than other advanced levels in the world.

China, of course, will have a continuing thirst for energy. The World Energy Outlook 2007 published by the International Energy Agency forecasts that total energy consumption in China in 2015 will be about 2.85 billion toe (tons of oil) and about 3.82 billion toe in 2030 (IEA, 2008). In addition to restructuring its economic growth, increasing energy efficiency, and building an energy-conserving society, special attention continues to be given to the development and use of China’s abundant, inexhaustible, and environmentally friendly renewable energy resources.


In 2007, the consumption of renewable energy in China totaled 220 million tce, accounting for 8.5 percent in the total primary energy consumption (Zhao et al., 2008). But China has abundant renewable energy resources, and the potential for developi
ng and utilizing these resources is very great. The main types of renewable energies in China include hydropower, wind power, biomass energy, solar energy, geothermal energy, ocean energy, and others. Despite disagreement about hydropower internationally, it is widely agreed that small hydropower (SHP) is a valid source of renewable energy. In the case of China, those hydropower stations with a capacity of less than 50 megawatts fall into the SHP category.

China has the theoretical potential for ranking number one in small hydropower development, with resources are located in 1,600 counties (or cities) across thirty-one of China’s provinces (and provincial level municipalities, excluding the Taiwan, Hong Kong, and Macao). Small hydropower resources are particularly plentiful in southwest China, where over 50 percent of the total SHP resource base is located. China’s technology for hydropower station design, installation, and operation is quite mature, and it has installed more than 80 percent of its hydropower capabilities, with roughly a third coming from small hydropower sources (Shi, 2008), (REN21, 2008).

Wind resources are particularly rich in northeastern China, northern China, northwestern China, and the eastern coastal regions. By the end of 2007, Germany had the largest wind power capacity in world, while China ranked fifth, with over 158 wind power farms on the mainland. The manufacturing technology and capabilities of China’s wind power equipment have also greatly improved, as has the volume of their production.

China enjoys the availability of plenty of solar energy. Most of China’s land area is located south of 45°N latitude. Over two-thirds of China’s land area receives over 2,200 hours of sunshine per year, with a total solar radiation received by China’s land areas annually being equivalent to 1.7 trillion tce. At present, solar energy is mainly applied in two areas, solar thermal and photovoltaic (PV). By the end of 2007, China had installed PV power to supply electricity for residents in remote rural areas and for transport and communication stations.

In recent years, China’s solar water heater (SWH) industry has been developing very quickly and has already become quite competitive. China’s export of solar water heaters, boosted by demand in the international market, also rose. In 2007, China’s export value of solar water heater increased by 28 percent from 2006 to equal US$65 million (CBI, 2008).

Biomass energy resources mainly consist of wastes from agriculture and forest industries, industrial wastewater, animal and human manure, and municipal solid wastes. China is a major agricultural producer, and biomass wastes from agriculture are widely distributed, especially those from crop stalks. Fuel-wood forests, timber-processing industries, and other forestry sectors generate biomass waste of over 600 million tons annually, of which 300 million tons can be used in energy applications. The industrial wastewater and manure from livestock and poultry farms are a substantial source of biogas. China’s cities are predicted to produce about 210 million tons of municipal solid waste by 2020. Once land-filled and waste-combustion power generation technologies are implemented, the annual energy produced could be 15 million tce. According to preliminary estimates, the total exploitable annual capacity of biomass energy in China is 500–800 million tce from now to 2030 (NDRC, 2007).

China is currently undertaking research experiments for the production of solid and liquid fuels from biomass. Considering the technology for compressed biomass solid fuel that is under research and developed at Tsinghua University, solid biomass fuels combined with advanced combustion technologies hold great promise in satisfying the household energy requirements of rural people, making full use of biomass resources, as well as in improving living conditions in rural areas.

Geothermal resources have already played a positive role in supplying heat and hot water in China. Geothermal pump technology is considered to have a great future in heating systems for buildings.

In addition to hydropower, wind power, solar energy, biomass, and geothermal energy, other renewable energy resources include ocean energy and hydrogen energy. Ocean energy in China is currently focused on tidal power generation. Due to the limitations of resources and high costs, its use is not widespread.


Realizing the great importance and huge potentials of renewable energy, the Chinese governments have implemented a series of policies to promote sustainable development. At the level of macro-policies, the National People’s Congress had already promulgated China’s Renewable Energy Law by February 2005. Critical systems were established in the law: (1) a system of government responsibility, requiring the government to formulate development targets and strategic plans, and to guarantee measures for renewable energy; (2) a system of public cost-sharing (realized by a cost-sharing system of the grid), whereby all citizens will be required to share the extra costs associated with developing renewable energy; and (3) a system of punishment and reward, which was designed to encourage the entire society, particularly companies, to develop and use renewable energy, and has financially punished those companies and individuals that have not met the obligations set out for them in the law (NPC, 2005). In addition, some specific regulations, legislation, and standards to implement the law have been constituted. In particular, the medium- and long-term development plan of renewable energy in China was issued in 2007. Clearly, the legal system to develop renewable energy has built a preliminary foundation.

Some direct economic incentives have also been implemented to encourage the development of renewable energy industry in China. First, is the customs tariff relief. Customs duties on imported complete wind turbines are 6 percent, whereas duties charged on imported components of wind turbines is 3 percent. Second, some value-added tax (VAT) is waived. Currently, most renewable energy products are taxed at the full VAT value (unified VAT rate is 17 percent). The exceptions are rates of 13 percent for biogas generation, 8.5 percent for wind power, 6 percent for SHP, and 0 percent for municipal solid-waste power generation. A third incentive is loan savings. Discounted loans were aimed to support biogas projects, solar-thermal applications and wind-power generation technologies. The government offered a 50 percent discount on regular commercial bank-loan interest. In addition, the government made a limited number of low-interest loans available for SHP. Some wind companies have benefited from the discount loans for the first 1 to 3 years. Fourth, central authorities offered subsidies in research and development (R&D) and marketing demonstration, as well as some local subsidies for solar energy systems for homes and for small wind systems in rural regions.

In addition to the central governments incentives, local governments have also formulated their own preferable measures. For example, income tax from wind companies was waved for the first two years in Inner Mongolia, and from 50 to 200 yuan was subsidized to each home PV system or small wind turbine.


Ironically speaking, some barriers to renewable energy development have indeed existed in China. Although the Chinese government has issued some policies to promote the development of renewable energy over the past ten years, the share of renewable energy in the total primary energy consumption is still low. Breaking the barriers that obstruct renewable energy development in China will be significa
nt to China’s energy future.

First, the government must apply some incentive measurements to promote renewable energy in its initial stage. At present, the policy system to support renewable energy such as wind energy, bio-energy and solar energy is imperfect; the incentive measure is not enough, the implementing of policies is poor, and policies are unconnected. The absence of effective investment and financing mechanisms greatly restrain the R&D processes. Owing to the characteristics of high cost, diffuse distribution, small-scale and discontinuous production, most renewable energy still lacks competitive capability in comparison with conventional energy technologies. Therefore, an integrated, powerful, stable, effective stimulus combined with incentive mechanisms based in law is necessary for further development.

Second, the market mechanism is imperfect. As a result of the above-mentioned characteristics and the absence of a definite long-term target to develop renewable energy, a continuous and stable demand for renewable energy in China has not yet emerged. The driving force of the market is so limited that technological innovation of advanced renewable energy has moved slowly. A few technologies, such as SHP and solar water heater, have to some extent, realized commercialization after years of improvement, though their market share is still very small compared to their entire potential and total energy demand. To further expand the market, there is a need to decrease the production cost and improve technology reliability.

Finally, the technology and industrial system is still fragile. Excluding hydropower, solar water heaters, and biogas, the investment in R&D in most renewable energy remains low, and China’s production capacity is inferior to that of developed countries. In addition, some key technology and devices have depended on imports for many years, such as the PV module production lines and large wind turbines. Moreover, there are no professional, accurate and integrated evaluation systems, and there is no quality control system. The human resource training system and technology service systems are imperfect due to the shortage of communication, and dissemination of information about renewable energy.

It is clearly expected that the development of renewable energy has stepped into a crucial phase in China. In next twenty years, whether renewable energy can be developed on an industrial scale will depends on support of further preferable policies and market expansion.

Further Reading

Asif, M., & Muneer, T. (2007). Energy supply, its demand and security issues for developed and emerging economies. Renewable and Sustainable Energy Reviews 11, 1388–1413.

CBI. (2008). China solar water heater market report, 2008. Retrieved December 24, 2008, from http:www.chnci.comreports2008-05200852985417.html

Energy Information Administration (EIA). (2007, December 10). World energy outlook 2007: China and India insights. International Energy Agency. Retrieved December 24, 2008, from http:www.iea.orgtextbasespeech2007Cozzi_Bali.pdf

Energy Information Administration (EIA). (2008a). How dependent are we on foreign oil? Retrieved December 24, 2008, from http: onto.eia.doe.govenergy_in_briefforeign_oil_dependence.cfm

Energy Information Administration (EIA). (2008b). InternationalData. Retrieved December 24, 2008, from http:www.eia.doe.govemeuinternationalcontents.html

Energy Information Administration (EIA). (2008c). United States energy profile. Retrieved December 24, 2008, from http: onto.eia.doe.govcountrycountry_energy_data.cfm?fips=US

Energy Information Administration (EIA). (2008d). Industrial report of new & renewable energy of China [2008 Zhongguo xin nengyuan yu ke zaisheng nengyuan chanye fazhan baogao.] Guangzhou, China.

National Bureau of Statistics of China (NBSC). (2008). China statistical yearbook 2008. Beijing: China Statistics Press.

Renewable Energy Network for the 21st Century (REN21). (2008). Renewables 2007 global status report. Paris: REN21 Secretariat and Washington, DC: Worldwatch Institute.

Shi, D. (2008). The institutes and outlook of China’s renewable energy development (Zhongguo ke zaisheng nengyuan fazhan xianzhuang yu zhanwang). Retrieved December 24, 2008, from

Wang, Z. and Li, J. (2008a). Report of renewable energy industry of China 2007. Beijing: Chemical Industrial Press.

Wang, Z. and Li, J. (2008b). Report of renewable energy industry of China 2007 [Zhongguo ke zaisheng nengyuan chanye fazhan baogao 2007]. Beijing: Chemical Industrial Press.

Zhao, X., Wang, S. and Liu, Z. (2008). Renewable energy developed fast in China (Ke zaisheng nengyuan jinru kuaisu fazhan shiqi). Retrieved December 24, 2008, from http:
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Source: Shen, Lei, Cheng, Shengkui, & Xu, Zengrang. (2009). Energy, Renewable. In Linsun Cheng, et al. (Eds.), Berkshire Encyclopedia of China, pp. 720–725. Great Barrington, MA: Berkshire Publishing.

Power windmills along the Silk Roads route, Xinjiang Uygur Autonomous Region, near Korla, 1993. Wind resources are particularly rich in northeastern China, northern China, northwestern China, and the eastern coastal regions. PHOTO BY JOAN LEBOLD COHEN.

Solar panels harvest the sun’s energy at Beidaihe. Over two-thirds of China’s land area receives over 2,200 hours of sunshine per year. PHOTO BY JOAN LEBOLD COHEN.

Energy, Renewable (K?zàish?ng néngyuán ?????)|K?zàish?ng néngyuán ????? (Energy, Renewable)

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