Trends and Contradictions in China’s Renewable Energy Policy

Trends and Contradictions in China’s Renewable Energy Policy

China is the world’s leader in wind and solar power but a wave of coal power plant approvals and fewer public mentions of urban air pollution and climate change have raised questions about the future of China’s renewable power sector.

The following article by Columbia – SIPA examines China’s recent energy policy announcements and their implications for the 14th Five-Year Plan, which will set energy policy for the period from 2021–2025. 

They argue that the future of renewable energy deployment in China will be shaped by an ongoing contradiction within the power sector between long-term market-oriented reforms on the one hand and short-term administrative planning on the other. This contradiction is well represented in two draft laws issued in April and June 2020: the draft Energy Law and the draft Guiding Opinion on Establishing a Clean Energy Consumption Long-Term Mechanism. The former states that the country should prioritize development of renewable energy by opening the market to more players, while the latter puts grid companies, provincial officials, and incumbent generation companies in charge of all aspects of planning and target-setting.

The ways in which this contradiction will be resolved are unclear. China’s central government remains focused on promoting markets in the longer term, in part based on market models that have worked in Europe and the US, so international lessons and experiences could play a role. China’s power reform could benefit from a greater focus on including consumers and other market players, and greater emphasis of long-term over short-term planning. Such a shift would help ameliorate the current trend of over-investment in unneeded and uneconomic coal capacity at the expense of renewables.

To read the full report, download at the link below:

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