The Chinese government recently declared that they are intending on placing a cap on their annual carbon emissions which will allow the individual provinces in China to regulate and plan their emissions more effectively. The hope is that this cap will provide a stable enough environment for the government to then introduce an inaugural carbon trading scheme which will further help push emissions down and generate capital to be invested in carbon mitigation schemes and renewable technologies. The introduction of a cap and trade scheme is hoped to reduce carbon emissions by between 40-45% below 2005 by 2020.
The Chinese government announced this on the back of record investment in renewable technology in 2010 overtaking the U.S. for the first time in 2010 with an astounding $54.4Bn being invested in the renewable sector. This compares with the US at $34Bn and the UK about a tenth of that at $3.3Bn. $54.8Bn equates to about 56,000MW of installed hydro power, 44,000MW of installed wind capacity and 800MW of installed solar power. The BBC reported that a total of $211Bn was invested globally last year with a 32% growth rate in the renewable sector. Using my back of the envelope calculation, this equates to the renewable market doubling every two-and-a-bit years, a formidable growth.
China, it would seem, is a good place to invest in renewable technology. So good in fact, that back in June of this year the World Bank awarded China and seven other countries grants to be used directly in organising, implementing and developing climate change mitigation technologies.
This all sounds very promising but, as with nearly every bit of good news, there is an important addendum which highlights a more subdued reality. Last year China emitted 7.7Bn tonnes of carbon equivalent which is a 13.3% increase on last yearâ€™s total. Since 2000 Chinaâ€™s CO2 emissions have risen by 170.6% and have been closely related to the countryâ€™s Gross Domestic Product growth. This is why the huge investment in renewable technologies is so important, as it is the only way to break the link between carbon emissions and GDP growth. In a world where GDP growth is king, the Chinese government could be showing the way in sustainable energy production and low carbon emissions.
The coming few years are going to be very interesting.