In 2011, RMI published an energy roadmap for the United States called Reinventing Fire. Its bold, integrated strategy would transition the U.S. off coal and oil energy by 2050 by aggressively deploying energy efficiency and renewables. Now RMI is embarking on an equally bold and aggressive initiative with important implications for the global energy landscape: conduct a similar analysis for China. Between October 2012 and June 2013, RMI staff—including chief scientist Amory Lovins, program director Jon Creyts, and manager Clay Stranger—traveled to Beijing four times to set up and launch the effort.
FEBRUARY 2013, BEIJING, CHINA
It is about a kilometer walk from the Forbidden City to Beihai Park. Halfway there your throat is burning and your eyes sting. Pacing yourself as you climb the hundreds of steps to the base of the ancient white pagoda, you keep your heart rate low, not wanting to further irritate your respiratory system. The blanketing smog hangs thick, visibility is limited, and by the time you reach the pagoda’s platform you can barely make out the temple gates less than 500 meters away. This winter, Beijing has seen some of the worst air quality on record; for the first time the pollution levels exceeded the 1–500 Air Quality Index, essentially breaking the scale.
The severity of the pollution, nearly all from burning coal and oil, hasn’t gone unnoticed. Chinese officials, international media, and Beijing residents have all called for action. Even China’s state-run media has been outspoken. During a recent peak smog event, a headline in the Party-run China Youth Daily read, “More suffocating than the haze is the weakness in response.” Chinese officials recognize the need to act decisively. This great energy challenge the country faces offers the opportunity to shift from fossil fuel supply to an efficient and renewable future while solving for pollution, public health, and energy security. With millennia of history of global leadership, China now has the opportunity to embrace that role yet again, helping to blaze a trail to a new energy era.
PAST AND PRESENT
The past two decades have seen China rise once again to global prominence, a position it occupied for much of the last two millennia. For 18 of the last 20 centuries, China has had the world’s largest economy, and from 1 AD through 1800 AD accounted for over 20 percent of global GDP. Spurred by advancements in technology, Western Europe and the Americas leaped ahead of China in the last two centuries, but China’s growth has reawakened. Expanding from 4 percent of the world’s GDP in the decades of Mao Zedong’s rule (1949–1976) to more than 15 percent today, China has realized growth rates of 7–9 percent per annum for the past decade. It is now the second largest economy in the world, and is projected to surpass the U.S. in absolute size before 2017.
Such rapid growth, made possible through diligent planning and closely controlled resource consumption, has allowed China to lift hundreds of millions of people out of poverty over the past few decades—something never before achieved on such a scale. At the same time, China managed to cut energy intensity by more than five percent per year for 25 consecutive years through 2001. Having departed from that trajectory for much of the first decade of the 21st century while it brought online energy-intensive heavy industries, China now appears on track to resume its prior trend of annual reductions in energy intensity. An experiment in building the world’s largest export engine may have run its course, and China’s gaze is turning inward to correct an economy that outgoing President Hu called “unbalanced, uncoordinated, and unsustainable.”
Enabled by industrialization and powered by rapid urbanization, China’s growth has brought with it the risks associated with pollution and resource constraints, but has also enabled parallel rewards, including poverty alleviation and the steeply dropping costs of manufactured goods, including renewable energy technologies.
The transition to an efficient and clean global energy future cannot happen without leadership from both China and the United States. Together the two nations account for about 38 percent of global energy use and 43 percent of global energy-related CO2 emissions. China recently surpassed the U.S. to become the world’s largest gross energy consumer and CO2 emitter, although the U.S. still uses and emits more per person. As the world’s largest energy consumer, China burned over four billion tons of coal in 2012—more than the rest of the world combined—providing nearly 70 percent of the nation’s total primary energy. During 2001–2011, China was responsible for 55 percent of global growth in energy demand. Such staggering numbers show the size of the challenge.
Yet despite having a heavily fossilized energy sector, China is also a world leader in renewable technologies. In 2012 it was responsible for over 25 percent of the global renewable energy investment total of $269 billion. And while temporary over-supply has lately rippled through the solar power market, China’s manufacturing productivity has similarly spurred the rapid global decline in renewable prices.
In February 2013, China’s National Energy Administration increased its solar supply targets from 21 GW to 35 GW total installed capacity before the end of 2015. Although ambitious, China is well positioned to realize this target given that it produces 60 GW of photovoltaic cells annually, 75 percent of the global total. Meanwhile, no other country has approached China’s scaling of wind energy, doubling each year for five successive years. China now has over 60 GW of installed wind capacity and is on track to meet its 2020 goal of 100 GW. Urbanizing rapidly, China continues to build infrastructure at a breakneck pace. Some estimates indicate that China will build 50,000 skyscrapers over the next twenty years, equal to ten new Manhattans.
With the U.S. plus China consuming nearly two-fifths of the world’s energy, there has never been a better moment for collaboration between the two countries in an effort to test the limits of energy efficiency and explore the maximum feasible share of renewable supply.
RMI IN CHINA: WHY NOW?
Given the resource intensity and market reach that comes from being a global manufacturing engine, China’s growing attempts to shift from a fossil-based economy to one increasingly embracing efficiency and renewables are important for all. The simple truth is that any path to a new energy era must pass through China. Therefore, RMI has thought long and hard about how best to learn from the Chinese experience, and how to effectively share RMI’s insights into ambitious and integrated energy systems planning with China.
As we have engaged leading Chinese experts, we have found a unique opportunity for pan-Pacific learning and partnership that is perfectly timed to meet both societies’ clear and urgent needs. A joint effort has taken shape to pool collective knowledge and help build a more robust understanding of efficiency and renewables’ potential for, and limits to, changing the trajectory of China’s future energy use. Now is an ideal time for RMI’s involvement in such an effort for four key reasons:
1. Having just undergone a leadership transition, China is ready for change. Recognizing the challenge and opportunity, China’s new leadership called for “a revolution in energy production and use” at the 18th Party Congress in November 2012. Indeed, this theme featured prominently in the recent summit between Presidents Xi and Obama in Palm Springs, Calif., in June.
2. China is hitting significant resource barriers that threaten economic growth targets and undermine the country’s energy systems. For example, a Bloomberg New Energy Finance report earlier this year noted that China’s “Big Five” power utilities have more than 500 GW of thermal power plants—largely coal-fired—in water-stressed areas and face more than $20 billion in water efficiency retrofits to improve their resilience, bolstering a growing call for water-efficient renewables. Meanwhile, with plans to urbanize 250–300 million people over the next 17 years, energy efficiency will play a vital role in realizing national economic targets while delivering basic services to a vast new urban population. Facts like these further build the resolve to forge a new energy path among the nation’s leaders.
3. China is at an important moment in its planning process to begin to address combined energy, environment, and security issues. It is currently crafting the aspirations for its Thirteenth Five-Year Plan to take effect in 2016. Planning is a vital element of China’s centralized government, and the Five-Year Plans are a series of sweeping national macro-economic strategies, authored and implemented by the National Development and Reform Commission. Initially the plans were created to encourage growth and drive industrialization, but they are increasingly viewed as vehicles to harmonize those goals with growing social and environmental concerns. Through a unique partnership, RMI has an opportunity to position some of its ideas for consideration in the Thirteenth Five-Year Plan.
4. Previous studies have provided key insights on energy possibilities, but to date an analytically robust approach that assesses the technical feasibility and economic impact of coordinated changes across all four energy-using sectors is absent from government planning processes. There is an opportunity to create insights that are critical in the current planning process through new tools and cooperative engagement.
For these reasons, RMI has seized an opportunity to work with the Chinese government on a project that will help envision a path for China to meet its energy needs economically using the maximum feasible share of efficiency and renewables through 2050.
AN INTEGRATED APPROACH
The initiative’s analysis aims to spotlight the economic, social, and environmental benefits of rapidly deploying renewables and energy efficiency technologies in China. To do so, it will focus on an economy-wide analysis of the four energy-producing and -consuming sectors of the economy: buildings, industry, transportation, and electricity.
For each sector, the team will develop and use “bottom-up” models to estimate the potential for different technologies and approaches to shift the trajectory of China against the business-as-usual scenario. Modeling will include both specific energy-saving and renewable technologies, and integrated benefits achieved by combining multiple options. Relying on our Chinese partners to inform the effort, the goal is to develop a robust, transparent, adjustable, and enduring modeling ability that will help inform government policies and China’s energy future.
KNOWLEDGE TO ACTION
The intent of the project is to provide knowledge that will lead to actions—policies, technology development, and adoption approaches—that will improve China’s overall energy efficiency and increase the adoption of renewables, thereby reducing expected growth in energy use, substituting supply with renewables where economic, and reducing fossil fuels’ CO2 emissions. This will be achieved through five primary outputs:
1. An executive report summarizing the key technical findings and analyzing their implications will be disseminated to key government, business, and academic thought leaders.
2. An accompanying policy report authored by the Energy Research Institute (ERI), one of the National Development and Reform Commission’s think tanks, will translate technical and economic insights into specific policy recommendations for the central government.
3. Presentations to relevant Chinese leaders will ensure direct exposure to the analysis as well as to provide platforms for regular discussion of the findings.
4. A modeling tool embedded within ERI will be used on an ongoing basis as China further refines its vision and delivery approach after the initiative has concluded.
5. An online database documenting analytic approaches, assumptions, and calculations with relevant digital content will help provide analytical transparency.
A TEAM EQUAL TO THE CHALLENGE
RMI has created a unique partnership of Chinese and American experts with the requisite experience and skills to conduct a world-class analysis.
Energy Research Institute (ERI), a primary partner, is a Chinese national research organization conducting comprehensive studies on China’s energy issues that both proposes and evaluates energy policies. ERI’s research focuses on the fields of energy economics, energy efficiency, climate change, and renewable energy. ERI reports to the National Development and Reform Commission, the agency responsible for national economic strategy and formulation of the Five-Year Plans.
The China Energy Group at Lawrence Berkeley National Laboratory, another primary partner, is committed to understanding the opportunities associated with meeting China’s energy needs, and to exploring their implications for policy and business. With over 25 years of experience in China, the China Energy Group works collaboratively with groups in China and elsewhere to understand the dynamics of energy use in China, strengthen capabilities of Chinese institutions to promote energy efficiency, and enhance relationships on energy efficiency among Chinese, U.S., and international institutions.
The most recent addition to the project team, the China Sustainable Energy Program (CSEP), is a nonprofit organization and the Energy Foundation’s Beijing office. With an emphasis on both national policy and regional implementation, CSEP assists Chinese agencies, experts, and entrepreneurs in solving energy challenges. At the request of Chinese leaders, the program supports capacity-building and technology policy transfer by linking Chinese experts with best practices expertise from around the world.
Combine the expertise of our partner organizations with RMI’s more than three decades of effort driving the efficient and restorative use of resources, and we have assembled a team equal to the challenge and complexity of the project.
The Reinventing Fire approach has resonated with a number of leaders in China and the Chinese government has pledged financial support for the project. ERI has assembled an impressive advisory panel, including State Councilors and Minister-level officials, to offer regular guidance throughout the research process. The panel includes several co-authors of the forthcoming Thirteenth Five-Year Plan. Direction from such a distinguished group of advisors will help ensure the credibility of the findings and will support our goal of creating results that are sufficiently plausible and compelling to be worthy of consideration in the Thirteenth Five-Year Plan.
We firmly believe that a cooperative effort between the U.S. and China has the potential to help rewrite the global energy story: shifting from dirty, depleting, and costly energy resources towards efficient use and abundant, clean supply. As the two largest economies in the world, our countries’ joint leadership on energy issues is essential to drive global change. By sharing best practices and cooperatively testing the limits of efficiency technologies and business models, the change we seek can be jointly led and sped from both sides of the Pacific.
On June 19, 2013 in Beijing that journey officially began. Approximately 90 officials, corporate leaders, and academics attended the initiative’s launch, including representatives from China’s National Development and Reform Commission, the United States’ Department of Energy, and the World Bank. There, a soaring eagle and a mighty dragon pledged a commitment to work together over the next two years to find innovative ways to quench the fires that threaten our collective progress, and explore jointly the possibility of a flameless energy future for all. RMI is proud to be a leader in the creation and pursuit of this universal vision as we take our mission to reinvent fire to the world.
Jon Creyts is a program director for RMI. Clay Stranger is manager of the office of the chief scientist for RMI.
Beijing smog image courtesy of Shutterstock/axz700.
Shanghai image courtesy of Shutterstock/ArtisticPhoto.
Reinventing Fire launch image courtesy of ERI.