China aims for renewable energy crown

July 23, 7:03 PMLA Energy Policy ExaminerAlexander Lennartz

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If your enemy is secure at all points, be prepared for him. If he is in superior strength, evade him. If your opponent is temperamental, seek to irritate him. Pretend to be weak, that he may grow arrogant. If he is taking his ease, give him no rest. If his forces are united, separate them. If sovereign and subject are in accord, put division between them. Attack him where he is unprepared, appear where you are not expected.

- Sun Tzu, the Art of War

After being repeatedly called out by Republicans for dragging its feet on carbon emissions and used as an excuse to stall environmental legislation in the US, China has decided to upstage America by making plans to take the world lead in renewable energy. China announced a plan to get 15 percent of its energy capacity from wind, solar and other renewable energy sources by 2020. China seems set to win the renewable energy battle by using the art of war. This war with the US is not military, but economic.

China’s march to superpower status is picking up pace. While the US is facing recession without end in sight, the Chinese economy grew a healthy 8% this past quarter. Estimates have China’s GDP eclipsing America’s sometime in the 2020s. With decisive action in renewable energy and fiscal stimulus while American politicians squabble along partisan lines, that date could be pushed up considerably. Watering down environmental legislation and scaling back renewable energy goals damages America’s long term economic health, which will weaken America’s relative strength in the world vis a vis China, India, the EU, Japan and even Brazil.

Being leapfrogged in the renewable energy field by the Middle Kingdom in such a surprising fashion is an embarrassment for the US. This was exemplified recently, when Texas energy baron Boone T. Pickens decided to delay/postpone/abandon his large scale wind farm project in North Texas while Chinese officials publicized their plans to build the largest wind farm in the world. Green businesses are flourishing in China, particularly in solar. Europeans complain of protectionism by the Chinese government in the growing green sector, but no action against Chinese businesses has been taken.

While things do look good for China at the moment, there are two big factors that the Chinese Communist Party must worry about:

First, there has been massive ethnic unrest in the past two years in Tibet and in Xinjiang. These outbursts of unrest have been violently put down and will be presumably dealt with in a similar fashion were they to occur again. Add these problems to the simmering tension with Taiwan and questions of political stability must be taken seriously. How this will affect the future of China remains to be seen.

Secondly, China will not sacrifice GDP growth for environmental legislation like cap-and-trade. Intense negotiations are expected at the UN Global Climate Change Summit in Copenhagen, Denmark December 7-18. China is so interconnected in the global economy it will have to make some concessions or face potential economic consequences.

The remainder of 2009 will put a lot of pressure on Beijing. No doubt they will have to show a bit more of their art of war.