China’s Surge in Green Energy to Fuel Trade with the US

China’s growing interest in transforming its economy to a less carbon-emitting one has helped it to grow at a faster pace in extracting energy through renewable sources. Along with its green energy achievements, it has also generated interest among major players of this domain including the US to take advantage of the trade opportunities provided by it.

A senior policy analyst at the Center for American Progress, Julian L. Wong termed the recent launch of a joint US-China research project to produce more fuel-efficient motor vehicles and buildings as an important first step to this end. John Kerry, the US Democratic leader had stated recently that China was seeking more of green tech, and if the US was willing to engage fully with China in bilateral cooperation or joint research and development, it would mean a transfer of technological assistance.

‘No tech buy tech’ strategy by the Chinese is also luring many green energy majors to partner with the Chinese companies to book profits from the fastest growing industry. The strategy is developed to bridge the technological gap through buying out such technologies which the cash-rich Chinese companies face while attempting to produce green energy products.

The International Energy Agency's has forecast that $26 trillion would be needed by 2030 to meet global energy demands. With the rising climate change demands of cutting toxic green house gases, at least 25 to 30 percent of those needs have to be met through renewable energy sources by that time.

China’s production skills coupled with the availability of cheap electricity provide a clear-cut cost advantage over rest of the world for the country to gobble up the chunk of the green energy pie. The Chinese factories already produce a third of world’s solar photo voltaic cells. By next year, China is tipped to edge out the US as the largest market for wind turbines in the world.

Astonishingly, an official Chinese data shows that the country is at the verge of achieving the 2020 wind power capacity target by next year alone. The Chinese government’s consistent attention to the wind sector by providing subsidies combined with other consumer coaxing methods have helped the sector to grow at a greater speed.

Two Chinese firms, BYD Auto and Qingyuan will mass produce electric cars to flood the Chinese markets as well as other auto markets they have access to. It should be recalled, the government had ordered 1,000 hybrid buses for Beijing and Shanghai earlier this year and also announced customer rebates of up to 40 percent off the price of new cars, depending on their energy efficiency.

Li Junfeng, deputy head of energy research at China’s top planning agency says the government thinks of renewables as a major strategic industrial option that will help fuel this country’s future growth. As Obama administration is inclined to pursue greener options for the country’s energy needs contrary to previous governments, the partnership with China in green energy gives room to understate the row between the two in some areas of trade.

By Jose Roy