China To Massively Invest in Green Energy

On Thursday the Chinese government announced that the country shall be investing in renewable energy. But in truth this is a huge understatement because the Chinese government said that it would be investing $72 billion per year ($361 billion by 2020) in non-carbon technology. The National Energy Agency (NEA) said that the investment would create approximately 13 million new jobs in wind, hydro, solar, and nuclear energy. The NEA estimates that by 2020 the new technology will generate around half of the country’s energy needs. This is an important step forward for the global fight against climate change, but the reasons behind this decision are more interesting.

Last month the National Development and Reform Commission outlined the specifics of this investment. In the next five year plan, the Chinese government shall spend $145 billion in developing solar energy in an attempt to multiply its solar electricity generation capacity by five. Additionally, there is to be $101 billion invested in wind farms, ¥72 billion ploughed into hydroelectric power. The remaining $43 billion will be invested in geothermal and tidal power.
Over the last few years China has been becoming more willing to invest in renewable energy but has also been an obstacle in the way of international agreements. So what has changed in recent years? Why have the Chinese government changed their mind? I contend there are three key reasons.
china pollution CNN.jpg
That air looks delicious. (CNN)
Firstly, the cost of pollution to the Chinese state is enormous. A report jointly commissioned by the Chinese government and the World Bank estimated that the health cost of air and water pollution to the Chinese economy was around 4.3% of the country’s GDP. The same report also found that non-health-based cost raised this number to 5.8% of GDP. Given that in 2015 Chinese GDP was $11 trillion, this 5.8% is actually a financial drain amounting to approximately $638 billion per year. When this annual cost is compared with the $72 billion per year investment the Chinese government are proposing, this looks like a fiscally prudent investment.
Secondly, the pollution epidemic in China has become more prominently seen in the Western press. In the run-up to the 2008 Beijing Olympics there was a lot of Western media sources talking about pollution in the context of how the athletes would cope, but when the games came and went the press attention on the subject also stopped covering the story. However with more people traveling to China, and more Chinese people visiting overseas, the international awareness of this problem has grown. As such, the Chinese government desperately wants to change how the country is perceived overseas and a massive investment in renewable energy is a way to do that. Don’t get me wrong if they’re investment in green technology is purely a marketing exercise, I’m not that bothered because the consequences of this investment for the green sector will be immense.
The third and final reason I believe the Chinese government have suddenly thrown the kitchen sink at sustainable energy. The Chinese Communist Party (CCP) was historically legitimate because of it’s commitment to communism. However after the death of Chairman Mao politicians realised that Chinese citizens had become disillusioned with Maoism because their living standards had remained largely unchanged. As a consequence Deng Xiaoping liberalised the Chinese economy and converted it into a state capitalist one, and legitimised the government by cultivating nationalism. Given this historical context it makes perfect sense why the CCP want to reduce pollution: it is negatively impacting the lives of its citizens and the CCP wants to minimize anything that would potentially undermine its authority.
For a number of years the argument in Western countries against investing in green technology was that without any commitments from other big polluters like India and China, any action wouldn’t have a big impact. Although I never believed this argument had any validity, when it was unclear that China and India would take steps to reduce carbon emissions it at least had a grounding in logic. However, given that India and now China have now jumped on the environmentalism bandwagon, this argument must be jettisoned by those who still lobby against renewable energy. The United States and other Western nations are abdicating their responsibilities but thankfully other big polluters are stepping up. The motivations of the Chinese government are most likely not altruistic environmentalism, but if the end result is a reduction of pollution and a commitment to prevent mass climate change I’ll be able to cope.
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