China is stepping further into the promotion of renewable energy nationwide, setting higher green power targets and punishing those who fail to meet those goals.
As the world’s biggest energy consumer, China is aiming to boost the proportion of electricity generated from renewables to at least 35 percent of total power consumption by 2030, according to a revised draft plan written by the National Development & Reform Commission (NDRC), the country’s top economic regulator.
The previous goal set by the government only stipulated “non-fossil fuels” making up 20 percent of energy consumption towards the same time point.
The new plan, called the Renewable Portfolio Standard (RPS), is an update of a draft initially released in March. The standard – which sets minimum consumption levels of power sourced from renewable energy – is among efforts to tackle the nation’s soaring pollution levels by reducing its reliance on coal. While aiming to boost use of renewable energy, the policy will also help to alleviate the government’s subsidy burden by way of additional revenue from penalties for non-compliance.
“We see the new RPS consultation paper having more implementation details and is more favourable to operators,” BOCI Research Ltd analysts said in a report for comments on the policy. The plan focuses “on improving the consumption of renewable energy, which is the major long-term purpose of the RPS mechanism”.
The NDRC also raises targets for individual provinces in terms of 2018 and 2020 non-hydro power consumption, including asking Inner Mongolia to improve its use to 18 percent this year from an earlier goal of 13 percent.
As also provided by the new legislation, companies that do not meet the standard will be required to pay compensation charges to grid companies and the revenues will be used to cover government subsidies for renewable projects. In recent years, China has made huger amount of investment in the renewable energy sector than any other country, leaving the government with a heavy subsidy burden.
“This also leaves us optimistic that the NEA may be mulling other ways to address the subsidy deficit issue,” BOCI said, adding the new plan may help to dismiss concerns about full subsidy payments to existing projects.
For such an energy-hungry country, the new plan is an encouraging step. Compared to other major economies of the world, however, it’s essentially a move to keep up. For example, the EU set a goal of 40 percent renewable use by 2030, while the US — although not formulating any nationwide regulation — has over 30 states with enforced or voluntary renewables targets. California has pledged a 50 percent consumption of renewable energy by 2030, Colorado 30 percent by 2020 and Minnesota about 25 percent by 2025.