China Struggling to Respond to U.S. Energy Revolution

China Struggling to Respond to U.S. Energy Revolution

BEIJING -- While China's much-hyped clean energy drive has become bogged down in problems of impracticality and policy incoherence, the U.S. has quietly effected a genuine energy revolution that creates huge cost advantages for America’s manufacturing base going forward. With major structural shifts already underway, changing international energy market dynamics present Washington with an opportunity to fundamentally reorient its foreign policy approach, toward China and a broader range of actors, in the decades to come.

In 2011, China overtook the U.S. in terms of renewable energy investment and under current plans will surpass the European Union in 2014. Beijing plans to invest $470 billion in renewables during the 12th Five-Year Plan (FYP), more than double the $211 billion allocated in the 11th FYP. China aims for 11.4 percent of total energy to come from renewables by 2015, up from 7.5 percent in 2007. But for a variety of reasons, China's renewable energy drive has failed to deliver the desired results.

The most glaring problem is China's addiction to coal, which continues unabated, with the country having installed nearly five times as much coal-fired power-generation capacity as renewable over the past decade. Moreover, the contribution of renewables actually contracted from 8.6 percent in 2010 to 8.3 percent in 2011, partly on weak hydroelectric generation due to drought, but also due to chronic inefficiencies and imbalances in both the solar and wind industries. To further complicate matters, China's domestic oil and gas supply is lagging demand by some distance, causing dependence on imports for both fuels to increase sharply.

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