2010-08-27 14:36

There is a fundamental paradox in China's energy policy, which is made all the more visible by recent trends in the electricity and transportation sectors, and cities. China is the biggest user of dirty energy as well as clean energy, home to the world's first eco-cities and some of the world's most polluted cities, and host to the greatest number of new oil-dependent cars but third in terms of producing alternatives to petroleum.

For example, coal still contributes to about 80 percent of China's electricity generation.

Yet China added 37,000 MW of renewable power capacity, more than any other country last year, and it led the world with the largest installed renewable energy capacity. China was the top market for new additions of wind energy, installing wind turbines that could generate 13,800 MW. It was also first in the installation and installed capacity for solar hot water heaters.

In the transport sector, China became the top country in production and sale of gasoline-powered automobiles in the world last year, encouraged by government subsidies and support to the industry to create jobs. Yet less than 5 percent of the Chinese actually own a vehicle, and the government heavily promotes mass transit and alternative fuels such as natural gas and ethanol. Indeed, last year China jumped into third place for global ethanol production, surpassing Canada and France.

In terms of cities, the State Council, China's Cabinet, advocated the "energetic establishment" of "eco-provinces" and "eco-cities" in 2000 and passed the Cleaner Production Promotion Law and the Environmental Impact Assessment Law in 2002 to make existing cities safer and cleaner. It enacted the Energy Conservation Law in 2008 to make officials accountable for implementing environmental standards.

As a result, a slew of ambitious energy- and environmentally-friendly urban initiatives have been announced. The eco-city in Tianjin would see two-thirds of all waste recycled by its inhabitants and discourage driving. Dongtan, near Shanghai, will virtually outlaw cars and enforce rigorous building efficiency standards. Other eco-areas could include Xiangji town in the Xinjiang Uygur autonomous region and Huangbaiyu village in Benxi, Liaoning province.

But, among the largest 300 Chinese cities, 297 did not meet the minimal environmental standards for ambient air pollution set by the United States. The World Bank estimates that the economic burden of premature mortality associated with air pollution is greater than 1 percent of GDP.

These trends show a contrast between "two future Chinas" - one seeking sustainable economic development through energy efficiency, frugality and renewable energy resources, and the other overwhelmingly dependent on pollution, waste and non-renewable energy sources to drive economic growth.

How are we to make sense of these conflicting trends?

One explanation is that China lacks a unified national energy policy. Instead, there are different energy policies, enacted at different times for different reasons. The responsibility for energy pricing, granting permission and approval of projects, overseeing State energy companies and fixing electricity tariff are spread across many ministries and agencies.

A second, and more worrying explanation, is that the twin goals of sustainability, underpinned by clean energy, and economic development, underpinned by dirty energy, are inconsistent. President Hu Jintao famously committed the country to quadrupling its GDP from 2000 to 2020 and China's economy is currently the second largest in the world.

China needs to figure out a way to solve the energy dichotomy, or else from the energy standpoint the Chinese economy may be getting bigger, but not necessarily cleaner.

The author is an assistant professor at the Lee Kuan Yew School of Public Policy of National University of Singapore.