Country China is leaving no stone unturned to create: China Solar City
With this newly found notion that it could be easy to power all of China, the world’s most populous country with Solar, China is aiming to become a more eco-friendly nation worldwide. China’s Ministry of Industry and Information Technology has announced a deadline for automakers to meet its new sales target Green cars. China announced that it will soon set deadlines to stop selling vehicles that run solely on fossil fuels and soon the country will be called China Solar City. An energy conglomerate, the country is actually seeking opportunities in electric vehicles eight months prior announcing plans to make zero-emission car batteries. Currently, China is the world leader in producing electric vehicles. Private Chinese car-makers and their foreign partners are already showcasing the next generation of Green cars.
The future of Solar power in China, the United States, and the World, all of it revolving around clean energy and climate change in one dimension or the other in the private sector that invests in clean energy technologies and clean energy businesses. The focus on the intersection between policy and finance as it exists to drive clean energy technology into the market, both in the US and globally including major countries like China and also India. The Chinese solar Industry is indeed fast growing and most importantly the implications for what in the U.S., the department of energy have a very large solar R&D budget. According to the International Energy Agency for China, in terms of electricity generation, coal provides 73%, hydro 18%, wind 3%, nuclear and gas 2% each, and solar 1%. In 2040, the IEA says coal production will slash nearly by half from 73% to 43%, hydro will drop a little bit, nuclear will increase from 2 to 12%, the wind will increase from 3 to 12%, and solar from 1 to 6%. Solar is expected accordingly to IEA to remain a small slice of the pie although six times larger than it is now. Comparing the charts of the US and China, when China goes from 1 to 6% in solar it is a massive increase because 1% of the massive pie is still a pretty big slice. So, the goal is to clarify an economically efficient growth path for the solar industry which is maturing and dominated by China.
This is very important the goal is not to define the US beats China or the other way around, the goal is to elucidate comparative advantage in an industry that is changing incredibly quickly including the US policy and the private investment in the US that would facilitate two things, firstly, the growth of solar power so that it becomes significant enough that it can make a dent in global carbon emissions because that hasn’t been clear so far. And secondly, the US solar industry that is viable for a long term is important. This is about the US finding an economically efficient place in a growing global solar industry, fundamentally about comparative advantage. In the last couple of years, both the countries have made fairly significant pledges to reduce its carbon emissions to prevent global temperatures from exceeding two degrees above industrial levels. Though China is getting imperative to clean up the air, to diversify the energy supply, there is real interest in developing technological leadership and lastly, which has been often overlooked is that there is a real pride to the extent which made the solar industry in China a brand identity.
There are certain busting myths about China’s solar sector. One is the solar industry is a financial bubble that is about to burst, secondly, China doesn’t innovate. Thirdly, the global solar industry is centralizing in China. Fourthly, tariffs imposed by the west are hobbling the Chinese industry, and lastly, China’s solar market is largely closed to foreign investment. But these are not accurate as it has been discovered that Chinese solar companies are reforming their capital structure and attempt to become more economically efficient. These companies are still in tough shape but looking at the early indications of where the industry is going, the notion is that Chinese industry is a bubble that is about to blow away. I think it is not borne out by facts that China, in fact, is improving significantly in solar and again not only in manufacturing processes but in the efficiency in cranking of the stuff. The global solar energy is centralizing in China to the extent that China dominates by making goods in the solar industry but the research discovers that we are at the start of real geographic decentralization of the solar industry that has important implications for lots of countries around the world including the United States. The tariffs, which has been imposed by the US on imported solar Chinese goods and China after those tariffs imposed on imported polysilicon. Actually, the tariffs have pushed the Chinese industry to get more efficient. The fact is that the tariffs have a delirious effect on US manufacturing. There is a notion in the US and in Europe as well that the Chinese solar market is closed for foreign investment and interestingly, the leaders in China at the senior levels of governments and in the industry are hungry for sophisticated economically efficient investment structures from the West. To be clear there is no shortage of capital in China but there is increasing realization that a lot of capital has been spent inefficiently. And if China is going to reach solar deployment goals that are as aggressive as the ones that it has enunciated, it needs to get much more efficient in a way it deploys its money.