Testimony Before the Subcommittee on Energy and Power: The Transformation of China's Energy System

Testimony Of Deborah Seligsohn
Senior Advisor, China Climate and Energy Program
World Resources Institute

Hearing Before the Subcommittee on Energy and Power, Committee on Energy and Commerce

The Transformation of China’s Energy System: Challenges and Opportunities

Summary

In my testimony today, I will start by discussing both where China is now and its plans for the upcoming five years, and then I will talk about some of the business opportunities this creates for other countries, including the United States, that want to compete in new energy technologies.

Energy, environment and climate policy has become increasingly important in China in the last decade. As with any policy focus, there are a number of interests and drivers involved. The confluence of concerns about energy security, environmental protection, climate change and economic restructuring has strengthened the Chinese government’s commitment to both energy efficiency and non-fossil fuel development. Under the 11th Five-Year Plan (2006-2010), China made considerable progress. It came quite close to its energy intensity target, reducing energy intensity over the five-year period by 19.1%, and it increased non-fossil fuel use by 3.1% per year, so that non-fossil energy now comprises 8.3% of China’s total energy use.

In March, China’s National People’s Congress adopted its 12th Five-Year Plan. The plan sets 2015 goals that continue to focus on energy efficiency and non-fossil energy development and set China well on the way to meeting its 2020 goals made at Copenhagen. The five‐year goals are to reduce carbon intensity by 17% and energy intensity by 16%, to increase the share of non‐fossil fuels in China’s total energy mix to 11.4%, and to increase forest cover by 12.5 million hectares and forest stock volume by 600 million cubic meters.

While decreasing as a percentage of total energy used, coal will continue to be an important energy source for many years. To address the greenhouse gas issue, China is actively pursuing a research and commercial scale pilot program looking at carbon capture and storage, a technology China has a strong interest in mastering.

International partnerships with Chinese clean technology companies are growing rapidly. What makes China attractive to U.S. and international investors is the clear policy framework which gives businesses the certainty they are looking for before investing. Companies including First Solar, GE, Duke Energy and American Electric Power have all announced new initiatives in the last year. Increasingly entrepreneurs with new ideas are looking to China to make those ideas become a reality. With a similarly supportive policy environment, the U.S., with its unsurpassed research resources and proven track record in new technologies, could be an unsurpassable winner.

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