Tapping China's green transformation

This week’s horrific smog over Shanghai and many other parts of China has been a terrible reminder of the challenges facing the nation as it competes with the United States to become the world’s leading economy.

Kids and the elderly have been told to stay inside, flights have been delayed, some 30 per cent of cars have been taken off the roads and factories have been ordered to close as Shanghai’s air quality index soared to a record 473 – an off-the-scales figure – and remained at dangerous levels. Unfortunately, this is not a unique experience for China, with Beijing and many other cities having endured similar pollution crises.

China’s political leadership understands its longer-term approach to addressing the pollution crisis will provide the foundations for future economic growth – infrastructure investment, development of strong clean technology industries and a movement away from coal-fired electricity generation and highly polluting factories. Through these measures, China will likely maintain its economic leadership as the world moves to a lower carbon economy.

Business Spectator has reported on (The silver lining in China’s smog, December 12) the opportunity to close down inefficient and highly polluting steel mills and coal-fired power stations – Hebei Province alone has announced an ambitious goal to reduce its steel production capacity by 60 million tonnes and coal consumption by 40 million tonnes in the next four years – but the crisis also presents the opportunity to modernise the economy and invest in the industries and infrastructure of the future.

China’s very fast train network, which sprawls 9000km across China, is a powerful symbol of how China has used 21st century infrastructure to position itself as a 21st century superpower.

By 2015, you will be able to travel from the island of Hong Kong to the metropolis of Beijing – a staggering 2200km – in just 10 hours by train. That has to be the engineering marvel of the 21st century.

I was fortunate enough to experience China’s very fast train network as a member of the Australian Solar Council’s recent solar industry delegation. We travelled from Shanghai to Tianjin – the same distance as from Sydney to Brisbane – in just 5.5 hours. It was clean, comfortable and fast, very fast (310kmh fast).

To be brutally honest, my perception of China before I left the comforts of Melbourne was of a nation struggling with the challenge of a large population, emerging economy and imposing political system. I did not imagine the 21st century infrastructure that was about to appear before me, with the high-speed trains, fantastic railway stations, impressive road system and stunning skylines. Shanghai is a city of the 21st century, a financial centre worthy of the world’s second largest economy – notwithstanding its recent pollution crisis. Indeed, I was fortunate to avoid severe smog throughout my visit.

China is using renewable energy as one of its anchors for the 21st century. It is the world’s largest manufacturer of solar hot water systems and solar panels. It has the world’s largest market for solar hot water and second largest market for PV. It is the world’s largest manufacturer of wind turbines and it is quickly growing its market share in LED lighting and battery storage. The future is being built in China.

China’s installed capacity for solar electricity should reach more than 35 gigawatts by 2015, up from about seven gigawatts last year. By 2020, total installed capacity could reach 50 gigawatts, with more than $40 billion worth of investment. Much of that drive from the Chinese Government is a direct response to tariffs imposed by the European Union and the United States, but it is also a trigger for innovation. I saw that innovation first hand as part of the Australian Solar Council’s delegation.

BYD is one company that is changing the world. Headquartered in Shenzhen with PV manufacturing near Shanghai, the company is one of the world’s largest car manufacturers and one of the largest battery manufacturers. Combine electric vehicles, batteries and solar PV, and you have a vision that could transform energy generation and seriously progress the low carbon economy.

The battery company Lishen has also combined its global leadership in battery storage with PV manufacturing to show a future that could see households going off grid with storage and large-scale renewable energy projects having substantial storage.  

Yingli is another company that is building the 21st century. The world’s largest solar PV manufacturer, it has already installed seven gigawatts around the world – 30 million solar panels. Yingli has an impressive fully automated production line. The giant robots that tower over and control the production facilities look like they have escaped from a bad science fiction movie but really they constitute 21st century infrastructure of a different form.

BYD, Lishen and Yingli are just three companies deserving of attention. The Australian Solar Council delegation met with many Chinese manufacturers focusing on PV, battery storage and LED lighting, and an impressive number are looking to invest in Australia and cement a footprint in the Australian market.

These companies are also focused inwardly at the massive Chinese market. China’s competitive advantage in 21st century infrastructure places it in a perfect position to export those skills, but also allows it to meet the nation’s extraordinary challenges – unsustainable pollution, diminishing water supplies and the challenge of accommodating the 1 million people who move each month from the country to the big cities.   

Australia is well placed to help China transition to a lower carbon economy through the expertise generated by its markets for carbon pricing, renewable energy and energy efficiency. Companies that have engaged in these markets in Australia will be in high demand in China. Similarly, Australian companies like Greenbank Environmental – Australia’s leading independent trader of renewable energy certificates – can help Chinese companies looking to engage in Australian markets.

China will likely be the world’s biggest economy within a decade, but its growth towards that achievement cannot be based on business as usual. It cannot afford the economic, environmental and political consequences that would flow from a permanent poisonous smog haze like the one that has blanketed China over the last week. It’s in Australia’s interest to work with China as it builds a strong lower carbon economy.

Ben Redmond is the settlements manager and head of energy efficiency with Greenbank Environmental.