View

Debate: Energy

By Lin Boqiang and Zhou Tianyong (China Daily)
Updated: 2010-08-23 13:55

Which source of energy should China invest in to meet its demands in the future? Two experts talk about their choices.

We've accepted new energy is vital

By Lin Boqiang

New energy has got unprecedented importance in China. The mid- and long-term development program for renewable energy was issued in 2007. The new energy and industrial development plan is about to be promulgated soon, and should help the new energy and related industries to attract 5 trillion yuan ($736.16 billion) in direct investment in the next 10 years.

New energy is what the country should seek and is seeking. The government now has to carry out the plans for the development of new energy, including policy adjustments, electricity tariff reform and fund distribution, properly and successfully.

In the short term, the new energy industry faces a technical bottleneck. For example, the problem of storing electricity generated by wind power and integrating it with the grids is still in the elementary stage. Therefore, neither wind nor nuclear power is likely to become a potent alternative energy source and be commercialized in the short run. In fact, the wind, solar and nuclear power sectors still need huge investments to become alternatives to the fossil-fuel power industry.

As in other countries, the development of new energy in China is dependent on the government's fiscal support and favorable policies. Besides, the development of the new energy industry in the country faces another obstacle: the relatively low tariff of electricity generated by the traditional sector.

To overcome the obstacles, future plans should focus on at least two major factors.

First, prices of electricity generated by conventional sources must be adjusted to reflect the cost of resources and the environment, so that the new energy industry gets a level playing field to determine its tariff. To raise the competitiveness of new energies, the government can either pour in more funds or adjust the price structure of traditional energy generators. And it should specify these two aspects in the planning to ensure they are implemented properly.

Second, besides favorable policies and investment, the government has to encourage cooperation between researchers in new energy and enterprises to ensure strong technological and manpower support for the industry. For that, future plans need to focus on intellectual property rights protection, encouraging innovation, and guiding more skilled personnel and capital toward the new energy industry. Moreover, the development of new energy needs an energy law to serve as protective guide and favorable policies to attract more investment.

Since it is unnecessary to hold more discussions and debates on the importance of new energy, the government should focus more on promoting it and lowering its generating cost to the minimum. On one hand, for the sound and fast development of the new energy industry, plans and projects should be devised according to resource distribution and market situation. On the other, the government's supportive policies should keep pace with the necessity of new projects. The many wind-power generators revolving idly for lack of grid integration should make us realize that without proper planning and execution it is impossible to prevent wastage of funds and resources.

The government, for now, should focus on research and use of new energy, and leave the manufacturing of equipment to the market. If new energy cannot be properly utilized, then overcapacity could hamper further development and expansion of the industry. And without research and innovation, new energy cannot lead the country toward a more advanced and greener use of energy.

The author is director of the Center for Energy Economic Research of China in Xiamen University.

Hydrogen is energy of the future

By Zhou Tianyong

The country's rapid economic growth has increased the demand for energy. But the supply is not rising correspondingly with the demand. The double pressure of increasing energy supply while reducing carbon emissions demands something of an energy revolution. Choosing the right type of energy to meet the rising demand, however, is a strategic problem.

The country, in my opinion, should adopt a catch-up (with developed countries) strategy and concentrate on developing hydrogen energy.

Energy can be generated from three types of resources. The traditional resources are coal, oil and natural gas. The transitional ones are oil-treated coal and batteries for automobiles. Energy generated by nuclear plants, and solar panel and wind farms, too, belong to the second group. Hydrogen energy is the last, or the ultimate source of energy.

A typical energy revolution would follow-up the developed world strategy. This follow-up strategy would allow the traditional energy generators to remain the main sources of supply while transitional energy technology is developed. In the second stage, transitional sources would replace the traditional ones. During this stage, research would concentrate mainly on developing hydrogen energy technology. In the final stage, hydrogen energy would become the primary source.

But even if the follow-up strategy were to be adopted now, it would take 40 years to completely industrialize the hydrogen energy sector.

Another problem is that if the government adopts the follow-up strategy, the country would always lag a step behind the developed countries. As things stand today, the developed countries are likely to intensify research in transitional energy sources. And once they obtain fruitful results, they will apply them to their energy industries, and follow it up by transferring them to China, which on all likelihood would still be relying on transitional energy sources.

Importing mature technologies from the developed countries means lower risk and lower initial investment. Besides, the transitional energy technology will help develop the industry faster. But the transitional energy technology will one day be replaced by hydrogen technology, which is still the most advanced and environmentally friendly. If China were to pour in huge funds for research in, and development of, hydrogen energy technology, the huge investment in transitional technology would become a big waste of time, money, energy and precious manpower.

Experiences in other sectors tell us to develop the ultimate energy technology, instead of concentrating on transitional energy sources.

The follow-up strategy we adopted for TV sets, film rolls, video recorders, TV image tubes and many other products made us realize that by the time we had imported the technologies from abroad, they had become outdated. To overcome that, we imported more and got more outdated products. That circle has not ended yet.

So, should we still play the catch-up game?

It should be noted that the developed countries (except perhaps Iceland) have not yet stolen a march over China in hydrogen energy technology. In some aspects we are more practical and advanced than them. Hence, I suggest China concentrate on developing the ultimate energy technology, that is, adopt the catch-up strategy.

This will bring huge benefits to the country, because hydrogen is almost totally free of solid wastes and will reduce our carbon emissions greatly. Its use will help protect the environment and ease the pressure on the transport system. Besides, if the carbon tariff proposed by some experts becomes a reality, our products would be more competitive in the international market.

The catch-up strategy of developing hydrogen technology, however, could result in losses for enterprises that have already invested heavily to develop battery technology for electric vehicles. If this happens, the government should compensate such enterprises by helping them shift to hydrogen technology.

The government must be very careful in selecting its area of focus. But it should avoid choosing one that would force the country to lag behind the developed world and act as a recycle bin for outdated technologies imported from abroad.

In order to achieve this, it should invite experts from different fields and with different views to conduct thorough research and analyze the practicability, risks and costs involved in the different models. Besides, domestic researchers' opinions should have the final say.

As an economics scholar, I believe that only the model that conforms to the market demands should be adopted. Of course, the government will support the model it chooses, but in the final analysis it should let the market and consumers make the ultimate choice.

As an economics rather than technology expert, all I can do is put the question to the public without any recommendations, and hope more experts participate in the discussion to help the government make the best choice.

The author is a professor and vice-director of the research office at Central Party School.