The significance of developing new energy resources has been proven far beyond finding energy alternatives. It has become a strategic choice for all nations with which to ensure their energy security, while combating climate change.
At the 12th China-EU summit held in Nanjing at the end of November, leaders of both sides focused on coordinating positions for negotiations at the Copenhagen climate change conference, while discussing how the world economy could further recover, among other topics. New energy, meanwhile, was deemed as a key area of cooperation.
New energy refers to a variety of energy sources explored and utilized with new technologies--including wind power, solar energy, biomass, clean coal, coal bed gas, natural gas hydrates, nuclear energy and hydrogen energy.
Smart grid technology and carbon capture and storage are also industries closely related to new energy. Since the degree of harm these inflict on the environment is little or nonexistent, they are often referred to as clean energy or green energy.
A solution to climate change
The EU regards promoting climate change negotiations as an important manifestation of its international leadership. According to Danish Prime Minister Anders Fogh Rasmussen, the Copenhagen conference would strive for a politically binding declaration specific commitments.
If this declaration is named after Copenhagen, and finally serves as the basis of the general agreement to be reached at the Mexico City climate change conference in 2010, it will be fantastic for Denmark, the EU and the whole world.
But given the uncertainty in U.S. legislation on greenhouse gas emissions reduction--coupled with the huge disputes among various nations--countries might not be able to come up with a specific emissions reduction target in the declaration.
Still, faced with the unprecedented and unanimous political appeal and public support worldwide, politicians of all countries must strive for substantial breakthroughs.
The key to any breakthrough, of course, will most likely rest with the utilization of energy--in particular, adopting new energy and improving energy efficiency.
Specific figures, meanwhile, will likely be presented by participating countries on the utilization of new energy to make for more persuasive arguments. And China-EU cooperation will inevitably prove a strong driving force for this breakthrough.
At the beginning of 2007, the EU unveiled a new energy policy proposal suggesting that by 2020 renewable energy should account for 20 percent of the EU's energy supply and total energy consumption should be cut by 20 percent.
To fulfill the goals, the EU passed a package plan aimed at distributing the responsibility for emissions reduction more equitably among its member states early last year.
When it comes to developing new forms of energy, the EU has always been ambitious with a strong ability to pursue its endeavors.
Leading to a declaration on new energy in Copenhagen will fully demonstrate its leadership, while winning advantages in the ensuing hard negotiations on technology transfers and financial support.
In China, the Central Government has already defined new energy as an important driving force behind economic growth.
The Mid and Long-Term Development Plan for Renewable Energy, for instance, proposed that renewable energy account for 10 percent of China's total energy consumption by 2010 and 15 percent by 2020. The upcoming new energy development plan, meanwhile, will set the goal of increasing the total installed capacity of wind power, photovoltaic (PV) power and nuclear power to 150 million kilowatts, 20 million kilowatts and 80 million kilowatts by 2020--being five times, 11.11 times and twice as much as that of the current plan, respectively.
Given the explicit support of domestic policies, China and the EU will probably reach agreements on new energy and related technology transfers and financial support.
In addition, the United States, a key party in global climate change negotiations, passed the American Clean Energy Leadership Act this June. The act states that 15 percent of the power in the United States shall be generated by renewable energy sources by 2020.
The American Recovery and Reinvestment Act of 2009 provides $42 billion toward government projects and $2 billion worth in tax incentives to be used toward projects promoting renewable energy and energy efficiency.
These acts have made it possible for the Obama administration to make promises on new energy issues. So long as China and the EU coordinate well and use their influences over the United States at correct moments, there is a great likelihood that a political declaration with substantial breakthroughs will be passed at the Copenhagen conference.
Since the onset of the financial crisis, the new energy industry has been given another meaning--one with which to increase employment while promoting economic recovery.
Thanks to the long-term cultivation of a series of policies--including the integration of renewable energy into the power grid, price incentives, tax preference, investment subsidies and export financing--the EU has become the major market of the global new energy industry.
However, with the increasing exploration of the market, the EU's own market capacity is decreasing. How to strengthen the comparative advantages it has already gained in the field of new energy, fully use them to expand the international market, and transfer them to eye-catching economic figures has become the question of greatest concern for the member states.
The new energy industry has been developing quickly in China--especially renewable energy, which has enjoyed a quick expansion in market scale.
Nevertheless, the rapid development has not freed China from the lack of equipment manufacturing capacity and technological innovation capability. In order to prevent China from becoming a mere "workshop of the world," Beijing desperately needs technological upgrades and enhancement of research and development ability.
Meanwhile, China is regarded as the most important potential market of new energy. With the introduction of various incentive policies, this market is gradually showing huge vitality.
Wind power is an industry in which China-EU cooperation is relatively mature. Europe is the world's major technology supplier of wind power generation. Indeed, the three major kinds of wind turbines currently in use were all first created and developed in Europe.
The technologies used by the more than 30 wind power equipment companies currently operating in China were originally imported from Europe. Many of the world's top wind power equipment manufacturers, such as Vestas, Gamesa, Siemens and Nordex, have established wholly owned or joint ventures in China. What's more, European wind power developers, for instance, RES of the UK, Acciona of Spain, DONG Energy of Denmark, have all entered the Chinese market in various forms.
In the field of solar energy utilization, the recent trade frictions between China and the EU in the PV industry will be relieved with the launch of China's domestic market. Due to the financial crisis and the changes of incentive policies in some EU member states, the PV industry experienced a sharp drop in orders. European PV cell producers were hurt more than their counterparts from Asia and other regions due to their high manufacturing costs.
Take the German company Q-Cells for example. In the first half of 2009, its revenue fell by 36.8 percent, compared with the same period of last year. Against this backdrop, German PV companies took a series of drastic measures against their Chinese competitors including launching anti-dumping measures. Q-Cells, meanwhile, unilaterally announced the termination of the supply contract with Chinese PV manufacturer LDK Solar.
In fact, the new energy industry is unable to develop without Beijing's support in subsidies and preferential policies. The launch of China's domestic PV market provides good opportunities for resolving the trade disputes. At the end of 2008, the installed capacity of PV power generation in China was 140,000 kilowatts. This figure is expected to post a 100-fold increase within the next 10 years under the upcoming new energy development plan.
To abandon the short-term trade disputes while considering how to better participate in China's domestic market from a long-term perspective will greatly benefit both European and Chinese PV companies.
In the field of biomass power generation, BWE of Denmark is leading the world's technology. China's National Bio Energy Co. Ltd. has worked together with the Danish company to generate electricity with straw since 2006. Until now, the National Bio Energy Co. Ltd. has established 23 biomass power plants, which have achieved good social benefits and reached a modest profit.
However, Chinese biomass resources are different from those of Europe. Therefore, besides the large-scale biomass power plants, China-EU cooperation will expand to systems with lower quantity and quality requirements relative to biological resources in the next step. These shall include combined heat and power production, biomass gasification power generation and biomass briquettes.
The experience of Northern European countries--especially Denmark and Sweden--when it comes to the comprehensive management and use of biomass, will hopefully further promote the Chinese biomass energy utilization market.
In terms of biomass liquid fuel, the China-EU--especially Chinese-Danish--cooperation is worthy of expectation. The world's two biggest enzyme companies--Novozymes and Genencor--are both from Denmark.
The two are leading global research in hydrolyzing cellulose to make ethanol. Cellulosic ethanol is expected to realize commercial production in 2015 and achieve wide commercial availability without subsidies under oil prices between $80 and $120 per barrel.
As for specific cooperation between China and the EU, Novozymes has joined hands with and China's COFCO and Sinopec to promote the second generation of ethanol fuel in China. Meanwhile, research institutions from China and the EU have also started extensive cooperation in cellulose hydrolysis.
The author is a research associate with the Sino-Danish Renewable Energy Development Program