Over the past few years China’s solar and wind generation capacity has increased significantly. In 2005 this was just over one gigawatt today it is more than eighty and China seems likely to exceed its 2020 target of more than 100 gigawatts. Even so this enormous increase would likely represent no more than just seven percent of China’s total electrical capacity compared to nearly three-quarters from coal and oil.
In 2013, China led the world in renewable energy production, with a total capacity of 378 GW, mainly from hydroelectric and wind power. As of 2014, China leads the world in the production and use of wind power, solar photovoltaic power, and smart grid technologies, generating almost as much water, wind, and solar energy as all of France and Germany’s power plants combined. In 2016, China became the world’s largest producer of photovoltaic power, at 43 GW installed capacity. Since 2005, production of solar cells in China has expanded 100-fold, estimated at producing some 63% of the world’s solar photovoltaics.
The initial future target set by the Chinese government was 10 GW by 2010, but the total installed capacity for wind power generation in China had already reached 25.1 GW by the end of 2009. China aims to have 100 GW of wind power capacity by 2020. However, use of wind energy in China has not always kept up with the remarkable construction of wind power capacity in the country. As Chinese renewable manufacturing has grown, the costs of renewable energy technologies have dropped dramatically. Innovation has helped, but the main driver of reduced costs has been market expansion.
Gas will likewise play an increasingly important role in China’s energy mix. The International Energy Agency expects China’s gas demands to double in just the next five years. With the rise of unconventional energy sources and fracking, gas is set to grow rapidly in the coming decades working to replace coal globally. Almost all of the growth in shale output currently stems from the US, but there is currently a process of technology diffusion as other countries learn the techniques that they have pioneered. According to BP’s Energy Outlook report “growth in China’s shale gas production increases, such that by 2035, China is the largest contributor to growth in shale gas production.”
But like most countries China is in the hugely contradictory state of providing significant subsidies to its fossil fuel industry, an exercise that is very tempting to governments due to the critical role that energy plays in economic development and the political pressure to do so. Fossil fuels create many negative externalities, both on environment - such as through climate change - and on human health. The IMF estimates the combined subsidy of both these negative externalities and the direct payments made to the industry to be in the order of $2.3 trillion annually.