China’s enormous inroads into transforming from a black coal-fired economy into one powered by renewables is a strategic decision aimed to position the country as the leading global energy power – and it’s working.
China has already moved into a world-leading position in the manufacture of solar panels and overtaken the EU in investment in clean energy systems. Investment in clean energy as a proportion of GDP is already more than 1 per cent, compared with less than 0.3 per cent for the EU.
This shift enhances China’s energy security because all renewables devices are products of manufacturing – and manufacturing can be done anywhere (not just near oil or gas fields) and this plays to China’s strengths.
Speed & scale
The speed and scale of greening in China has never been witnessed before. While in the West we hear lots of rhetoric about renewable energy, China has simply got on with the job. At this rate, by the 2030s China will be more green than black.
Abundant evidence reviewed in Global Green Shift shows the global green transition is already underway. China knows too well the pitfalls of being dependent on fossil fuels imports – for example being drawn into disputes over claims to oil in West Africa – and this is driving the push into manufacturing its own energy.
When we probe the reasons it becomes clear China is not doing this for reasons of ideology, and certainly not as a gift to the world on account of fears of global warming.
China has discovered the inconvenient truth continuing with the fossil fuelled 'business as usual' approach would lead to insoluble crises involving oil wars, terror and geopolitical entanglements as well as a growing burden of polluted urban environments – all of which are avoided by going for the renewables option (to enhance energy security) and a circular economy (to enhance resource security).
What we see is a consistent, rational energy and resources strategy being implemented. You can already see how China is benefiting by becoming progressively less dependent on fossil fuel imports, as well as moving to world leadership in renewable-energy businesses, from solar to wind to energy storage.
Rising industrial powers like India, Brazil and South Africa are already looking to follow China’s lead, in this new ‘green growth’ model of development. These countries want to remove constraints to their economic growth.
They have seen how China is starting to reap the core benefits of energy security and resource security which come from letting renewable energy replace polluting energy from a finite source.
Not all countries are taking note. Moves by US President Donald Trump to withdraw from investment in renewables will doubtless be music to China’s ears.
Trump’s pledge to bring back coal mining jobs and rejection of renewables is handing China clear leadership in this area. What’s more, given China’s expanded R&D spending, you can expect China to dominate next generation product development, patenting, and standards setting.
Undoubtedly, these developments will further unsettle Silicon Valley in the US, which sees its future in electric vehicles, renewable energy, and batteries. Some sections of corporate America and members of the Republican Party have already expressed concern that backing away from investment in renewables could come at enormous economic cost to the United States.
While the US – and Australia – continue a debate about the best energy mix it’s evident China has already made a commitment to seeking a green alternative on a global industrial scale.
China sees its industrialisation process is being stalled by local pollution and geopolitical complications, and a green alternative is the only available option to guarantee energy and resource security. In my view this will become the new global norm in the twenty first century.
What then should be the response to these amazing developments in Australia? Obviously in the first place it means our famed fossil fuel exports to China have a short life in front of them.
As countries like India swing behind the China model, so they will become diminishing export markets for Australia’s coal exports as well. Our long resources-led boom is evidently coming to an end – and we have to make the effort to find an alternative business model for the country.
Emulating China’s swing towards a green economy would be a smart way forward. It would build on Australia’s abundant renewable-energy resources – sunshine and wind in the first instance, plus hydro power – and on long traditions of being a world leader in renewable-energy research.
If we are even smarter we would emulate China’s pattern of formulating clear medium-term industrial goals and then directing investment towards fulfilment of these goals.
China does it through its five-year plans. India likewise does it with its own five-year plans. Even liberal democracies like Brazil and Chile do it in the energy sphere with medium-term energy projections which then guide investment.
Australia should likewise meet the challenges posed by China’s rapid industrialisation and the opportunities it generates. This can be achieved forging new energy technologies and refining existing ones, as well as building companies which can work with Chinese renewable-energy giants to export them to China and to the world.
John Mathews is professor of strategy at MGSM, Macquarie University. His most recent book is Global Green Shift: When Ceres Meets Gaia.
This essay is a part of the Disruptive Asia project by Asia Society Australia. Disruptive Asia examines how Asia’s rise is changing Australia, and how Australia is responding.