China and the Future of New Energy Technologies Trends in Global Competition and Innovation Bram Buijs Clingendael International Energy Programme Clingendael International Energy Programme Nederlands Instituut voor Internationale Betrekkingen Netherlands Institute of International Relations Clingendael China and the Future of New Energy Technologies Trends in Global Competition and Innovation Clingendael International Energy Programme Clingendael Energy Paper March 2012 3 Clingendael International Energy Programme CIEP is affiliated to the Netherlands Institute of International Relations ‘Clingendael’. CIEP acts as an independent forum for governments, non‐governmental organizations, the private sector, media, politicians and all others interested in changes and developments in the energy sector. CIEP organizes lectures, seminars, conferences and roundtable discussions. In addition CIEP members of staff lecture in a variety of courses and training programmes. CIEP’s research, training and activities focus on three themes: • regulation of energy markets (oil, gas, electricity) in the European Union; • the international economic and geopolitical aspects of oil and gas markets, particularly with respect to the European Union security of supply; • energy and sustainable development. CIEP is endorsed by the Dutch Ministry of Economic Affairs, Agriculture and Innovation, the Dutch Ministry of Foreign Affairs, the Dutch Ministry of Infrastructure and the Environment, BP, Delta, Electrabel GDF‐Suez, Eneco, Energie Beheer Nederland, Essent, Esso Nederland, GasTerra, Gasunie, ING, NAM, NUON, TenneT, Oranje‐Nassau Groep, Port of Rotterdam, RWE, Shell Nederland, Total E&P Nederland, Vopak Oil Europe Middle East and Wintershall. CIEP publications and research results are made available primarily through the CIEP website: www.clingendael.nl/ciep . Title : China and the Future of New Energy Technologies Subtitle : Trends in Global Competition and Innovation Author : Bram Buijs Copyright : 2012 Clingendael International Energy Programme Cover image: : Chinese calligraphy of the character Qi, the meaning of which includes ‘energy’ in a more spiritual sense. Calligraphy by Li Dan‐Qing from Beijing (www.orientaloutpost.com). Number : 2012/3 Printed by : Jurriaans Lindenbaum Grafimedia b.v. English editing : Deborah Sherwood Published by : Clingendael International Energy Programme Address : Clingendael 7, 2597 VH The Hague, The Netherlands P.O. Box 93080, 2509 AB The Hague, The Netherlands Telephone : +31 70 374 66 15 Telefax : +31 70 374 66 88 Email : [email protected] 4 5 Table of Contents Executive Summary ............................................................................................................................... 7 Introduction: Low­Carbon Technologies, Global Market Developments and China’s Growing Role ......................................................................................................................................... 10 Growth of Clean Energy Sectors Worldwide .............................................................................. 10 Clean Energy Investment in China .............................................................................................. 14 Chinese Policy Aimed at Building Up ‘Strategic Emerging Industries’ ........................................ 19 An In‐Depth Look at Six Industrial ‘Low‐Carbon’ Sectors ........................................................... 22 Case Study I: Wind Energy ................................................................................................................ 24 The Growth of Wind Energy in China ......................................................................................... 25 The Emergence of the Chinese Wind Industry ........................................................................... 27 Future Outlook ........................................................................................................................... 31 Case Study II: Solar PV ........................................................................................................................ 34 Global Technology Developments .............................................................................................. 36 The Emergence of the Chinese Solar PV Industry ...................................................................... 39 Impact of the Economic Crisis and Developing the Chinese Market .......................................... 41 Future Outlook ........................................................................................................................... 43 Case Study III: Nuclear Power .......................................................................................................... 48 The Emergence of the Chinese Nuclear Industry ....................................................................... 49 Future Outlook ........................................................................................................................... 53 Case Study IV: Hydropower .............................................................................................................. 56 The Emergence of the Chinese Hydropower Industry ............................................................... 57 Future Outlook ........................................................................................................................... 58 Case Study V: High Speed Rail .......................................................................................................... 60 Chinese Market and Industry Developments ............................................................................. 61 Future Outlook ........................................................................................................................... 64 Case Study VI: Hybrid and Electric Vehicles ............................................................................... 66 Global Technology Developments .............................................................................................. 67 Chinese Policies to Build Up a “New Energy” Automotive Industry ........................................... 69 Challenges Facing A Chinese Hybrid and Electric Vehicle Industry ............................................ 72 Future Outlook ........................................................................................................................... 74 Taking The Next Step: Towards Innovation? .............................................................................. 76 Chinese Policies on R&D, Technology Development and Innovation ........................................ 77 Status of Innovation and IPR Development in China .................................................................. 81 Innovation in China: Developing its Own Characteristics? ......................................................... 82 The Value of Innovating Versus Commercializing ...................................................................... 84 Conclusions ................................................................................................................................. 86 Challenges for the Future .................................................................................................................. 88 Can and Will China Sustain its Push for Clean Energy Development? ........................................ 88 Will ‘Green Protectionism’ Impact Global Clean Energy Markets? ............................................ 90 Global Competition: Challenges for Chinese and Western Companies ..................................... 92 Conclusions ........................................................................................................................................... 96 Acknowledgements ........................................................................................................................... 102 Bibliography........................................................................................................................................ 104 6 Executive Summary In the field of renewable energy and low‐carbon technologies, Europe, Japan and the United States have traditionally been the global leaders in terms of innovation, industrial capacity and deployment. However, this dominance is coming under increasing competition from the one country that has often been portrayed as the world’s most polluting: China. Europe has been the natural home to many of the low‐carbon technologies that have been deployed to date, especially with regard to the ‘new’ renewable energy technologies such as solar energy and wind energy that have grown rapidly in recent years. Also in the fields of other low‐carbon technologies, including hydropower and nuclear energy in the power sector, and transport‐related technologies such as high‐speed rail and electric vehicles, Europe has enjoyed a strong position in terms of technological skills and global market share, together with the United States and Japan. Supported by the European Union’s key role in driving forward climate change policy both globally and internally, policy mechanisms to support the transition to a cleaner energy system have been put in place. The dominance of Europe in many clean energy fields is still readily apparent: Seventy‐five percent of all installed solar photovoltaic power generation capacity is located in Europe.1 More than forty‐four percent of global wind power generation capacity is located in Europe.2