|March 17, 2009|
China's New Generation: Driving Domestic Development
Schwartz notes that inevitably the international financial crisis, which has reverberated deeply into China’s economy, has had an impact on the Chinese wind power sector in a number of ways. For instance, it has contributed to declining prices for certified emissions reduction credits (CERs) under the CDM Kyoto Protocol framework, a key subsidy for wind farm development.
In addition, it has caused some foreign companies to exit the Chinese wind farm development business as oil prices have declined and credit has become more difficult and costly to acquire. It has also brought on the recession that has resulted in declining energy use and falling power prices throughout China.
Like the new Obama administration in the US, the Chinese government understands that they also can get a ’twofer’ by funding renewable energy and energy efficiency projects, which will both spur economic development and advance China towards its goal of a cleaner and more sustainable future.
By most accounts, however, the impact of this worldwide financial upheaval has been limited with respect to China’s burgeoning wind power industry.
This in part is attributable to the fact that the Chinese wind industry’s development is in large directed by Beijing, and 80% of the market is concentrated in large state-owned enterprises. It is also due to the leadership decision in Beijing to forge ahead with renewable energy development as one element of its approach to combating the economic downturn. In fact, the centerpiece of Beijing’s response to the economic slowdown in China is a US$586 billion stimulus package - a quarter of which is expected to be allocated to environmental, renewable energy and energy efficiency projects. (See Figure 1, below, which shows actual and revised projects for wind installations in China in MW).
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