Chinese Vice-Premier Li Keqiang is set to sign three joint statements with the European Union this week meant to increase China’s energy security, improve its electricity market and promote cooperation with the bloc on sustainable cities.
Agreed earlier in February, the statements will see both sides working on the transformation of China from a developing rural landscape into a nation of energy efficient mega-cities.
The wave of development set to wash over China – whose urban population the United Nations has predicted will grow from just over half currently to 80 per cent by 2050 - has created vast opportunities for the world’s clean technology, or cleantech, industries. European firms are amongst those hoping to get a slice of the action.
China’s leaders are preparing for this urbanisation trend by setting goals for its cities in its latest five-year plan, which stood out from previous versions for its emphasis on reducing carbon dioxide emissions and pursuing ‘active yet prudent urbanisation’.
Its five-year plans are a series of social and economic initiatives which guide the country’s growth path.
China’s 12th Five-Year Plan identified seven strategic industries that could drive healthy economic growth while reducing China’s dependency on environmentally destructive industries and fossil fuels. These are smart grids, energy efficiency, green buildings, information and communication, low-emissions transportation and logistics, resource recovery and environmental protection.
Part of China’s strategy to reduce its energy consumption by 16 per cent from 2005 levels in 2015 involves reducing the energy demand from its buildings, which currently consume about 30 per cent of China’s electricity, by constructing green buildings and improving the energy efficiency of existing buildings.
According to a recent study by the United States-based Johnson Controls Institute for Building Efficiency (IBE), emphasis on green buildings in urban China is growing as the cities shift increasingly away from heavy industrial manufacturing toward service industries.
The IBE study on five of China’s low-carbon cities found that post-industrial cities such as Shanghai and Hangzhou prioritised green buildings, whereas cities such as Chongqing and Baoding - which put a greater emphasis on manufacturing - look to industrial energy efficiency technologies for reducing emissions.
As China’s cities mature, green buildings will eclipse other energy efficiency measures as the primary source for reducing emissions, predicted the study.
IBE director Jennifer Layke told Eco-Business in an interview that over the past year, China’s policymakers have demonstrated strong support for energy efficiency through measures such as a new scheme to defray some of the upfront costs of energy efficient features for its buildings.
“Without efficiency action, policymakers recognize that their goals around air quality, human health, water supplies and energy security are all at risk,” she said.
She noted that China’s progress on measuring and monitoring energy use in buildings could make it a leader in creating new, low carbon communities in a variety of different climates.
“This type of technical expertise can assist in the development challenges and new urban development needed elsewhere in China and around the world,” she said.
But barriers to the large scale implementation of green buildings still remain, she noted. For example, building owners and developers often lack awareness of how they can save on costs though energy efficient technologies. They might also lack the means to measure a building’s energy performance, which would impact their ability to garner support for financing, she added.
Nevertheless, natural resource scarcity, tight energy supplies and the need for comfortable, healthy buildings are converging, said Ms Layke.
Some of China’s other low-carbon initiatives include clean energy production and managing energy demand efficiently.
For example, in central Beijing the government has been driving out large- and small-scale coal use while at the same time promoting technologies such as smart grids that can help reduce carbon emissions and lower energy demand.
Last October, China’s State Grid Corporation (SGCC) enlisted French telecom firm Alcatel-Lucent to help develop smart grids in a deal that is part of the more than $600 billion investment that China is spending on smart grids over this decade.
In another sign that China is making progress toward its smart grid target, a study from independent research firm Pike Research found that China was the largest market for smart meters in 2011.
SGCC has announced that China will have completed the smart grid infrastructure needed for a unified national grid by 2016, and will have installed over 300 million smart meters by the end of 2015. At the national level, such a grid will relieve on-going problems with integrating solar and wind power into the national electricity grid. At the city level, smart grids will manage consumer electricity demands and diverse electricity supplies from growing numbers of facilities.
Some of those facilities will be waste to energy (WTE) plants, which simultaneously address urban waste problems and rising energy demand. China has recently announced favourable government policies that create significant opportunities for WTE sector.
Earlier this month, it announced a fixed price for power purchased from waste to energy plants which is about double that of coal-powered plants. The industry is set to boom, with reports from Pike Research predicting that the Chinese thermal WTE technology market will grow from $875 million currently to $3.7 billion in 2016.
The water industry is another active investment area. In Shanghai alone, authorities announced in March that they will spend up to US$16 billion over the next five years on improvements to water systems. At the same time, China’s Ministry of Industry and Information Technology said that it expected sales of wastewater treatment technology and other environmental technologies to rise sharply in 2012 even as it has already enjoyed growth of more than 30 per cent in 2011 to just over US$20 billion.
Such heavy investment in China’s strategic industries has provoked some warnings however.
Global media firm Reuters reported last month that China’s Minister of Industry and Information Miao Wei told government and business leaders that the government-mandated strategic industries were at risk of “blind expansion and duplicated construction”.
The report did not identify specific examples, but it noted that the ministry is working with local officials and companies to ensure they do not misspend the expected $1.7 trillion investment in China’s strategic industries.
Reuters noted that another priority for China’s planners is to leverage state funding for additional investment in its strategic industries from local and foreign firms.
How officials can attract such foreign investment is set to be at the top of the agenda at the upcoming UrbanTec China conference in Beijing, to be held as part of the International Fair for Trade in Services (CIFTIS) by China’s Ministry of Commerce and the People’s Government of Beijing Municipality.
Organized by German events company Koelnmesse from May 30 to 31, the inaugural event will feature high profile government and industry speakers as well as an exhibition of urban sustainability technologies including smart grid, energy efficiency, mobility and logistics, green buildings, information and communication, and resource recovery and environmental protection.
Koelnmesse said in a statement that the conference was “tailor-made to suit the Chinese market” for smart city technology - a concept that is fairly new in China – and that participants would find in-depth discussions on cleantech industries and financing.
Such technologies are already being deployed in projects such as the up-and-coming Sino-Singapore Tianjin Eco-City (SSTEC), a bilateral project of China and Singapore located in the city of Tianjin near Beijing.
Last month, Tianjin’s 30 square kilometre eco-city welcomed the first of its expected 350,000 residents, many of whom will work for the companies responsible for the infrastructure and technology within the eco-city.
All of the buildings in the SSTEC, which is due for completion by 2019, must meet requirements for a green building certification scheme developed specifically for the eco-city, which is more stringent than China’s national green building standard.
A recent report on China’s cities led by Beijing-based Urban China Initiative (UCI) noted that China’s new eco-cities give planners “tremendous leeway for creative and sustainable design…nowhere else in the world are so many cities rising from virtually nothing.”
However, the report - called the 2011 China Urban Sustainability Index - also cautioned that eco-cities risked contributing to urban sprawl as some were built on farmland and other undeveloped lands.
Overall, the prospects for sustainable cities in China are good as long as smaller, poorer cities have growing economies, found the report, which analysed the 112 cities that had been designated as “target cities for sustainable development” in China’s previous five year plan in 2006, and compared their per capita income to the environmental and social impacts of their growth.
UCI co-chair Jonathan Woetzel, who is also a director at McKinsey, told Eco-Business that he sees good progress in improving sustainability for cities in the earlier stages of economic development.
He observed that while poorer cities grew their economies at the expense of a healthy environment, all of the cities in the study had outgrown this trend because they had the means to invest in environmental services such public transportation, waste management and wastewater treatment.
“This means that many Chinese cities are now well positioned to couple economic growth with gains in sustainability,” he said, adding that China could and should move increasingly toward protecting the environment and promoting equal access to high quality social services as economic growth and urbanization continued.
However, as a city’s per capita income reaches about 20,000 yuan – the cities in the study ranged from 10,000 to 30,000 yuan - gains in income are no longer as strongly associated with environmental improvements, he noted.
The UCI report found that local governments would have difficulty sustaining investment for environmental improvements such as the development and design of new urban downtowns and enhanced environmental services because such environment projects are not self-sufficient and rely heavily on government subsidies to make up budget shortfalls.
The situation is made more complicated by the fact that the national government controls many public utility fees, prompting city governments to turn to short-term revenue options such as land sales, noted the report authors, who argued for urgent diversification of investment resources.
“This implies that China has tough choices to make as it enters the next phase of development,” said Mr Woetzel.
