Commerce, Communities and Clean Electricity : Changing the Course of Energy Use in China
Kartick K | Aug 16th 2016
The growth potential and projected future growth trajectories of many developing countries have sparked debate over the apparent paradox of simultaneous economic growth and climate stabilisation. Nonetheless, it has been demonstrated by various countries that economic growth can be “decoupled” from growth in CO2 emissions.  This is where harnessing renewable energy sources have and will continue playing a key role.

 

Nestled among the cotton fields in China’s Hebei province, the inhabitants of the Boli village in Nangong county have been no strangers to an unstable power supply, with the occasional electricity cuts resulting in visible damages – especially during the spring plough periods.  Apart from the coal-powered electricity, burning or decaying of agricultural residues has not been an uncommon sight either in this local hub for agricultural produce.

Just as in the case of Nangong county in China, most developing regions and countries in the world still rely heavily on fossil fuels to meet the fast-paced growth in energy demand. Major emerging economies like China and India in Asia (two of the top-3 biggest economies globally by GDP in purchasing power parity terms), as well as South Africa (one of the leading economies in Africa), have some of the most carbon-intensive electricity grids in the world. The power sectors in most other developing countries are also dominated by fossil-fuels. Considering the growth potential and projected future growth trajectories of these countries, there have been debates over the apparent paradox of simultaneous economic growth and climate stabilisation. However, it has been demonstrated by various countries that economic growth can be “decoupled” from growth in CO2 emissions.

The most plausible solution towards affordably mitigating climate change and enhancing energy security is an increased harnessing of renewable energy sources globally, especially in developing nations. It is expected that renewable energy will represent the single largest power source growth over the next five years – a whopping two-thirds of net additions to global power capacity – driven by falling costs and aggressive expansion in emerging economies. The market penetration and techno-financial viability of most of these technologies have also been achieved.  While the massive drop in oil prices over an extended period of time could have dampened investment in renewables, global clean energy investments continue to surpass record-breaking levels with each passing year. The cheapness of oil has historically evoked a very different scenario, namely one with less investment into the renewable energy business.

The positive outlook for global renewable energy uptake has received a considerable boost with a renewed commitment by national governments to a truly global low-carbon and climate-friendly legislation, inked at the COP21 in Paris in 2015. In addition to governments, non-state actors are also on the move, with voluntary private sector participation in the renewable energy sector becoming increasingly widespread and various initiatives, campaigns, and programs sprouting all over the world. These include the likes of the Breakthrough Energy Coalition, initiated by Bill Gates and other billionaire philanthropists with the goal of sponsoring clean energy, and the RE100, by means of which leading companies all over the world – from manufacturing to services – have made public their plans of procuring 100% of their electricity demand from renewable sources of energy.

The means of meeting the electricity demand of an entire facility or company with renewable energy can be tackled in several ways:

  • Procurement of renewable electricity from market sources – green electricity contracts, green power tariffs and dedicated Power Purchase Agreements (PPAs) with utilities, generators, and suppliers. While this approach is somewhat visible in European and North American markets, the electricity markets in most developing countries are not yet matured, open or developed enough to support this option.
  • Generation of renewable electricity from own on-site and/or off-site facilities (installations owned or controlled) that can be grid-connected or off-grid. This option entails a large upfront capital outlay, which may not be preferred by some companies. On the other hand, many companies have operations in locations which may not have adequate renewable energy potential to justify such investments.
  • Purchase of Renewable Energy Certificates (RECs) or Guarantees of Origin (GOs): In simple terms, 1,000 RECs or GOs would correspond to 1,000 MWh of the electricity consumed¹. For countries/regions that don’t have national or regional REC/GO schemes (like in Europe and North America for example), RECs from various international standards like the International REC Standard, Gold Power Standard, etc. can also be used. Many companies find RECs to be more convenient and transparent, and they also entail lower risk compared to dealing with more techno-financially and legally complicated options like upfront capital investments or purchase agreements. Finally, they offer an avenue to join the corporate sustainability leadership bandwagon and participate in public-forum initiatives like the above-mentioned RE-100, but also achieve an improved performance rating in the likes of CDP’s Climate Performance Leadership Index and LEED Certification.

Writing as someone who works for a leading global climate change and sustainability solutions provider, I’m proud to say we walk the talk: Apart from carrying out our annual carbon footprinting and GHG emissions offsetting exercise, we at South Pole Group also took on another challenge: greening 100% of the electricity consumed by our office that is currently served by one of the most carbon-intensive electricity grids in the world – China. The entire annual electricity consumption of our Beijing office was offset by redeeming RECs² from the Nangong Biomass Plant issued by the I-REC Standard. By using RECs, we are furthermore able to reduce our emissions from electricity in a cost-effective way, in compliance with the GHG Protocol.

Nangong_China2

A local employee at Nangong Biomass Plant, Nangong county, China

The Nangong Biomass Plant is located in the initially mentioned Nangong county, the rural region 300 km from Beijing. Transforming the discarded local agricultural waste into over 190’000 MWh of clean electricity per year, the plant now meets the energy needs of approximately 164’000 people in the Nangong region of Hebei province. The electricity generated from biomass utilization displaces the electricity that would otherwise be produced from coal-fired power plants, boosting the power supply stability of the region. The plant also supplies electricity to the North China Electricity Grid – the very same grid from which our Beijing-based office draws electricity from. Last but not least, the project has contributed to the creation of 133 local job positions and reduced smoke pollution from the open burning of biomass residue.  

It is already possible to power operations and regions with clean electricity, even in a carbon-intensive market such as China. Harnessing renewable energy sources can also contribute to mitigating climate change and enhancing energy security in an affordable way in developing countries. And when planned well, they are a win-win for all –  commerce and communities alike


¹RECs & GOs: the environmental attributes of renewable energy issued by a relevant and recognised standard registry provide equal clean energy credits for every unit of fossil-fuel based electricity consumed.
² Redemption is the act of retiring issued RECs purchased by you corresponding to your electricity consumption, hence effectively denoting that quantity of electricity you consumed came from renewable energy sources.  

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