An official from the electricity department of the Ningxia Hui Autonomous Region disclosed that the investment for 1 kwh of wind power is nearly 10,000 yuan, two or three times more than that of thermal power. Therefore when granting loans to wind power plants, financial institutions often demand stricter guarantees. At this point, the government has no guarantee mechanisms or special supporting funds for the utilization of renewable energies.

Planned development

China's rapidly growing economy is pushing energy consumption to new highs as the increasingly affluent populous plugs in and turns on more appliances every day, adding to the high-voltage, factory-like hum that has long characterized the country's modernization efforts. In its "alternative oil strategy," which is part of the 11th Five-Year Plan (2006-10), the Chinese Government has called for a doubling in renewable energy generation to 15 percent of the country's total needs by 2020.

The target is in line with the Renewable Energy Law requiring grid operators to purchase resources from renewable energy producers. The law, which came into effect in January 2006, also offers financial incentives to foster renewable energy development, including discounted lending and a range of tax breaks.

Of the main renewable energies, wind power is said to have the most potential. Professor Wang Weichang, an energy expert at Tsinghua University in Beijing, predicts that wind energy is on course to supplant hydropower as the country's second-largest electricity source behind coal. Wang said China has the ability to generate up to 100 gigawatts, or 20 percent of the current national capacity, through wind energy. The Renewable Energy Law has also decreed that 20 percent of the country's total energy consumption should come from renewable sources by 2020.

China has mapped out its renewable energy development plan for increasing the variety of energy sources and cutting greenhouse gas emissions.

The State Council, China's cabinet, has reviewed and passed a renewable energy mid- to long-term development plan. According to the plan, China will accelerate the development of hydropower and solar, wind and biomass energies.

Estimates are that by 2010 China's renewable energy will reach the equivalent of 270 million tons of coal. Total installed capacity of hydropower is expected to hit 180 million kw, wind power 5 million kw, biomass power 5.5 million kw, and solar power 300,000 kw. Fuel ethanol production will reach 2 million tons and bio-diesel output is projected to be 200,000 tons. Methane use is expected to total 19 billion cubic meters.

From 2010 to 2020, China will enhance the development of renewable energy, according to the plan. The installed capacity of hydropower will increase to 300 million kw, wind and biomass power 30 million kw respectively, and solar power 1.8 million kw. The use of fuel ethanol, bio-diesel and methane will reach 10 million tons, 2 million tons and 44.3 billion cubic meters respectively.

In 2005, China's renewable energy utilization exceeded the equivalent of 166 million tons of coal, accounting for 7.5 percent of the country's total energy consumption.

Although China has mapped out an ambitious plan to utilize renewable energy from water, sunshine and plant sources, it has some strict requirements. Premier Wen Jiabao stressed at a State Council meeting that the development of renewable energy should avoid occupying arable land, consuming of large amounts of grain or damaging the environment.

In fuel ethanol production, non-staple crops like sorghum, batata and cassava will become the new sources for fuel ethanol, supplanting the use of corn. In 2005, China produced 145 million tons of corn, 2.7 million tons or 2 percent of which was used as raw material for fuel ethanol production.

Xiong Bilin, Deputy Director of the NDRC Industry Department, said that the country would not approve new projects using food-based ethanol. The current four plants making ethanol from corn have been urged to switch to new sources.

Among the four ethanol-producing plants using corn as raw material, Tianguan Group based in central China's Henan Province, China's major farm produce base, has already shifted 20 percent of ethanol production from corn to cassava, with an annual output of 300,000 tons.

Yet even with China's ambitious perspective on renewable energy, environmental experts warn that the country should be wary of environmental impacts brought by bio-fuel production and should not just focus on energy security and cuts in greenhouse gas emissions.

Meng Wei, President of the Chinese Research Academy of Environmental Sciences, said at a recent forum that bio-fuel utilization can also have negative consequences to the environment. To produce 1 ton of fuel ethanol requires 60 tons of water and releases a large quantity of wastewater.