Why is China Cutting Renewable Energy Subsidies? | Accurate Append

Why is China Cutting Renewable Energy Subsidies?

Once seen as the global leader in the transition away from fossil fuels, China is struggling with an identity crisis, shifting priorities concerning renewable energy, allegations of human rights abuses, and the wrong kind of hydrogen.

Only a couple of years ago, China was the shining city on the hill of renewable energy, even as it continued to burn a lot of coal and other fossil fuels. By 2014, “China had installed 378 gigawatts (GW) of renewables capacity . . . to tap water, wind and sun to generate power.” The plan was to have more GW of renewables “than all the countries of the OECD combined.” Like many nations, China was doing this by subsidizing renewables, although (again like many nations) the renewable subsidies paled in comparison to fossil fuel subsidies, still seen as essential to the economy. 

That retention of fossil fuel subsidies goes against the recommendations of energy policy experts who instead recommend phasing out of fossil fuel subsidies and reallocating the money to renewables. And, it turns out, China is still supporting fossil fuels with subsidies while, in fact, phasing out renewable subsidies. Rather than supporting wind and solar power with subsidies, China intends to cut subsidies for them altogether. That doesn’t mean they won’t support a renewables transition in other ways though: the nation’s financial institutions will be asked to finance the transition “through ratings of commercial banks, deposit insurance rates and macro prudential assessments.” In other words, China would prefer investment to subsidies.

This seems unwise. It’s true that investment in renewables is massively increasing and the world is on the brink of a healthy self-sustaining renewables market. But we’re not quite there yet, and state-driven acceleration is still warranted. Aside from the urgency of global climate change, a recent study attributes one out of every five deaths worldwide—yes, one out of five of all deaths—to air pollution from fossil fuels. 

Meanwhile, China is investing in hydrogen vehicles, but there’s another problem here: the world has insufficient supplies of clean H2. According to Recharge news, the former industry minister, Li Yizhong, recently “told an audience at a recent conference that, while local governments in China are enthusiastic about the development of hydrogen, few have thought about where supply will come from.” China has plenty of “grey hydrogen”—essentially hydrogen with carbon in it—but it requires carbon capture to avoid producing between 9 and 12 tons of carbon dioxide for every ton of hydrogen, definitely not a good way to utilize hydrogen as clean energy.

China remains the world’s largest producer of solar energy products for worldwide use as well, and the shift in domestic production policy isn’t likely to change that. But what could disrupt its production is global complaints of human rights abuses in Xinjiang, the province where China is allegedly abusing Uyghurs in contravention of the region’s autonomous status—through forced labor making solar energy equipment. “Companies based in Xinjiang produce half the world’s polysilicon, an essential material component in the solar photovoltaic manufacturing industry. Collectively, Chinese enterprises account for over 80 percent of the global polysilicon supply.” If this is disrupted, it would slow down the placement of solar energy in Africa and the rest of the world. 

This, of course, means the world should be working hard to duplicate China’s solar production efforts in places and ways that don’t violate human rights. The United States could do this, but U.S. lawmakers are still held hostage by the fossil fuel industry. It’s time to elect leaders who will break from that captivity.

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