The rapid growth of China’s renewable energy sector presents valuable lessons for the United States.
One of the Trump administration’s talking points about global warming is that we’re reducing greenhouse gas emissions, while the countries that remain in the Paris accord are not. The first part of this story is clearly not true, as data for 2018 show a large rise in emissions for the United States. The second part is also not very accurate, as most other countries are taking large steps to reduce emissions. At the top of the list is China. The country has undertaken a massive push to convert to electric powered vehicles and clean energy sources.
China’s progress in this effort is truly extraordinary. In the case of electric cars, it has used a carrot-and-stick approach where it offers consumers large subsidies for buying electric cars while also requiring manufacturers to meet quotas for electric car production as a percent of their total fleet of cars. It has also invested in the necessary infrastructure, ensuring that there are a large number of charging stations widely dispersed across the country so that drivers don’t have to worry about being unable to recharge their cars.
The result has been a massive increase in the sale of electric cars. Electric car sales are projected to be 1.1 million this year, almost equal to sales in the rest of the world combined. The country expects sales to continue to rise rapidly, with annual sales hitting 11.5 million in 2030. By comparison, electric car sales are expected to be just 480,000 in the United States this year, less than half the number in China.
There is a similar story with solar and wind energy. China added more solar capacity last year than the rest of the world combined. In 2018 it already surpassed the goal it had set for 2020. It is now looking to double its capacity over the next two years.
China also has almost as much wind power capacity as the rest of the world combined. Its capacity is more than three times as great as in the United States. However, even with the extraordinary growth in clean energy, wind and solar together still account for less than 20 percent of China’s generation capacity and less than half the amount of electricity produced by burning coal. Nonetheless, China’s enormous progress in promoting electric cars and clean energy should tell us a great deal about the potential in these areas in the United States. While China’s economy has grown rapidly over the last four decades, on a per person basis its income is still less than one-third that of the United States.
This means that a relatively poor country was able to make massive gains in reducing greenhouse gas emissions compared with its baseline growth path. The focus on electric cars and clean energy also did not impair the country’s growth in any obvious way.
Over the last decade, China’s GDP growth has averaged 7.9 percent annually. Perhaps there is a story where China’s economy would have grown even more rapidly without the subsidies and other measures to promote green growth, but obviously, these measures could not have been very serious impediments if the country could still sustain one of the fastest growth stretches the world has ever seen.
If China could make such enormous progress in a short period of time, surely the United States could make comparable gains with the resources at its disposal. This doesn’t mean that the necessary reductions in greenhouse gas emissions will be costless: people will have to change lifestyles. This means doing without SUVs and eating much less meat. But China’s success is an impressive example.
This brings up another issue directly related to Donald Trump’s trade war with China. One of the biggest complaints that Trump has is that China is “stealing” American technology. Most media commentators have widely endorsed this complaint.
China already spends almost as much as the United States on research and development. With a much more rapidly growing economy, China is virtually certain to pass the United States in research and development spending in the very near future, if it has not already done so.
Rather than spending so much effort worrying about what China is taking from us, we should be thinking about what we can get from China, especially in the area of green technologies where it has made such enormous progress. Rather than looking to lock up American our technologies to maximise the profits US corporations get from their patent and copyright monopolies; a modern trade deal would look to maximize the flow of technology across national borders.
That would be the focus of a trade deal if we were concerned about economic prosperity and the future of the planet. Unfortunately, that is not likely to be the agenda of the people involved in trade negotiations.
Dean Baker is a macroeconomist and senior economist at the Centre for Economic and Policy Research, Washington DC.
This article was originally published on the John Menadue – Pearls and Irritations website on 25 January 2019. It is republished with permission.