China’s Renewable Energy Law Takes Effect

China’s landmark renewable energy law took effect on January 1, prompting the government to issue a number of pertinent new rules and technical criteria, according to the Worldwatch Institute.

In particular, financial subsidies and tax incentives for the development of renewable energy sources — including wind power, solar energy, biomass, and others — are in the enactment process, said Zhang Guobao, vice director of the National Development and Reform Commission, at a press conference on January 12. Based on the “feed-in laws” that have been successful in advancing renewables in Germany and other European nations, one new regulation addresses the core issues of pricing and fee sharing for on-grid renewable energy. According to Xinhua News, the ruling stipulates two forms of renewables pricing: a government-set price and a government-“guided” price. For example, for biopower — defined by China as energy derived from biomass, or plants — the government will set the price based on the provincial or local on-grid price of desulfurized coal, plus a government subsidy of 0.25 yuan (US $0.03) per kWh. This subsidy will no longer be available once a biomass project has been in operation for 15 years. For all renewable power projects approved after 2010, the subsidy provided per kWh generated will decrease at an annual rate of 2 percent. For biomass projects, if the licensees are determined through a competitive bidding process, the bid-winning price will be implemented provided it does not exceed the local price of grid-connected power. The on-grid price of wind power, too, will be set by State Council authorities based on the bid-winning price. The price of solar, marine, and geothermal power projects, meanwhile, will be determined on an “economic and reasonable” basis. The cost difference between on-grid renewable power and power from on-grid desulfurized coal will be shared in the selling price at the provincial and national levels. The Chinese government endorsed the Renewable Energy Law in February 2005, driven by a surging demand for energy as well as the desire for energy security, pollution reduction and poverty alleviation. Specifically, the law aims to boost China’s renewable energy capacity to 15 percent by the year 2020 and outlines a commitment to invest $180 billion in renewable energy over this period. It sets the stage for the widespread development of renewable energy in China, particularly for commercial-scale electricity-generation facilities. Other financial issues under discussion include a national fund to foster renewable energy development as well as low-cost loans and tax breaks for renewable energy projects. Courtesy of Zijun Li, Worldwatch Institute

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