China Clean Energy Firms Face Billions of Subsidy Shortfall
According to Reuters, China will struggle to pay billions of yuan in subsidies to clean energy companies, with a shortfall set to quadruple by 2020.
Dongming Ren, director of the National Development and Reform Commission’s Energy Research Institute, underscored the cost of funding the country’s ambitious renewables push during an industry conference on Oct.18th. According to him, if China’s current renewable policy of fixed power prices keeps unchanged, the total shortfall by 2020 is expected to reach 200 billion yuan ($30.2 billion), up from 50 billion yuan last year.
In view of China’s vow of raising non-fossil fuel to 15% of its total energy mix by 2020 and cap its carbon emission by 2030, the government is actively supporting and subsidize renewable energy while the dependence of China’s renewable sector on government subsidies will be one of the main near-term challenges for clean power.
To ease the government’s financial burden on renewable projects and keep the rate of waste power under control, China has cut subsidies for new large-scale solar and onshore wind power projects and set capacity limits in regions with high waste rates.
Since 2013, China has piloted carbon emissions trading in seven provinces and cities, including Beijing, Tianjin, Shanghai, Chongqing, Shenzhen, Hubei province and Guangdong province. It is planned to establish a national carbon-trading system and launch a nationwide carbon emissions market by this year.
“China needs to expand the source of renewable subsidies, otherwise it would be very difficult for clean energy to compete with coal, especially before environmental costs are showed on coal-fired power prices,” said Ren.
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