Presentation given by Frauke Urban (SOAS) at the University of Münster, January 2015 Part of the STEPS affiliate project on Low Carbon Innovation in China. Website: http://steps-centre.org/project/low-carbon-china

1. Low carbon innovation in China –
Prospects, Politics and Practice
Dr Frauke Urban
SOAS, University of London
Münster, 9th January 2015

2. Content
1. Background: China’s energy and climate setting
2. Project overview: Low carbon innovation in China
3. Case study: Solar energy
4. Conclusion
Project team at solar PV
plant in Shandong
province, China:
Wang Yu, Sam Geall,
Frauke Urban

3. 1. China’s energy & climate setting
• World’s most populous country, rapidly
growing economy
• World’s largest emitter of greenhouse gas
emissions
• World’s largest energy consumer, mainly
coal-dependent
• But also world’s largest investor in renewable
energy, including in hydropower, wind energy
and solar energy
• Increasing innovative capabilities for low
carbon energy & green economy in China

4. 0 1,000 2,000 3,000 4,000 5,000 6,000 7,000 8,000 9,000
Japan
Russia
India
Euro zone countries
USA
China
Total CO2 emissions in Mt, data from World Bank 2013

5. Per capita CO2 emissions in t, data from World Bank 2013

6. Total energy use in Mt coal equivalents, data from World Bank 2013
0.00 1,000.00 2,000.00 3,000.00
Japan
Russia
India
Euro zone countries
USA
China

7. 0 1000 2000 3000 4000 5000 6000 7000 8000
India
China
Euro zone countries
Japan
Russia
USA
Per capita energy use in kg, data from World Bank, 2013

8. 2. Project overview
• ESRC-funded project, 2013-2016, UK-China collaboration
• Main research question: Can Chinese low carbon innovation
help address the climate crisis?
• Project aims to investigate the social and political aspects
of low carbon innovation in China, rather than focusing on
technical change alone.
• Large literature on low carbon innovation in China, but much
of it downplays the social nature of technical change, and
questions of political change and power.
• Methods: interviews, focus group discussions, back-casting
• Theory: socio-technical transitions (Geels, 2002), innovation
systems (Berkhout et al. 2011), power analysis (Smith &
Stirling 2007)

9. 2. Project overview
• Contrasting cases of low carbon innovation:
high tech vs frugal tech
• 3 sectoral case studies: energy, transport,
agriculture
• Solar PV vs solar water heaters
• Electric cars vs electric 2-wheelers
• GM crops vs agro-ecological systems

10. 3. Case study: Solar energy

11. 3. Case study: Solar energy
• Prospects solar PV:
• First silicon PV cell produced in USA in 1950s
• Combination of independent innovation and foreign technology,
domestic firms have built a “PV industry with Chinese characteristics”
(NDRC, 2012:4).
• Export-oriented: 95% of PV systems exported, mainly to Europe
(Germany) and USA (REN21, 2012; Fischer, 2014).
• Almost 60% of total global solar PV production from China, with an
export value of US$20.2 billion (NDRC, 2012; Sun et al, 2014).
• Domestic installed capacity (5%): 12 GW by 2013, target is to install 35
GW by end of 2015 (Sun et al, 2014), mainly ground-mounted large-
scale solar plants
• Historically expensive, but sharp decrease in prices in recent years:
1$/Watt
• Currently 6 of global top 10 solar PV firms are Chinese: Yingli Green
Energy; Trina Solar; Jinko Solar; Rene Solar; Hanwha SolarOne; JA
Solar.

12. 3. Case study: Solar energy
• Prospects solar WH:
• “Undiscussed protagonist” of a transition from fossil fuels to low
carbon energy (Annini et al, 2014:152).
• Domestic-oriented: China is the world’s largest solar hot water
market: more than 65% of world capacity (REN21, 2011), and
they are used by over 30 million households in China (CGTI,
2009).
• Leading innovation: evacuated tube design, designed at
Tsinghua University in 1990s: low cost, indigenous innovation
• Chinese firms hold 95% of the patents for core technologies of
solar water heaters worldwide (CGTI, 2009).
• Used predominantly on small-scale, in rural & urban areas, cost
a couple of hundred $ per SWH (IEA, 2014)
• Some 3,000 solar water heater firms, with Himin Solar and
several Shandong-based firms being the top sellers (Hu et al,
2012)

13. 3. Case study: Solar energy
• Politics and policies solar PV
• Supported by national government, such as embedded in NDRC
targets and Five Year Plans
• Ministry of Science and Technology (MOST) drives forward R&D, with
an average annual investment of around 500 million yuan (around
US$81 million) (Wang, Shu and Lu, 2013)
• Local government provided free or low-cost loans, tax rebates,
research grants, cheap land (Chen, 2014), e.g. in Jiangsu and
Shandong provinces
• Feed-in-tariff, but grid connectivity challenges, mainly bureaucratic
hurdle
• Paradox of large-scale development of PV industry without
complementary policy support for creating a domestic market (Fischer,
2012)
• Twin challenge of export of PV systems, but import of purified silicon
(Chen, 2014), industry vulnerable to financial crisis & anti-dumping laws
(Mazzucato, 2013)

14. 3. Case study: Solar energy
• Politics and policies solar WH
• National-level support for R&D until the 1990s
• Relatively little stable national financing incentives after the
evacuated tube design was commercialised in 1998
• SWH targets mentioned in national policy documents in early
2000s, less afterwards e.g. 12th Five Year Plan focuses mainly on
solar PV
• Strong support at the local level from government and
bureaucrats: a mandatory requirement to install solar water
heaters as part of every new building in several provinces and
cities; purchase subsidies for SWH in rural areas (Hu et al,
2012).
• Growth of SWH industry linked to local employment for private
firms & SOEs, tax revenues for local governments, economic
growth and increased competitiveness for the province and/or
municipality

15. 3. Case study: Solar energy
• Practice solar PV
• Global financial crisis and trade disputes with the EU and US
made domestic market more attractive
• Rapid increase in installed solar PV capacity in China
• But…. Major challenges like “lack of enabling business and
knowledge environment; lack of adequate policy support; and
competing strategic policy considerations” (Fischer, 2012:132)
• Relatively high prices for individual buyers
• Difficulty of installing solar PV modules – many potential
consumers do not own or have access to roof space
• Connectivity with the grid is technically and bureaucratically
challenging, despite feed-in-tariff
• Within China PV is mainly used in ground-mounted, large-scale
installations, for which financial incentives are particularly crucial.

16. 3. Case study: Solar energy
• Practice solar SW
• Rapid increase of SWH, mainly popular in rural areas and small towns,
although some leading firms are increasingly attracting urban customers
• Solar water heaters meet the demand of millions of Chinese customers by
offering good quality, high performance, but at a low cost (Hu et al, 2012).
• Reduces pressure during peak load, contributes to energy security and
opportunities for economic growth at the local and provincial level (Li et al,
2011).
• Relaxed building codes enable setting up solar water heaters on roofs without
planning permission or other bureaucratic rules.
• Quality is key as low quality SWH can result in a range of adverse effects,
including water damage to buildings.
• Day-to-day practice may change as SWH can behave different to electric or
gas WH
• Evacuated tube solar water heater as a dominant, low cost Chinese
innovation that has already changed socio-technical preferences for water
heating for 30 million Chinese households (Annini, 2014).

17. 4. Conclusion
• China’s approach to low carbon innovation in solar energy is two-
fold:
• High tech, export-oriented, large-scale / industrial-scale, still
rather expensive, top-down, driven by central government,
national firms
• VS frugal tech, domestically-oriented, small-scale / individual-
scale, cheaper, bottom-up, driven by local government, local
firms & local demand
• The ‘hidden champion’ of solar water heaters is flourishing at the
provincial level, largely uninfluenced by central government,
domestically developed technology, driven by affordable prices
and large local demand
• Similar trends can be seen in transport & agriculture
• Alternative, decentralised, citizen-led, bottom-up low carbon
transitions for a green economy can be powerful tools to mitigate
climate change in China and beyond

18. • Thank you for your attention
• Questions?