The Green Leap Forward KEy MEssagEs 1 T The dominance of coal shadowed China's achievements in developing renewable energy (RE) during the last three decades. Small hydropower and later photovoltaic (PV) solar power were promoted by the government for electrification of rural counties and areas remote from the grid. After stalling during the 9th Five-Year Plan (FYP), 1996-2000, and the early years of the 10th FYP, 2001-05, wind and, to a lesser extent, biomass boomed after the effectiveness of

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... he Renewable Energy Law in 2006. In 2009, installed RE capacity reached 55 gigawatts (GW) of small hydropower (the largest in the world), 22.68 GW of wind power (and rising), 4 GW for biomass, and 300 megawatts-peak (MWp) for PV. These achievements are remarkable by any standard. 2 The RE Medium-and Long-Term Development Plan, published in 2007, specified the country's commitment to increasing the share of RE to 15 percent of the 2020 primary energy supply. The government is envisaging increasing the targets of renewable electricity from 360 GW generating 1,490 terawatt-hours (TWh) to 500 GW generating 1,820 TWh (including large hydropower). 3 The envisaged government target (EGT), if confirmed, would constitute major progress in addressing local and global environmental issues. It would put the energy sector on track to achieve the goal of meeting 15 percent of the country's primary energy needs through RE. The implicit local and/or global environmental externalities underlying the envisaged target indicate a tremendously increased focus on reducing local pollution and addressing climate change, as well as strong support to build a world-class RE industry. 4 The impact of the RE programs on the cost of electricity generation could be significant in case of major scale-up, but it remains manageable. 5 The target could be achieved in a most-effective manner in the following ways: • Developing hydropower faster: Hydropower rehabilitation and more rapid and environmentally and socially sound development could achieve the target at a lower cost because hydropower is already competitive with coal. Developing hydropower more quickly would allow for increasing the RE target above the EGT without increasing the incremental cost of the program. • Improving the performance of wind power rapidly: China's experience has been less than optimal in planning wind farms, operational integration and coordination between developers and grid operators. This considerably reduced the performance of the wind program. If not addressed adequately, the high level of inefficiencies could increase the cost to the nation of the envisaged wind program, which could become prohibitive. • Promoting trade: With trade, provinces could achieve their mandated targets. RE transactions would amount to about 360 TWh, 42 percent of the total of the EGT. And more important, trade would reduce the discounted cost of the envisaged RE target by about 56-72 percent. • Developing green electricity scheme(s): Green electricity has been well studied in China and piloted in Shanghai municipality. Deploying green electricity schemes at the national and/or regional levels should be considered among the options to pay for the incremental cost resulting from the development of RE. v