Your intrepid energy explorer is reporting this week from China. You’ve heard about the bad air no doubt. It’s no exaggeration. In an interior city, Changsha in the Hunan Province, a taxi driver was only partially joking today that he’d been living in the city for 4 years and had only seen a blue sky 3 times.

That said, it is no exaggeration that the Chinese government and people know they have a problem and are going to great lengths and great expense to improve the situation. The government has set aside 1 trillion yuan (~$150B – that’s  B as in billion) to improve the situation. This isn’t future money, this is cash set aside for spending on improving the energy infrastructure; power distribution and improving efficiency.

The China Daily, about the only newspaper Earl can read over here, had a section in the 10 February edition on Energy/Environment. The section titled Mixed Energy Forecast gave an assessment on renewable energy. Here is a synopsis on what was reported about the gains made as a result of the Renewable Energy Law that has been implemented.

• Investment in wind power in 2008 was 88% greater than 2007 investment growing the wind output by 4GW to 10GW total.
• Nuclear power infrastructure investment increased 72% in 2008 over 2007
• The global financial crisis will cause a decline in investment in 2009
• The Chinese government has promised to offer more support to the renewable energy industry
• Several large hydro electric projects came on line adding 20.1 GW to the 2008 hydro output. In addition to the massive Three Gorges project there are 10s of thousands of micro-hydro stations throughout rural China.
• The bad news is that there is an absence of incentive policies for the solar industry. There are currently more than 70 grid-connected to photovoltaic projects but only two of them received feed-in tariffs and most have not benefitted from the Renewable Energy Law.
• Nuclear power goals have recently been increased with plan to bring total nuclear generated electricity to 5% of the demand by 2020.

The paper also reported that from October 2007 to June 2008 subsides of 2B yuan (~$22M) were provided to 148 renewable energy projects. This indicates that these projects are definitely gaining momentum. The global financial crisis has brought down global demand for raw materials such as steel and silicon. This is good news for the renewable energy industry bringing down costs for wind turbine and solar panel manufacturers. The net result of this is lower prices around the world. Stay tuned for more reports.