A massive $736 billion energy investment plan could make China the world leader in renewable energy and help meet global CO2 emissions targets, but turning words into action might prove challenging, the chief economist with the International Energy Agency said on Friday.
"It is definitely very good news for China but also, looking at the implications for energy markets and the climate, very good news for the rest of the world," Fatih Birol told Reuters in a telephone interview.
The plan could not only reduce China's greenhouse gas emissions, now the world's highest, but might also help improve China's energy security by promoting the use of hybrid electric vehicles. It could also galvanise an economy long dependent on old and heavy industries, Birol said.
"However, to have a plan is something - to implement it is another thing. This is a very huge problem and it will more or less be a game-changer for the Chinese electricity generation sector."
One of the biggest challenges will be the phasing out of fossil fuel subsidies, which continue to encourage waste and inefficiency in China. "China is making the right steps but there are still subsidies which would slow down the implementation and perhaps reduce the efficiency of this programme."
In a report published last year, the IEA said China's total emissions were likely to double to around 12 gigatonnes a year by 2030 if current policies and energy patterns were maintained. The report said China would need to invest $1.5 trillion in the next two decades in order to keep 2030 emissions at around 7 gigatonnes per annum.
"This money given now is almost half of the money needed for the next 20 years, so it is very encouraging and it is going all in the right direction - renewables, nuclear power, efficiency."
Birol said the plan would make it considerably easier to meet the world's climate goals, and could therefore make negotiations on a new global climate accord go more smoothly.
The new plan, which will focus on raising the proportion of non-fossil fuels in China's overall energy mix to 15 percent from 8 percent at present, had little to offer those seeking to develop cleaner ways to use coal, which is set to continue to dominate for the foreseeable future.
The IEA said in a recent report that carbon capture and storage technologies - which strip greenhouse gases from coal before or during combustion - could contribute around 18 percent of China's required emission cuts.
"In this plan CCS is not there, and one might have thought they could have used it as a business opportunity to promote it - perhaps we will see that in the next stage."
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