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China: Leader of the new energy future
By Kingsmill Bond, New Energy Analyst
The battle for leadership in new energy deployment over the course of this decade is likely to be won by China. Europe has the most favourable government policies and the US the most famous entrepreneurs, but China has the best economics and the most polluted air.
- The race is on. China, the US and Europe are locked in a race to deploy new energy and take the lead in a key technology of the future.
- Why China is likely to win. China has the three key ingredients for victory – necessity, economics and autocracy. Without new energy deployment, the country will choke and be dependent on energy imports; the economics of new energy versus fossil fuels are better in China than in the West; and the government is focused on making it work. China is already the largest producer of new energy equipment, which it is installing faster than any other country.
- Europe is a real challenger. Europe has the largest amount of deployed new energy and the highest targets for new energy deployment and emissions reduction. Moreover, individual countries have the largest share of new energy in their overall mix. But energy demand is falling, actual energy demand is half that of China, and expensive deployments in the past are still being paid for.
- The US is in third place. Cheap natural gas, low petrol prices, low population density and a powerful fossil fuel lobby are likely to hold back the US. Despite the heroic efforts of California and Elon Musk, the US is in third place in most aspects of new energy deployment.
- The rest of the world is lagging. Japan is too small, India will not be a challenger this decade, and other countries are a long way behind.
- Why Chinese leadership matters. If China pioneers a new path to development via new energy rather than via fossil fuels, it will likely be copied by the rest of the emerging markets; this will help fossil fuel demand to peak by 2020.
For more details, see our 11 July note China: Leader of the new energy future.