Industrial and Rural Energy in China: Innovative Private-Sector Initiatives Lead the Way

Article excerpt

China's massive industrial sector is an economic juggernaut, helping to drive national gross domestic product (GDP) growth rates of around 10 per cent per year. But while the country's highly productive factories and plants may be boosting national prosperity, their rapid expansion carries with it a serious environmental burden and costly energy inefficiencies that are increasingly becoming a barrier to China's sustainable development, thus contributing to climate change.

As Wang Yanjia, a scholar at Tshingua University, pointed out in his presentation at an Organization for Economic Cooperation and Development (OECD) event in 2006, national industrial expansion has become a mixed blessing for China. On the one hand, industry accounts for nearly half of its GDP, with revenue increasingly being generated by the private sector, which is nurtured by State policies, shifting toward a market-based economy. On the other hand, the industrial sector is responsible for about 70 per cent of national energy consumption and 61 per cent of carbon dioxide emissions, rapidly becoming a major contributor to global warming. It may not be prudent to suggest that China should curb its industrial growth entirely, simply that one adverse by-product of the growth of energy-intensive industries, particularly during the tenth "five-year plan", has not been matched by a necessary improvement in energy efficiency of those industries. While there has been improvement in the past, technology used by China's major industries still lags behind in efficiency standards compared to more advanced technology being used in other countries.

Fortunately, the Government has acknowledged the capital wasted on such inefficiencies and the dubious honour of being the second greatest emitter of energy-related carbon emissions in the world as an issue to be addressed.

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Entrepreneurial Vision

China's rising entrepreneurial class is taking up the challenge to meet energy efficiency goals laid out in the most recent five-year plan, such as the target of reducing energy consumption by 20 per cent per unit of GDP. Entrepreneurs in the energy-related sectors, especially in thermal energy, are pushing for groundbreaking and profitable innovations that promise to help control the country's ravenous industrial energy consumption while maintaining, or even increasing, high levels of output.

Beijing Shenwu Thermal Energy Technology Company, founded in 1999 by Wu Dao Hong, is a prominent example of the success entrepreneurs are finding in implementing business models that combine environmental and economic goals. It manufactures equipment that reduces industrial fossil fuel consumption and carbon emissions. In addition, the company generates major energy and cost savings for its clients in the steel, petroleum, chemical and other sectors. Shenwu utilizes a proprietary patented combustion technology that the World Bank has recognized as one of the world's best energy-saving solutions. Its products, based on high temperature air combustion and other technologies, reduce energy consumption by 30 to 60 per cent while increasing output by 10 per cent--a competitive edge that has generated over $50 million per year in revenues. The technology also reduces carbon emissions by 30 per cent, ensuring the company's long-term viability in a carbon-constrained economy.

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The fact that Shenwu was the first Chinese company to be listed on the Chicago Climate Exchange shows the new direction the industrial sector is taking. The success the company is experiencing speaks volumes to the value energy-sector entrepreneurs are finding in an approach that lowers burdensome energy costs, while reducing carbon emissions and contributing to environmental benefits. As the Government wisely pursues sustainable development goals alongside industrial growth, public officials seem intent on increasing support for companies that seek to fulfil the demand for industrial energy efficiency. …