Henry Huiyao Wang's address on the Global Solutions Summit 2024
President of CCG advocates for leveraging China's advancements (not overcapacity) in renewable energy technologies globally.
The Global Solutions Summit 2024 took place on May 6-7 in Berlin, featuring the Center for China and Globalization (CCG) as a knowledge partner. The President of CCG, Henry Huiyao Wang, participated in the session titled "Accelerating the Renewable Energy Transition" on May 7. German Chancellor Olaf Scholz delivered a keynote address on the same day.
Today's CCG Update presents a revised article based on the transcript of the conversation between Henry Huiyao Wang and Janka Oertel, Director of the Asia Programme and Senior Policy Fellow at the European Council on Foreign Relations. Oertel inquired whether the provision of green capital and favorable lending conditions is seen as a priority and a responsibility for China, and asked for Wang's suggestions on accelerating the renewable energy transition.
The text has been edited for clarity and conciseness from its original delivery at the summit.
I believe that the topic we are discussing today is very timely, especially after Olaf Scholz, the German Chancellor's speech on the climate initiative that Germany is pushing. At this moment, the world needs to realize that climate change poses an imminent threat to human beings, and every country should do its best to address it.
Ten or fifteen years ago, Beijing was severely polluted by smog, which often led visiting foreigners to criticize China's environmental policies before quickly leaving the city to escape the smog. However, China built up the climate consensus very quickly, particularly after the Paris Agreement a decade ago. Currently, China is the world's largest producer of clean energy, with half of its energy production being renewable. This is an achievement, considering the country's population of 1.4 billion people. Now it has become the largest producer of solar panels, the largest producer of EVs, and the largest producer of wind power.
Despite these accomplishments, China is now facing criticism for "overcapacity," a stark contrast to the criticism about heavy pollution a decade ago. It is important to highlight that the world is significantly below the levels of what some might call "overcapacity" in renewable energy production; indeed, overcapacity is not a genuine issue. For example, the International Energy Agency (IEA) forecasts that a total of 630 gigawatts of annual solar capacity addition is needed by 2030 to combat Climate Change. But now the global capacity only meets about a quarter of this demand. The IEA also forecasts that the global renewable energy investment needs to be increased to $4.0 trillion per year, but now it is less than one-third of that amount. Clearly, the real issue is not overcapacity but a significant shortfall in renewable energy supply.
I believe that China should collaborate with the international community, including Europe, the U.S., and the Global South, to leverage the technology developed in China and expedite the transition to renewable energy. China is already a pioneer in this field, and we should set aside geopolitical, ideological, and political differences in this endeavor. Everybody still buys American and European aircraft, like those produced by Airbus. Yet when it comes to clean energy products that are produced in China, it is said to be "overcapacity." There seems to be a reluctance to embrace Chinese clean energy products and calls for postponing the transition to electric vehicles in 2035-2040. This, in turn, prolongs the use of gasoline and diesel until 2040.
This double standard needs to be avoided. We should seize the opportunities presented by China's clean energy products and make them beneficial for all nations, especially those in the Global South, in the fight against climate change and the acceleration of the renewable energy transition. China serves as a positive example, with half of its energy already coming from renewable sources and a rapid growth in clean energy adoption.
If China can produce cost-effective and efficient solar panels, why not utilize them? This could be considered China's "subsidy" for the world, and China's contribution to combating climate change. Leveraging affordable and reliable resources from China is a good idea. We need to consider this matter from various perspectives.
Recognizing the substantial gap in global climate finance, China, as the world’s second-largest economy, is taking a proactive stance by focusing on two key fronts. First, China is striving to minimize production costs and offer global renewable energy solutions. Secondly, the Asian Infrastructure Investment Bank (AIIB) is extending green financing for similar environmentally friendly projects, with India being the largest beneficiary of AIIB loans from China.
In the realm of climate financing, it is imperative to foster collaboration among G20, G7, and BRICS nations to arrive at viable solutions during the 29th Conference of the Parties to the United Nations Framework Convention on Climate Change (COP29). Let's get all countries to rally behind climate financing.
China has already made substantial domestic and international contributions to support climate financing. However, developed nations, particularly the G7, should intensify their efforts due to their historical responsibility, as two-thirds of historical pollution originated from them. While China and India are relatively new contributors to pollution, they are now facing pressure to halt emissions abruptly since the "window" for allowable emissions has closed. If China should not emit any further given the "window" has closed, then China should not be criticized for finding new solutions to climate change, or face undue criticism or accusations of "overcapacity." China's initiatives in combating climate change are, in essence, a global benefit.
In terms of global solutions, my No.1 recommendation is that since China has the best renewable energy technology, China should be allowed to set up factories in Europe, and everywhere in the world. Just as China welcomed foreign investment in the 1980s, maybe the trend should now be reversed, and other countries should welcome China's clean energy investment.
Recently, two Chinese companies have withdrawn from their solar projects in Poland following EU investigations into alleged receipt of foreign subsidies. If Chinese firms can offer the best electric vehicles, batteries, and solar energy, while also providing employment, investments, and local solutions, then why not? We should not let the political agenda dictate our economic benefits.
For the second solution, I would like to talk about Africa. The success of a Chinese company in providing that provides solar energy for half a million African households, so they can turn on lights in the evening and charge their phones at a very affordable cost is a commendable example. We could extend similar initiatives in the Global South with the help of all the other countries, utilizing cost-effective energy products and Chinese technology to drive widespread adoption. Africa is already a good example.
The third solution addresses budget issues. Currently, many NATO countries are calling for defense budgets to be raised to at least 2% of GDP with many already exceeding this figure. Let's strive for peace in Ukraine and the Middle East. Let's set aside 1% of GDP from every country to address urgent climate change concerns and limit the military budget to 1%. Mandating that each country contribute at least 1% of GDP to the green transition, rather than overspending 2%, 3%, or even 4% on military and ammunitions, will emphasize environmental sustainability over excessive military expenditure.