China and the United States—A Comparison
of Green Energy Programs and Policies

Richard J. Campbell
Specialist in Energy Policy
March 30, 2011
Congressional Research Service
7-5700
www.crs.gov
R41748
CRS Report for Congress
P
repared for Members and Committees of Congress

China and the United States—A Comparison of Green Energy Programs and Policies

Summary
China is the world’s most populous country with over 1.3 billion people. It has experienced
tremendous economic growth over the last three decades with an annual average increase in gross
domestic product of 9.8% during that period. This has led to an increasing demand for energy,
spurring China to add an average of 53 gigawatts (gw) of electric capacity each year over the last
ten years to its power generation capabilities.
China has set ambitious targets for developing its renewable energy resources with a major push
of laws, policies, and incentives in the last few years. The wind power sector is illustrative of
China’s accomplishments, as installed wind power capacity has gone from 0.567 gw in 2003 to
12.2 gw in 2008, and China surpassed the United States in 2010 with over 41 gw of installed
wind power capacity. Notably, however, approximately one-third of that capacity is not yet
connected to the power grid. Plans already exist to grow China’s wind power capacity to 100 gw
by 2020. A similar goal exists for the solar photovoltaic power sector which China intends to
increase generating capacity from 0.14 gw as of 2009 to over 1.8 gw by 2020. A hold on large and
medium-scale hydropower project development has been lifted, with a virtual doubling of
hydropower capacity planned. Most recently, China pledged ahead of the Copenhagen talks in
2009 that 15% of total energy consumption will come from non-fossil fuel sources by the year
2020. The 12th Five Year Plan will encompass 2011 to 2015, and will further formalize the link to
green energy with specific deployment goals and investment. China recognizes that developing
its domestic renewable energy industry and building its manufacturing capacity will help it meet
energy demands at home and win advantages in future export markets.
The key piece of legislation in recent years for advancing renewable electricity in China is the
Renewable Energy Law of 2005. The law was designed to “promote the development and
utilization of renewable energy, improve the energy structure, diversify energy supplies,
safeguard energy security, protect the environment, and realize the sustainable development of the
economy and society.” Renewable energy is subsidized by a fee charged to all electricity users in
China of about 0.029 cents per kilowatt-hour, and was originally based on the incremental cost
difference between coal and renewable energy power generation.
However, energy efficiency and conservation are officially China’s top energy priority. These are
considered the “low-hanging fruit” in the quest to reduce energy use and cut demand. Energy
conservation investment projects have priority over energy development projects under the
Energy Conservation Law of 1997, with government-financed projects being selected on
“technological, economic and environmental comparisons and validations of the projects.” China
is the world’s largest market for new construction, and new building standards have been in
development since 2005 with national energy design criteria for residential buildings. In the
power generation sector, many smaller, less efficient coal-fired power plants have been closed.
In contrast to China, some argue that the United States does not have a comprehensive national
policy in place for promotion of renewable energy technologies, with some observers saying that
the higher costs of renewable electricity are not conducive to market adoption. However, for both
countries, the reasons for increasing the use of renewable energy are diverse, and include energy
security, energy independence, cleaner air, and more recently anthropogenic climate change,
sustainability concepts, and economic development. Creating new, higher quality jobs could
reasonably be said to be primary drivers of policy goals in both the United States and China.
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China and the United States—A Comparison of Green Energy Programs and Policies

Contents
Introduction ................................................................................................................................ 1
Existing Laws, Programs, and Incentives..................................................................................... 3
China .................................................................................................................................... 3
Clean Energy Research and Development Programs........................................................ 4
Key Legislation Promoting Renewable Energy................................................................ 5
Renewable Energy Focus ................................................................................................ 8
Incentives, Subsidies, and Procurement Programs ......................................................... 14
United States....................................................................................................................... 16
Clean Energy Research and Development Programs...................................................... 17
Key Legislation Promoting Renewable Energy.............................................................. 17
Renewable Energy Focus .............................................................................................. 18
Incentives, Subsidies and Procurement Programs .......................................................... 21
Discussion ................................................................................................................................ 22

Figures
Figure 1. Map of China ............................................................................................................... 2

Tables
Table 1. China—Renewable Energy Deployment Targets ............................................................ 9

Contacts
Author Contact Information ...................................................................................................... 26

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China and the United States—A Comparison of Green Energy Programs and Policies

Introduction
China is the world’s most populous country with approximately 1.3 billion people. It has
experienced tremendous economic growth over the last three decades with an average annual
increase in gross domestic product (GDP) of 9.8% during that period.1 This rapid economic
growth has led to an increasing demand for energy, spurring China to add an average of 53
gigawatts (gw) of electric capacity each year over the last ten years to its power generation
capabilities.2
China is also the world’s largest producer and consumer of coal, with about half of its coal use
being for electricity generation. In fact, coal provides over 70% of China’s current electricity
needs, and fuels much of the new power generation capacity being built.3 While many of these
new coal plants are among the most technically advanced in the world,4 the burning of coal
results in sulfur dioxide, nitrogen oxides, and particulate emissions which contribute to air
pollution, and greenhouse gas5 emissions linked to global climate change.6 The current and
potential future environmental consequences of burning coal are a major reason China has been
actively seeking to increase its renewable energy7 capabilities. When current rates of use are
considered, limited domestic reserves of coal, natural gas, and oil provide another impetus for
change. However, China’s announced intent to rely on domestic, sustainable solutions for its
growing energy needs has led to a focus on developing “green” or renewable energy resources.8

1 Roger Ballentine, China Offers Tips on Using Energy More Efficiently, Renewable Energy World.com, February 23,
2009, http://www.renewableenergyworld.com/rea/news/article/2009/02/energy-efficiency-tips-from-china-54611.
2 Energy Information Administration, International Energy Statistics, Total Electricity Installed Capacity ,
http://tonto.eia.doe.gov/cfapps/ipdbproject/IEDIndex3.cfm?tid=2&pid=2&aid=7.
3 U.S. Energy Information Administration, China Energy Data and Statistics, July 2009, http://www.eia.doe.gov/
emeu/cabs/China/Background.html.
4 About 60% of China’s new coal plants have a fuel conversion to energy efficiency of about 44%, as compared to the
most efficient coal plants in the United States with an efficiency of about 40%. Keith Bradsher, China Outpaces U.S. in
Cleaner Coal-Fired Plants
, New York Times, May 10, 2009, http://www.nytimes.com/2009/05/11/world/asia/
11coal.html?_r=1.
5 Greenhouse gases are carbon dioxide, methane, nitrous oxide, hydrofluorocarbons, perfluorocarbons, and sulfur
hexafluoride.
6 National Research Council, Hidden Costs of Energy: Unpriced Consequences of Energy Production and Use,
October 19, 2009, http://www.nap.edu/catalog.php?record_id=12794#toc.
7 Renewable energy resources are defined by the U.S. Department of Energy as energy resources that are naturally
replenishing but flow-limited. They are virtually inexhaustible in duration but limited in the amount of energy that is
available per unit of time. Renewable energy resources include biomass, hydro, geothermal, solar, wind, ocean thermal,
wave action, and tidal action. See http://www.eia.doe.gov/glossary/glossary_r.htm.
8 Jianxiang Yang, China Speeds Up Renewable Energy Development, Global Environmental Institute, October 26,
2006, http://www.worldwatch.org/node/4691.
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China and the United States—A Comparison of Green Energy Programs and Policies

Figure 1. Map of China
Administrative Regions and Provinces

Source: http://www.nationsonline.org/maps/china-provinces-map-855.jpg
China now has ambitious targets for developing both its hydropower and non-hydropower
renewable energy resources with a major push of laws, regulations and incentives in the last few
years. Development of large and medium-sized hydropower projects had previously been at a
standstill with environmental impact and population displacement issues presenting major
obstacles. 9 The wind power sector is illustrative of China’s accomplishments, as installed wind
power capacity has gone from 567 megawatts (mw) in 2003 to 12,200 mw in 2008. Plans already
exist to grow China’s wind power capacity to 100 gw by 2020. A similar goal existed for the
China’s solar photovoltaic (PV) power sector to increase capacity from 140 mw as of 2009 to 1.8

9 Xie Liangbing and Chen Yong , Making Up for Lost Time: China’s Hydropower Push , Economic Observer, January
24, 2011, http://www.eeo.com.cn/ens/Industry/2011/01/24/192214.shtml. (CHHYDP).
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gw by 2020,10 but now has been revised upward to as much as 20 gw by 2020. China also
reportedly plans to virtually double its hydropower capacity to 380 mw by 2020. Developing its
domestic renewable energy resources also provides a growth opportunity for China’s domestic
renewable energy technology industries, and can serve to increase its domestic manufacturing
capabilities.
This report will look at the laws, programs, and policies encouraging development of wind, solar,
and biomass power in the China and the United States as the major renewable electricity
technologies common to both countries. While hydropower is the most developed source of
renewable electricity in both China and the United States, additional development of conventional
hydropower is not currently a major focus of energy policy in the United States. The terms
“green” and “renewable” energy are used interchangeably for purposes of this report.
Existing Laws, Programs, and Incentives
Government incentives in the United States and China for renewable energy projects encompass a
set of tools which generally depend on where a particular project is on a product development
cycle. For example, direct subsides are more often applied earlier in the timeline of research and
development (R&D) projects, while tax incentives are generally made available later in a cycle to
aid manufacturing ventures or to encourage consumers to adopt the technologies and help to build
demand.
China11
Most of the large industries in China (such as steel and petrochemicals) are comprised of state-
owned enterprises which are essentially run by the national government. The five large power
generation companies in China are also government entities: Huaneng, Guodian, Datang,
Huadian, Zhongdiantou. Two utility grid companies exist—the State Grid Corporation covering
the 22 provinces in northern and western China, and the Southern Power Grid in the five
provinces in southern China (see Figure 1). For many years, the National Development and
Reform Commission (NDRC) was the regulatory body in China with control over energy prices
and project approval, and control over China’s renewable energy development. As a result of
recent reforms, energy policy strategy in China is now guided at the highest levels by the
National Energy Commission (NEC) which is chaired by China’s Premier Wen Jiabao. 12

10 Xinhua News Agency, China to Significantly Raise Its Renewable Energy Targets, May 5, p. 2009,
http://www.energy-enviro.fi/index.php?PAGE=2584.
11 Official Chinese government (English language) source documents are used when possible. Amounts quoted in
dollars use currency conversions in reference documents, and are not adjusted for time-value of money.
12 The highest level body coordinating energy policy in China is the National Energy Commission established in
January 2010. It is tasked with formulating energy development strategy, reviewing major issues related to energy
security and energy development, and coordinating energy exploitation and international cooperation on energy issues.
It is headed by Wen Jiabao, and its deputy director is China’s Executive Vice Premier, Li Keqiang. Its members include
the heads of ten government ministries, several quasi-ministries and regulatory commissions, the governor of the
Central Bank, a deputy chief of the People’s Liberation Army, and other power figures. China People’s Daily online,
China’s National Energy Commission is established, January 27, 2010, http://english.peopledaily.com.cn/90001/90778/
90862/6880658.html.
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Large scale investment in clean energy technologies is a relatively recent undertaking for China,
with air pollution concerns prompting the first forays into clean energy development. More recent
attention to mitigating the perceived effects of global climate change have provided additional
momentum.13 Policies for encouraging renewable energy in China are largely driven by the
central government, and enacted through national and provincial and local government programs.
China led the world in 2010 in renewable energy investment, spending $54.4 billion, with the
United States third in clean energy spending, investing $34 billion.14
Clean Energy Research and Development Programs15
A series of programs promoting research and development of renewable energy technologies
were established by China in the last quarter of the past century under the Ministry of Science and
Technology. These included the following:
Key Technology R&D Program: Initiated in 1982 to address major science and technology
issues in economic and social development, this was China’s first national R&D program
supporting innovation for environmental pollution control and efficient resource utilization
for energy and water. Almost $1 billion was invested between 2001 and 2005.16
863 Program: Known more formally as the “National High-Tech Development Plan,” the
863 Program was created in March 1986 to develop a wide range of technology fields. The
program focuses on boosting innovation in strategic high technology sectors so that China
can gain a foothold in world markets. Its initial objective was to make China independent of
financial obligations for foreign technologies, and to diversify research efforts away from
purely military themes to civilian and dual-use technologies such as satellites, computers,
robotics, biotechnology, energy and space exploration. The program invested $3 billion in
research from 2001 to 2005, and another $585 million was approved in 2008 jointly for the
863 and 973 R&D programs.17
973 Program: The National Basic Research Program focuses on fundamental, basic research
and thus complements the 863 Program. Energy and sustainable development have been key
features of the 973 Program since its founding at the third meeting of the National Science
and Technology Committee in 1997. The program funded 382 projects between 1998 and
2008, with a total investment of $1.3 billion.18

13 “China bound its commitment domestically through a State Council decision even before last year’s Copenhagen
meeting, and it has said that the 40-45% carbon intensity reduction target will also be incorporated into its 12th Five
Year Plan to be adopted by its National People’s Congress in March 2011.” See Deborah Seligsohn, Cancún Climate
Change Summit: China’s Journey from Copenhagen
, Guardian Environmental Network, WRI, November 1, 2010,
http://www.guardian.co.uk/environment/2010/dec/01/cancun-climate-change-summit-china.
14 Pew Charitable Trusts, Who’s Winning the Clean Energy Race?, March 2011, http://www.pewenvironment.org/
uploadedFiles/PEG/Publications/Report/G-20Report-LOWRes-FINAL.pdf.
15 Ministry of Science and Technology of the People’s Republic of China, Key Technologies R&D Program,
http://www.most.gov.cn/eng/programmes1/200610/t20061009_36224.htm.
16 Center for American Progress (CAP), Out of the Running?, March 2010, http://www.americanprogress.org/issues/
2010/03/pdf/out_of_running.pdf.
17 CAP.
18 CAP.
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Five Year Plans: The Five Year Plans are the guide to China’s economic growth. The 10th
Five Year Plan (for 2001 to 2005) budgeted $2.4 billion for the implementation of 12 “mega-
projects” based on the 863 and National Key Technologies Programs aimed at achieving
significant technological breakthroughs for China’s industries. The 11th Five Year Plan (for
2006 to 2010) identifies energy technologies as a focus of the 863 Program, with hydrogen,
fuel cells, energy efficiency, clean coal and renewable energy a focus of $172 million in
funds. The 11th Five Year Plan has also made utility-scale renewable energy and new energy
development the 973 Program’s main focus.19 Renewable energy is increasingly being linked
to China’s future wellbeing—both economically and environmentally.
The 12th Five Year Plan will encompass 2011 to 2015 and was formally announced in March,
2011. Energy efficiency and renewable energy continue as a focus of China’s government as part
of seven new “Strategic Emerging Industries.”20 China will likely follow the plan with specific
investment goals (through preferential tax, fiscal and procurement tools) in biotechnology, new
energy (nuclear, solar, wind , biomass), High-end Equipment Manufacturing, Energy
Conservation and Environmental Protection (energy efficiency, advanced environmental
protection, recycling), Clean-Energy Vehicles, New Materials, and Next-Generation Information
Technology. These industries are expected to become the “backbone of China’s economy” in the
near future, offering inroads to global markets.21 China has pledged in the 12th Five year Plan to
cut energy consumption per unit of GDP by 16% and cut carbon emissions by 17% in the period
from 2011 to 2015.22
Key Legislation Promoting Renewable Energy
Renewable energy had been encouraged by a number of early laws in China, but these were
intended more for rural development in distributed generation schemes. Many laws governing
renewable energy do not have a lot of details prescribing how the legislation should be
implemented. The laws generally state goals or what has to be accomplished, and lay out a
framework. The details on how goals will be achieved are determined later, usually by the NDRC.
The main law governing China’s power industry is the Electricity Law of 1995.23 It was the first
law to place legislative controls on the utility industry, centralizing control of existing regulatory
agencies and restructuring state-owned electricity companies. The law was designed to promote

19 The Five-Year Plan for National Economic and Social Development, or the Five-Year Plan, mainly aims to arrange
national key construction projects, manage the distribution of productive forces and individual sector’s contributions to
the national economy, map the direction of future development, and set targets. See http://english.gov.cn/2006-04/05/
content_245556.htm.
20 HSBC Global Research, China’s Next 5-year Plan—What It Means for Equity Markets, October 6, 2010,
http://www.research.hsbc.com/midas/Res/RDV?p=pdf&key=DRpq0Zsciy&n=279532.PDF.
21 APCO Worldwide, China’s 12th Five-Year Plan - How It Actually Works and What’s in Store for the Next Five
Years
, December 10, 2010, http://www.apcoworldwide.com/content/PDFs/Chinas_12th_Five-Year_Plan.pdf.
22 Department of Climate Change, National Development and Reform Commission, China Announces Targets for
Carbon Emission, Energy Cuts for 2011
, March 28, 2011, http://cdm.ccchina.gov.cn/english/NewsInfo.asp?NewsId=
5252.
23 Angie Austin, Energy and Power in China: Domestic Regulation and Foreign Policy, The Foreign Policy Centre,
April 2005, http://fpc.org.uk/fsblob/448.pdf.
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the safe development of the electricity industry, and identified renewable energy as a means to
develop electrification especially in rural areas.24
The Energy Conservation Law of 1997 was enacted by the Standing Committee of the National
People’s Congress to guide the use of energy resources, promote energy-saving technologies, and
protect the environment. The General Provisions state that “Energy conservation is a long-term
strategy for national economic development,” and the “state shall encourage and support research
and popularization in the science and technology of energy conservation.” While energy
development and conservation are both being pursued, energy conservation investment projects
are given priority over energy development projects under Article 10, with projects under the
central government being selected on “technological, economic and environmental comparisons
and validations of the projects.” Article 11 then directs the State Council and provincial
governments to “allocate energy conservation funds from both capital construction and
technological restructuring investment funds to support rational energy utilization and
development of new and renewable sources of energy.” Article 38 of the Law requires
government “at all levels” to use renewable energy resources sustainably, especially for rural
areas. Article 39 focuses on improving energy efficiency in a variety of applications:
The State encourages the development of the following universal energy conservation
technologies: (1) promote the wide use of cogeneration of heat and power and district
heating, increase the utilization rate of heat and power units, develop heat-cascading
technology, combined heat, power and cooling technology and combined heat, power and
coal gas technology, and increase the efficiency of thermal energy application in an all-round
way; (2) gradually achieve more-efficient operation of electric motors, fans, pumping
equipment and systems; develop adjustable speed motor drives for energy conservation and
electric-electronic power saving technology; develop, produce and disseminate the use of
high-quality and low-cost energy-efficient appliances and equipment; and increase the
efficiency of electric power; (3) develop and disseminate the use of clean coal technologies,
including fluidized bed combustion, smokeless combustion, and gasification and
liquefaction, that are suited to domestic coals in order to increase coal utilization efficiency;
and (4) develop and disseminate other universal energy-efficient technologies that are proved
mature and yield remarkable benefits.
Article 40 directs all trades and professions to seek and disseminate energy-efficient technologies
or solutions, and to replace outdated technologies and equipment. 25
The Energy Conservation Law is generally written to consider sustainability while feeding the
growth of the economy. Conservation and energy efficiency measures are seen as ways to lower
the financial and environmental costs of funding China’s growing economy. Demand-side
management is also a key feature of China’s 2007 Climate Change Program26 in reducing the
energy intensity27 of the economy through:
the development of specific energy conservation plans, the adoption and implementation of
technology, economic, fiscal and management policies in favor of energy conservation, the
development and application of energy efficiency standards and labeling, the encouragement

24 Article 48. See http://www.lehmanlaw.com/resource-centre/laws-and-regulations/environment/electric-power-law-
of-the-peoples-republic-of-china-1996.html.
25 See http://www.china.org.cn/english/environment/34454.htm.
26 China.org.cn, National Climate Change Program, http://www.china.org.cn/english/environment/213624.htm.
27 Energy intensity as consumption per unit of gross domestic product.
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of R&D, demonstration and diffusion of energy-saving technologies, the importing and
absorbing of advanced energy-saving technologies, the creation and employment of new
energy conservation mechanisms, and the promotion of key energy conservation projects.28
China’s 11th Five Year Plan requires state-owned enterprises to reduce energy intensity by 20%
overall from 2005 levels. Meeting this goal may prove to be a challenge. While China has been
able to reduce energy intensity 14.4% from 2005 to 2009, there was an increase of 3.2% in energy
intensity during the first quarter of 2010.29
China’s Law for Prevention and Control of Air Pollution of 2000 also looks to renewable
energy as a means of preventing atmospheric air pollution. The law encourages the support and
development of clean energy technologies for “solar energy, wind energy and water energy.”30
However, the key piece of legislation in recent years for moving renewable energy deployment
forward is the Renewable Energy Law of 2005.31 The law was based on goals to “promote the
development and utilization of renewable energy, improve the energy structure, diversify energy
supplies, safeguard energy security, protect the environment, and realize the sustainable
development of the economy and society.” The law has several key elements:
• Allows for middle- and long-term national targets to be set for the total volume
of renewable energy development (Article 7);
• Mandates connection with the grid and the purchase of electricity from licensed
renewable energy generators (Article 14);
• Makes available preferential loans with subsidized interest rates (Article 25), and
granted tax benefits (Article 26) for renewable energy projects.
While under the provisions of the law, the “energy authorities of the State Council” are to
implement its provisions both locally and nationally, the NDRC developed a Medium and Long-
Term Development Plan for Renewable Energy
(MLTPRE) in 2007 to implement the law. The
MLTPRE established national deployment goals by technology to reach renewable energy. The
“Guiding Principles” of the MLTPRE state that it focused on hydropower, wind, solar, and
biomass energy development and deployment, coordinating renewable energy development with
economic, social, and environmental objectives. Overall, the MLTPRE aimed at raising the share
of renewable energy to 10% of total primary energy consumption by the end of 2010, and 15% by
2020. The cost of renewable energy development and deployment in excess of conventional
power (i.e., coal) is to be socialized by passing the expense to all customers as a surcharge to the
retail price of power.
Mandates for market share under the MLTPRE require areas of China covered by large scale
power grids to have non-hydropower renewable energy account for 1% of total power generation
by 2010, and at least 3% by 2020. Power generators with installed capacities over 5 gw will be

28 National Development and Reform Commission of China, National Climate Change Program, June 4, 2007,
http://www.china.org.cn/english/environment/213624.htm.
29 XinHua News, Stick to Energy Goals, May 7, 2010, http://news.xinhuanet.com/english2010/indepth/2010-05/07/
c_13281612.htm.
30 Article 9. See http://www.china.org.cn/english/environment/34422.htm.
31 Renewable Energy World, Authorized Release: The Renewable Energy Law. The People’s Republic of China
(herinafter RELaw), http://www.renewableenergyworld.com/assets/download/China_RE_Law_05.doc.
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required to have non-hydropower renewable energy of 3% of total capacity by the end of 2010,
and at least 8% by 2020.32
The national government recently added an incentive for the grid companies to connect to
renewable energy projects. The Renewable Energy Law was amended in 2009 to require
electricity grid companies to buy all the electricity produced by renewable energy generators.
Power companies refusing to comply will be fined an amount up to twice the “economic loss” of
the renewable energy producer.33
China’s pledge for 15% of total energy consumption to come from non-fossil fuel sources by the
year 2020, made ahead of the 2009 climate talks in Copenhagen,34 was reiterated by the National
Energy Administration35 at a Beijing national work conference in January 2011.36 Increased
targets for specific renewable energy technology deployment will likely be a significant part of
goals in the 12th Five Year Plan.
Renewable Energy Focus
China’s renewable energy development goals are shown in Table 1. The major renewable energy
technologies are described in the following paragraphs. Since China considers hydropower to be
renewable energy, it is also included in the section.

32 http://www.chinaenvironmentallaw.com/wp-content/uploads/2008/04/medium-and-long-term-development-plan-for-
renewable-energy.pdf.
33 China Economic Net, China Adopts Amendment to Renewable Energy Law (herinafter (CENet), December 26, 2009,
http://en.ce.cn/National/Politics/200912/26/t20091226_20695325.shtml.
34 Peta Hodge, “China’s Emissions Pledge Shows Commitment to Copenhagen,” Green Business News, November 26,
2009, http://www.greenwisebusiness.co.uk/news/chinas-emissions-pledge-shows-commitment-to-copenhagen-
936.aspx.
35 The National Energy Administration (NEA) was created in March 2008 as part of the general reforms of the Chinese
energy sector by the Congress of the Communist Party of China. The NEA is a semiautonomous body under the NDRC
responsible for energy planning and development, drafting of energy laws, and international energy cooperation. See
http://ec.europa.eu/energy/international/bilateral_cooperation/china/stakeholders_en.htm.
36 Barbara Finamore, Staff Blog - China’s Announcements on Energy and Climate in Advance of Presidential Summit,
Natural Resources Defense Council, January 18, 2011, http://switchboard.nrdc.org/blogs/bfinamore/
chinas_announcements_on_energy.html.
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Table 1. China—Renewable Energy Deployment Targets
(Capacities by Year)
Renewable Energy
Source
2005 2010 2020
Hydropower
117 gw
200 gwa 430
gwd
Biomass Power
2 gw
5.5 gw
30 gwd
Wind Energy
1.26 gw
42 gwa
150 gwd
Solar PV
0.07 gw
0.6 gwa
20 gwd
Bioethanolb
1.02 million tons
2 million tons
10 million tons
Biodieselc
50,000 tons
200,000 tons
2 million tons
Source: Compiled by CRS from various reports, including the Medium and Long-Term Development Plan
(2007) from the National Development and Reform Commission (People’s Republic of China). See
http://en.chinagate.cn/reports/2007-09/13/content_8872839.htm.
a. Actual instal ed capacity for 2010.
b. Non-food grains used as feedstock.
c. From waste and edible oil sources.
d. Reported new target.
Biomass
Biomass as a source of grid-connected electric power in China has yet to realize its full potential,
with inefficiencies in transporting biomass feedstocks to centralized locations being a major
hurdle. Biomass electric production was estimated to have reached 5,500 mw in 2010, and is
expected to increase to 30,000 mw by 2020.37 Biomass is widely used in China’s rural areas
where over 80% of the population live.38 When biomass is used in biogas digesters, the resulting
biogas mixture can be up to 70% methane.39 Biogas produced from livestock manure is a major
resource in rural areas for household cooking and heating.40 Biogas methane can also be used to
fuel engine generators and to produce electricity for households. Larger biogas projects from
collectives can operate cogeneration facilities providing thermal energy for heating or hot water.
Biomass-fueled electricity is generally considered to be carbon-neutral, but biomass is a very
small part of China’s overall centralized electricity production. Development of biomass projects
connected to the grid are expected to be limited to areas with abundant biomass resources in order
to promote direct-fired biomass electric power generation plants. As of 2006, biomass electric

37 David DuByne, Biogas? China size it, Science Alert, May 9, 2008, http://www.sciencealert.com.au/opinions/
20080905-17301.html.
38 http://www.cite-sciences.fr/france-chine/en/chinaworld/2/c15.html.
39 Methane digesters convert manure or other organic matter into biogas through a process called anaerobic digestion.
In this process, bacteria decompose the organic matter in the absence of oxygen, producing a gas composed of 60 to 70
percent methane and 30 to 40 percent carbon dioxide—biogas. See http://www.cleanenergyresourceteams.org/
technology/biogas-digesters.
40 By the end of 2005, there were more than 17 million household biogas digesters producing 6,500 million cubic
meters of biogas annually. Over 1,500 large-and medium-scale digester projects facilities generate around 1500 million
cubic meters of biogas annually. See http://www.china.org.cn/english/environment/213624.htm.
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power capacity was about 2,200 mw.41 Biomass power projects are eligible for a feed-in tariff42
(FIT) which was raised to $0.051 per kilowatt-hour in 2008.43 A production subsidy was
authorized of $19 to $22 per ton of biomass pellets produced from agricultural or forestry
residues.44 Biomass energy is also viewed as a part of the solution to arrest desertification in
China, with programs to plant willow trees springing up in affected regions. Willow trees grow
quickly, and are harvested for energy. For example, a power plant in Inner Mongolia burns as
much as 200,000 tons of willow annually, producing 210 million kwh of electricity, thus
displacing power from coal-based generation. The ashes left over from the combustion process
can be used for fertilizer.45
With China’s domestic oil reserves dwindling, biofuels are considered a supplement to enhance
China’s transportation energy supplies, and reduce air emissions. Over $290 million was allocated
for research, development, and demonstration of biofuels. China is the world’s third largest
producer of ethanol, following the United States and Brazil. While biofuels can be made from a
variety of biomass sources, China’s MLTPRE focuses on using marginal lands and non-food
crops for biofuels production,46 with specific targets for bioethanol and biodiesel (see Table 1). It
should also be noted that China has become a net food importing country which makes food
security a priority, and is a likely reason for China’s focus on non-food crop sources of
bioethanol.47
Hydropower
China is now the world’s largest hydropower producer with over 200 gw of installed capacity.48
That capacity is expected to increase to 290 gw by 2015, according to goals announced by
China’s National Energy Administration, with major new dams to be installed on the Huanghe,
Jinshangjiang,Yalongjhiang, Daduhe, Nujiang, and Lancangjiang rivers.49 China’s overall
potential for ‘technically developable” hydropower is estimated to be 540 gw, according to the

41 Renewable Energy Policy Network for the 21st Century, Recommendations for Improving the Effectiveness of
Renewable Energy Policies in China
, October 2009, http://www.ren21.net/pdf/
Recommendations_for_RE_Policies_in_China.pdf. (RECREN).
42 A feed-in tariff is an energy-supply policy focused on supporting the development of new renewable power
generation. …The FIT contract provides a guarantee of payments in dollars per kilowatt hour for the full output of the
[renewable energy] system for a guaranteed period of time (typically 15-20 years). Karlynn Cory, Toby Couture, and
Claire Kreycik, Feed-in Tariff Policy: Design, Implementation, and RPS Policy Interactions, National Renewable
Energy Laboratory, NREL/TP-6A2-45549, March 2009. (FITP).
43 RECREN.
44 RECREN.
45 Zhang Qi, Burning Willows to Stop Desertification, China Daily, May 11, 2009. http://www.chinadaily.com.cn/bw/
2009-05/11/content_7761535.htm.
46 The potential land area for cultivating oilseed plants and energy crops (including jatropha curcas, rapeseed, ricinus
communis, lacquer tree, Chinese goldthread tree, and sweet sorghum) is estimated to meet the annual feedstock
requirements of 50 million tons of liquid biofuel. China has banned the use of grain for ethanol production. RECREN.
47 Jonathan Lynn, China Became Net Food Importer in 1st Half, Reuters, August 22, 2008, http://www.planetark.com/
dailynewsstory.cfm/newsid/49900/story.htm.
48 Tim Weckesser, The China Business Network, Number 1 in Thermal, Solar, Nuclear, Wind and Hydro Power,
January 27, 2011, http://www.thechinabusinessnetwork.com/Channel-Index/Green-Development/General/General-
2011/Number-1-in-Thermal,-Solar,-Nuclear,-Wind-and-Hydr.aspx.
49 energychinaforum.com, NEA Outlines Key Tasks for Energy Sectors, to Benefit Related Listed Firms, January 20,
2011, http://www.energychinaforum.com/news/46032.shtml.
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MLTPRE. Over 400 gw of that capacity seen as “economically developable” with 70% of the best
resources for hydropower development in southwest China.50 With the lifting of the effective
“ban” on large and medium-scale hydropower development,51 China reportedly now plans to
develop approximately 430 gw of hydropower capacity by 2020.52 Past dam-building booms
created many water resource and environmental problems, but China’s government has passed a
variety of water-protection laws and regulations over the last 20 years which it hopes will reduce
environmental impacts of the current dam-building cycle.53
Solar
China is the world’s largest producer of solar photovoltaic (PV) panels, accounting for 72% of
new PV manufacturing capacity globally.54 Installed capacity in China has grown more slowly
than production, with a total of 0.6 gw of solar PV installed as of 2010.55 However, this represents
a huge growth since 2008 when China had installed about 140 mw of PV capacity.56 With the
global economic downtown came a slowdown in orders for PV panels. China began to look at
developing the solar power domestic market.
China’s initial goal for solar power was established in the 2007 MLTPRE at 1.8 gw, but this target
is in the process of being revised upward to perhaps 20 gw.57 A “Golden Roofs” initiative
announced in March 2009 provides a subsidy of $2.93 per watt for roof-mounted PV systems
over 50 kilowatts (kw) which could cover over half of a system’s installation cost. A feed-in tariff
of $0.16 per kilowatt-hour (kwh) was also established for PV power projects at the same time.
Encouragement for larger utility scale solar projects was announced in July 2009 under the
“Golden Sun” program, which provides for up to 50% of project costs (including transmission or
distribution lines to connect to the grid), and up to 70% of such costs for projects in more remote
areas (such as the Western Region). The Golden Sun program is for projects of 300 mw capacity
and above, which are in service for a minimum of 20 years.58
Provinces also provide local incentives for solar development. For example, the Jiangsu
provincial government established a FIT for solar power from ground-based solar farms, rooftop,

50 National Development and Reform Commission, Medium and Long-Term Development Plan for Renewable Energy
in China
, September 2007, http://www.cresp.org.cn/uploadfiles/2/967/medium%20and%20long-
term%20development%20plan%20for%20re%20in%20china%20eng.pdf.
51 See CHHYDP.
52 Shanghai Daily, China ready for flood of hydropower, January 6, 2011, http://www.phayul.com/news/article.aspx?
id=28883.
53 Peter Bosshard, Dam Nation, ForeignPolicy.com, March 8, 2011, http://www.foreignpolicy.com/articles/2011/03/
08/dam_nation.
54 Whats On Xiamen, Inc., China Trina Solar to Invest $US800m in New Manufacturing Plants, December 30, 2010,
http://www.whatsonxiamen.com/tech593.html.
55 Energychinaforum.com, India and China to Benefit as Global Solar PV Returns to Pre-Recession Growth, March 8,
2011, http://www.energychinaforum.com/news/47839.shtml.
56 http://earth2tech.com/2009/06/24/is-china-on-the-cusp-of-becoming-a-huge-solar-panel-market/
57 Breakthrough Institute and the Information Technology and Innovation Foundation, Rising Tigers, Sleeping Giant
(herinafter Rising Tigers), November 2009, http://thebreakthrough.org/blog/Rising_Tigers.pdf.
58 China also announced several utility-scale renewable energy projects in 2009, including the world’s largest wind
farm, a 10 gw “Three Gorges of Wind Power” project in Gansu Province, and a 2 gw solar power plant in Northern
China using Arizona-based First Solar's thin-film solar PV panels. See http://switchboard.nrdc.org/blogs/bfinamore/
china_records_its_climate_acti.html.
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or building integrated PV systems installed in 2009 with respective rates of $0.31, $0.54, and
$0.63 per kwh of electricity generated.59 There has since been discussion of establishing a
national feed-in tariff for solar power projects. However, solar power may be in competition for
national government funding with wind power (which is seen by the central government
leadership as a better option for China) for such consideration, making a solar FIT unlikely in
2010.60
Pilot plants for large scale concentrating solar power facilities have been proposed for Gansu (300
mw) and Shaanxi (92 mw), with discussions for a demonstration plant in Inner Mongolia (50
mw).61
Wind
China installed 16 gw of wind power capacity in 2010, lifting its overall total to almost 42 gw,
making it the world’s leader of installed wind power capacity. Even so, China lags behind the
United States in total energy produced from wind power with 50 billion kwhs generated. China’s
grid-connected capacity lags behind installed capacity by over 30%.62
Domestic wind power turbine technology and electricity production have grown tremendously in
China since the turn of the century. National government support for wind power in China began
in 2001 with a 50% cut in value-added taxes for power generated by wind. This was followed in
2003 with a push for wind power development from the Chinese government with the
introduction of a tender process for award of concessions for wind power projects.63
The process for wind farm development usually begins with the NDRC conducting wind resource
assessments for prospective areas prior to arranging for a concession for a wind power project.
Projects below 50 mw do not require competitive bidding, and so may be developed by local
authorities. Wind power projects over 50 mw are approved by the NDRC, which also sets prices
for the electricity generated by these projects. While wind projects under 50 mw can be approved
by local governments, prices for wind power are generally subject to final approval by the
NDRC. 64
The regional grid power company would enter into a long-term power purchase agreement to buy
electricity from the selected bidder over the life of the wind project, with the national government
guaranteeing the power purchase. The bidding process would also determine the in-grid tariff,
with the agreement specifying how much electricity the bidder would provide to the grid. The

59 Yotam Ariel, Incentives, Falling Cost and Rising Demand in China’s PV Market, Renewable Energy World,
November 13, 2009. http://www.renewableenergyworld.com/rea/news/article/2009/11/incentives-falling-cost-and-
rising-demand-in-chinas-pv-market.
60 Chris Brown, NDRC’s Zhang Guobao and the Feed-in Tariff, China Solar Energy, April 7, 2010,
http://chinasolarenergy.blogspot.com/2010/04/ndrcs-zhang-guobao-and-feed-in-tariff.html.
61 Helios CSP, China Moves Toward Concentrating Solar Power Plants, February 23, 2011, http://helioscsp.com/
noticia.php?id_not=221.
62 Whats On Xiamen, Inc., China Overtakes US as World’s Largest Wind-Power Installer, January 14, 2011,
http://www.whatsonxiamen.com/tech625.html.
63 Competitive bids for concessions with a goal of reducing the price of wind power projects. See http://www.gwec.net/
index.php?id=125.
64 With the exception of Guandong Province which approves its own projects and prices. RECREN.
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goal of the program was to achieve economies of scale by producing a large capacity and thereby
produce a low price for grid-connected wind power. Additionally, it was thought that foreign
companies would be attracted by the long-term purchase power agreement to invest in China’s
wind energy sector.65
Mixed results came from the tenders received, with many being structured on impractically low
power prices. Winning bids were thus often too low to make the projects economically viable.
This prompted the government to change the weight of power prices in its process of evaluating
the bids.66
The 2005 Renewable Energy Law established a purchase system for renewable electricity, but the
process of requesting bids for tenders continued for grid-connected wind power projects. In 2007,
a target of 15% of China’s total energy consumption from renewable energy was set for 2020.
The law required the grid company to purchase the full amount of power generated by wind
power projects with the tariff for all projects being set by the winning bid.67
In 2009, the NDRC replaced the public bidding process and instituted FITs for wind power,
scaled according to the available wind resource and construction conditions in the various regions
of China.68 As more projects were installed, the understanding of the dynamics between localized
wind resources and resulting power production led to more rational prices for wind power.
As of 2009, China’s Meteorological Administration estimated China’s developable wind power
resources at over 250 million kilowatt-hours.69 By the end of 2009, China’s installed wind power
capacity had reached 25.8 gw.70 Officials in China expect to surpass the official MLTPRE target
of 30 gw for installed wind power by 2020, with estimates of 150 gw of wind power capacity
predicted. The revised expectations have yet to be formally endorsed by the NDRC.71 However,
China’s wind resources and increasing demand for electric power are now being matched by the
industrial capability to build wind turbines and solar panels which can meet the resource
potential.
Offshore wind is another mostly untapped resource in China. China’s offshore wind power
potential is estimated at more than 750 million kilowatt-hours, which is more than twice the
estimate of exploitable wind power resources onshore. As with onshore wind, offshore
concessions would be put up for tender offers with price offers to send electricity to the grid.
Developers must be Chinese-funded enterprises, or Sino-foreign joint ventures with majority
Chinese ownership. The process of establishing concession areas has already begun with China’s

65 Ecoworld, Wind Power in China, July 2006, http://www.ecoworld.com/energy-fuels/wind-power-in-china.html.
66 RECREN.
67 RELaw.
68 Tariff levels ranged from $0.07 to $0.09 per kwh. Rising Tigers.
69 Zhang Qi, Wind Can Power Up Entire Nation, China Daily News, June 18, 2009, http://www.chinadaily.com.cn/
bizchina/2009-06/18/content_8296706.htm.
70 New York Times, “Gains in Global Wind Capacity Reported,” February 15, 2010, http://green.blogs.nytimes.com/
2010/02/15/gains-in-global-wind-capacity-reported/.
71 China to Triple Wind Goal to 100,000 mw by 2020, May 6, 2009, http://climateprogress.org/2009/05/06/energy-and-
global-warming-news-china-solar-wind/.
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National Energy Bureau, and the State Oceanic Administration jointly issuing an “Interim
Measure” in 2010 concerning regulations for developing offshore capacity.72
Incentives, Subsidies, and Procurement Programs
Financial support for renewable energy in China involves subsidies, tax polices, pricing
mechanisms, and a reward scheme for green production. Subsidy support is extended to overhead
costs of programs (i.e., administrative, operational, and other expenses for government renewable
energy agencies), renewable energy technology research and development, and provincial or local
electrification projects. Tax incentives can come from the central or local governments, and can
be technology specific. Pricing for renewable energy is not standardized, and is set by contracts
negotiated between projects and utilities.73
Renewable energy is subsidized by a rate fee charged to all electricity users in China of about
0.029 cents per kwh.74 Electricity customers in China pay rates according to customer class.75 The
fee was originally based on the incremental cost difference between coal and renewable energy
(estimated in China at $0.044 to $0.059 per kwh).76 The fee goes to the companies which operate
the electricity grid and must buy the renewable power from project developers. The fee for
industrial users of electricity recently doubled in 2009 to about 0.8% of their electricity bill.77
As China’s technological capabilities improve, it will use more of its own industrial capacity to
meet domestic clean energy needs, and rely less on imported equipment. China has embraced an
array of incentives, subsidies, and procurement policies to encourage such development. Interest
rates as low as 2% for bank loans enable the financing of renewable energy projects.78
Preferences were established with the Government Procurement Law of 2002, which specified
the government shall procure domestic goods, construction, and services, unless availability or
other conditions exist to impair such procurement.79
Application of domestic content rules for renewable energy projects were formalized in 2005 by
the NDRC’s “Notice of Requirements for the Administration of Wind Power Construction.” At
least 70% of Wind Power equipment is required to be produced in China. The determination of
domestic content is based on the percentage of total components in a wind turbine manufactured
and assembled in China, regardless of the level of Chinese ownership in the producing factory.
Wind farms which fail to comply do not receive approval for construction permits. Authorities in

72 China.Org.Cn, Xinhua, China Speeds Up Offshore Wind Power Construction, March 20, 2010,
http://www.china.org.cn/business/2010-03/20/content_19647071.htm.
73 National Renewable Energy Laboratory, Renewable Energy in China—Financial Incentives, NREL/FS-710-36045,
April 2004, http://www.nrel.gov/docs/fy04osti/36045.pdf.
74 The original surcharge of 0.014 cents per kwh was increased to 0.029 cents per kwh in 2007. See RECREN, p. 23.
75 For example, electricity for residential use in Beijing was 49 fen per kwh [about $0.07], while that for agricultural
use was around 52 fen per kwh, for secondary industry use 76 fen per kwh and for commercial use 79 fen per kwh,
according to Beijing Electric Power Corporation. One yuan is 100 fen. See http://news.xinhuanet.com/english/2009-11/
19/content_12492364.htm.
76 RECREN.
77 Keith Bradsher, China Leading Global Race to Make Clean Energy, New York Times, January 30, 2010 (herinafter
NYT1), http://www.nytimes.com/2010/01/31/business/energy-environment/31renew.html.
78 NYT1.
79 Article 10. See http://english.gov.cn/laws/2005-10/08/content_75023.htm.
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China are reportedly considering dropping the domestic content requirement, when objectives of
establishing the domestic wind turbine industry and supply chain are considered met.80 Under the
Wind Power Concession Project, the NDRC is “overseeing construction” of a series of wind
farms of at least 10 gw generating capacity.81
Financial incentives for other renewable energy projects in China are available from both the
national and provincial governments. The central government offers an investment subsidy of
50% for solar power projects under the Golden Sun program. For biomass power projects, a $0.04
per kwh subsidy is offered, along with incentives such as risk reserves and tax breaks, and the
government has established at least one joint venture to demonstrate and deploy biomass power
technology at a reported 40 plants.82
Incentives for non-food sourced biofuels production are available to farmers and biofuel
producers. Ethanol production in 2006 was 1.56 million tonnes compared to 0.19 million tones
for biodiesel, with subsidies for ethanol at $115 million and no subsidies for biodiesel in that year.
In 2007, flexible subsidies were made available to biofuels producers to make up for losses on
crops due to low crude oil prices (though the Chinese government wants to encourage enterprises
to reserve funds to offset such risks). Farmers were authorized a subsidy of $405 for each hectare
of forest used for biofuels production, and a subsidy of $365 for each hectare growing biofuel
crops.83 China controls transportation fuel prices, and sets the price of ethanol at approximately
91% of the price of gasoline. The five licensed producers of ethanol in China are eligible for
support in the form of direct output-linked subsidies, tax exemptions, and low-interest loans, and
they are the beneficiary of mandatory blending programs for ethanol with gasoline in ten
provinces. Contrary to the highly controlled ethanol industry, the biodiesel industry is dominated
by small scale producers who use waste cooking oil and animal fats as feedstock. Producers sell
biodiesel direct to users without taxation or direct fuel subsidies. Total support for ethanol and
biodiesel is expected to rise to $1.2 billion by 2020, excluding the subsidy support to farmers
mentioned earlier.84
Under the economic stimulus plan designed to help China recover from the current global
financial crisis, the national government allocated over 210 billion yuan (about $31 billion), or
5.3% of its entire stimulus package, for environmental protection and energy conservation.85
China provides substantial domestic subsidies to its green energy industries in support of its
ambitious deployment goals. However, in the wake of complaints in the United States by the
United Steelworker’s Union and others that China was illegally subsidizing its wind power and
solar PV exports in violation of World Trade Organization (WTO) obligations, the U.S. Trade

80 See http://www.chinadaily.com.cn/bizchina/2009-11/24/content_9033778_3.htm.
81 See China’s Promotion of the Renewable Electric Power Equipment Industry (herinafter CPRE),
http://www.nftc.org/default/Press%20Release/2010/China%20Renewable%20Energy.pdf.
82 The national government established the National Bio Energy Company, Limited, as a joint venture between the
State Grid Corporation of China and the Dragon Power Company, Ltd. CPRE.
83 Xinhua, China to Offer Incentives for Non-Food Biofuels, November 7, 2007, http://www.chinadaily.com.cn/china/
2007-12/07/content_6306076.htm.
84 See Global Subsidies Initiative of the International Institute for Sustainable Development, BIOFUELS—AT WHAT
COST ? Government support for ethanol and biodiesel in China
, December 2008, http://www.globalsubsidies.org/files/
assets/China_Biofuels_Subsidies.pdf.
85 Zhu Shaobin, China’s Economic Stimulus Plans Benefit Environment, Xinhua, March 3, 2009,
http://news.xinhuanet.com/english/2009-03/10/content_10986048.htm.
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Representative announced an investigation in 2010 of China’s support for makers of wind power,
solar energy, advanced batteries, and energy-efficient vehicles.86 China’s export restrictions on
rare-earth elements87 (REEs) were described by the United Steelworkers Union as an example of
China’s unfair trade practices. China produces 97% of the world’s REEs and charges a 10%
export tariff. China also cut its exports of REEs by 40% in July 2010, causing global demand to
exceed supplies for the first time.88 The WTO reportedly issued an interim report in February
2011, which stated that Chinese restrictions on its exports of nine raw materials were inconsistent
with WTO rules, which may induce WTO members to bring a similar case against China over its
export restrictions on REEs.89 China’s government has denied the allegations of unfair trade
practices, pointing to proposed federal incentives for the U.S. clean energy industry as
comparable subsidies.90
United States
Some argue that the United States does not have a comprehensive national policy in place for
promotion of renewable energy technologies. Federal policies exist providing corporate tax
incentives for renewable electricity, but these are generally authorized for short periods and must
be periodically reauthorized. Even when the programs are authorized for longer terms, they are
not always fully funded in appropriations legislation. Most federal grant and loan programs are
short-term in funding duration, with the programs authorized by the American Recovery and
Reinvestment Act of 2009 being an example. An exception, however, is biofuels which do have
significant federal government support in the form of the Renewable Fuel Standard (RFS). The
RFS mandates minimum goals for blending quantities of renewable fuels with gasoline and diesel
through 2022.91
Much of the U.S. renewable energy installed capacity is a result of state deployment initiatives92
rather than federal programs, with 30 states having a renewable portfolio standard (RPS) in place
to encourage deployment.93 However, the availability of federal tax incentives have aided

86 Sewell Chan and Keith Bradsher, “U.S. to Investigate China’s Clean Energy Aid,” New York Times, October 15,
2010, http://www.nytimes.com/2010/10/16/business/16wind.html?_r=1&pagewanted=print.
87 A group of 17 elements consisting of scandium, yttrium, and the 15 lanthanides. Rare-earth elements are vital to
many electronic and renewable energy technologies. See CRS Report R41347, Rare Earth Elements: The Global
Supply Chain
, by Marc Humphries.
88 Robert F. Service, Chinese Policies Could Pinch U.S. Efforts to Make Electric Vehicles, American Association for
the Advancement of Science, Science, Vol. 329 no. 5990 p. 377, July 23, 2010, http://www.sciencemag.org/content/
329/5990/377.1.short.
89 John Miller and James Areddy, Trade Judges See Flaw in China Policies: Preliminary WTO Report Finds No Case
for Some of Beijing’s Export Restrictions
, Wall Street Journal, February 18, 2011.
90 Michael Wines and Xiyun Yang, “China Rips US Complaint on Clean Energy Aid,” New York Times, October 18,
2010, http://www.boston.com/news/world/asia/articles/2010/10/18/china_rips_us_complaint_on_clean_energy_aid/.
91 CRS Report R40155, Renewable Fuel Standard (RFS): Overview and Issues, by Randy Schnepf and Brent D.
Yacobucci
92 The Union of Concerned Scientists projects that state Renewable Portfolio Standard programs will support 76,750
mw of new renewable power by 2025—an increase of 570% over total 1997 U.S. levels (excluding hydro).
http://www.ucsusa.org/assets/documents/clean_energy/RES_in_the_States_Update.pdf
93 http://www.ferc.gov/market-oversight/othr-mkts/renew/othr-rnw-rps.pdf
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deployment in recent years, with the Investment Tax Credit94 (ITC) being key to many corporate
decisions to invest in renewable energy.
Clean Energy Research and Development Programs
The history of energy research and development in the United States in the closing quarter of the
last century can be characterized as being driven by energy prices, causing shifts in the direction
of policies, programs, and levels of program funding. During this period, the U.S. Department of
Energy (DOE) has been the key agency involved in energy R&D in the United States according to
a 2001 report from the National Research Council:
From 1978 through 1999, the federal government expended $91.5 billion (2000 dollars) on
energy R&D, mostly through DOE programs. This direct federal investment constituted
about a third of the nation’s total energy R&D expenditure, the balance having been spent by
the private sector. Of course, government policies—from cost sharing to environmental
regulation to tax incentives—influenced the priorities of a significant fraction of the private
investment. On balance, the government has been the largest single source and stimulus of
energy R&D funding for more than 20 years.95
DOE continues to be responsible for the largest share of federal energy-related research dollars,
and administers the national laboratories and technology centers which are key to the execution of
U.S. national energy research strategies. The modern history of energy research can be traced to
the 1977 Department of Energy Organization Act (P.L. 95-91) which dismantled the predecessor
agency (the Energy Research and Development Administration) and created the agency.
Key Legislation Promoting Renewable Energy
The National Energy Act of 1978 followed the formation of DOE, and was largely focused on
conservation of fossil fuels in reaction to the 1973 energy crisis. The Public Utility Regulatory
Policies Act (PURPA) (P.L. 95-617) encouraged generation of electricity from renewable sources
by requiring electric utilities to purchase electricity from qualifying small power and cogeneration
facilities.96
It was the Energy Security Act of 1980 (ESA) (P.L. 96-294) which largely brought renewable
energy and renewable technologies into the forefront of public policy. ESA consisted of six major
acts97 and provided funding for research in areas such as renewable energy and biofuels.

94 See business energy tax credit discussion at http://www.dsireusa.org/incentives/incentive.cfm?Incentive_Code=
US02F&re=1&ee=1.
95 National Academy of Sciences, Energy Research at DOE: Was It Worth It? Energy Efficiency and Fossil Energy
Research 1978 to 2000
, Washington, DC, 2001, http://www.nap.edu/catalog.php?record_id=10165.
96 Qualifying Facility (QF): A cogeneration or small power production facility that meets certain ownership, operating,
and efficiency criteria established by the Federal Energy Regulatory Commission (FERC) pursuant to the Public Utility
Regulatory Policies Act (PURPA). See http://www.eia.doe.gov/glossary/glossary_q.htm.
97 Under the Energy and Security Act of 1980 were the following: U.S. Synthetic Fuels Corporation Act, Biomass
Energy and Alcohol Fuels Act, Renewable Energy Resources Act, Solar Energy and Energy Conservation Act and
Solar Energy and Energy Conservation Bank Act, Geothermal Energy Act, and the Ocean Thermal Energy Conversion
Act.
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The Energy Policy Act of 1992 (EPACT) (P.L. 102-486) was wide-ranging legislation addressing
topics of energy efficiency and conservation, natural gas supplies, alternative fuels and alternative
fuel vehicles. EPACT set goals for energy management,98 and authorized subsidies for wind and
other alternative energy technologies (i.e., the Renewable Energy Production Incentive discussed
later in this report). EPACT also established the Production Tax Credit99 (PTC).
The Energy Policy Act of 2005 (EPACT5) (P.L. 109-58) continued the focus on energy supply
and demand policies. EPACT5 extended the PTC for wind and qualifying biomass technologies.
The law also authorized funds for developing renewable energy technologies and loan guarantees
for renewable energy deployment, and required electric utilities to offer net metering on request
to customers. EPACT5 also created the Renewable Fuel Standard with requirements for blending
7.5 billion gallons of renewable fuel with gasoline by 2012.
This was followed by the Energy Independence and Security Act of 2007 (EISA) (P.L. 110-
140) which was largely focused on energy security and energy efficiency. EISA also provided
funds to accelerate R&D for renewable energy particularly solar and geothermal power, and
energy storage technologies. EISA also extended the RFS program with a mandate to blend 36
billion gallons of renewable fuel with gasoline and diesel fuel by 2022.
The American Recovery and Reinvestment Act of 2009 (ARRA) (P.L. 111-5) was enacted as a
stopgap measure in response to the current financial crisis to aid economic recovery.
More than $45 billion was appropriated for energy efficiency and renewable energy
programs across federal government programs, most of which was to be obligated before the
end of FY2010. Almost $8 billion was provided for energy and other R&D programs, $2.4
billion for energy technology and facility development grants, and $14 billion for electric
power transmission grid infrastructure development and energy storage development
(including $6 billion for loan guarantees). Another $14.1 billion was provided for renewable
energy tax incentives, with an additional $2.3 billion for energy efficiency tax incentives.100
ARRA also included a temporary provision allowing projects eligible for the Investment Tax
Credit to receive a grant covering 30% of project costs.
Renewable Energy Focus
The principle U.S. renewable energy sectors are described in the following paragraphs.
Hydropower is not viewed by all U.S. experts as renewable energy, but since China has
significant goals for hydroelectric development, a summary of U.S. hydropower is included.

98 See http://www1.eere.energy.gov/femp/regulations/epact1992.html#wc.
99 The renewable electricity Production Tax Credit is a per-kilowatt-hour tax credit for electricity generated by
qualified renewable energy technologies and sold by the taxpayer to an unrelated party during the taxable year. See
CRS Report R40913, Renewable Energy and Energy Efficiency Incentives: A Summary of Federal Programs, by Lynn
J. Cunningham and Beth A. Roberts.
100 CRS Report R40412, Energy Provisions in the American Recovery and Reinvestment Act of 2009 (P.L. 111-5),
coordinated by Fred Sissine.
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Biomass101
Biomass for electric power is arguably the most conventional of all renewable electricity
technologies. Approximately 23.5% of non-hydropower renewable electricity produced in the
United States came from biomass in 2010.102 Biomass combustion is a relatively mature
technology but it is not widely used and is generally not very efficient unless it is used in a
combined heat and power application. Large scale co-firing of biomass with coal is a higher
efficiency, lower per unit cost application, and is categorized usually under coal power
generation. Technologies for biomass gasification could result in higher efficiencies when used to
produce synthesis gas or hydrogen for heat and/or power production. Demonstration and
deployment of newer industrial gasification technologies is needed to scale-up plants and provide
economical designs with high degrees of availability. Wood-burning stoves and solar water
heaters are the most common residential renewable energy applications. With wood and biomass
electric power net summer generating capacity reported at 7.6 gw for 2010, DOE estimates that
17 gw of biomass capacity could be available by 2030.103 The RFS is a significant factor in
biofuels policy which has largely focused on corn-based ethanol104 but is shifting to cellulosic and
other advanced feedstocks.105 Increasing scrutiny on the effects of ethanol production on global
food prices and production practices has pushed researchers to focus more on non-food cellulosic
sources production of ethanol.106
Hydropower
While only about 2,400 of the existing 80,000 dams in the United States are used for hydropower,
many of the non-power dams have a significant unharnessed hydropower potential. A DOE study
in 2003 indicated that enhancing existing hydro facilities, by adding turbines to dams without any
hydro capacity or enhancing existing structures (increasing capacity or adding turbines), is
relatively inexpensive and could present a further opportunity for hydropower development.107
Most of the better sites for larger, conventional hydropower projects in the United States have
already been developed. However, DOE’s Idaho National Laboratory assessed the potential for
developing small and low-head hydroelectric generation in the United States.108 A set of
feasibility criteria was established for “developable resources, and identified approximately 5,400
with the potential for small hydro projects (i.e., providing between 1 MW and 30 MW of annual
mean power). DOE estimated these projects (if developed) could result in a greater than 50%
increase in total U.S. hydroelectric power generation.

101 CRS Report R40833, Renewable Energy—A Pathway to Green Jobs?, by Richard J. Campbell and Linda Levine.
102 U.S. Energy Information Administration, Annual Energy Outlook 2011 Early Release Overview (herinafter AEO
2011), Renewable Energy Generating Capacity & Generation, March 2011, http://www.eia.gov/oiaf/aeo/tablebrowser/
#release=AEO2011&subject=0-AEO2011&table=16-AEO2011&region=0-0&cases=ref2011-d120810c.
103 Ibid.
104 CRS Report R41282, Agriculture-Based Biofuels: Overview and Emerging Issues, by Randy Schnepf.
105 CRS Report RL34738, Cellulosic Biofuels: Analysis of Policy Issues for Congress, by Kelsi Bracmort et al.
106 See http://www.nrel.gov/biomass/pdfs/40742.pdf.
107 Oak Ridge National Laboratory, Dams: Multiple Uses and Types, http://www.ornl.gov/info/ornlreview/rev26-34/
text/hydside1.html.
108 U.S. Department of Energy - Idaho National Laboratory, Feasibility Assessment of the Water Energy Resources of
the United States for New Low Power and Small Hydro Classes of Hydroelectric Plants, DOE-ID-11263, January
2006, http://hydropower.inel.gov/resourceassessment/pdfs/main_report_appendix_a_final.pdf.
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Solar
As of 2010, the net summer grid-connected solar power industry in the United States was
approximately 2.9 gw representing both solar PV and solar thermal capacity. DOE estimates that
approximately 16 gw could be available by 2020.109 Solar power, like wind power, is considered a
variable resource but solar power technologies can generate most power at peak energy demand
times when the weather is hot and sunny. Concentrating solar power thermal plants with heat
storage capacity are being increasingly considered for large central station generating plants in the
sun-rich areas of the western United States. Solar thermal hot water heating is a small but
growing application in the United States whose deployment prospects may be enhanced by a
recent focus on energy efficiency and conservation. For the solar power industry, the key federal
incentive of recent years has been the Investment Tax Credit which allowed businesses to invest
in solar power projects and receive a tax credit for up to 30% of the expense. As a short-term
remedy to the almost annual reauthorization quest for the ITC, the Emergency Economic
Stabilization Act of 2008 extended the 30% solar investment tax credit for eight years to 2016,
and removed the prohibition against utility company use of the ITC, thus allowing them to take
advantage of the credit.
Wind
The net summer wind power capacity in the United States was approximately 38 gw in 2010.110
However, DOE estimates that domestic wind power could reach a capacity of 61 gw or greater by
2030.111 A major federal government incentive for wind power has been the Production Tax
Credit (PTC), which originated in the Energy Policy Act of 1992 as aid to facilities in operation.
Currently, an income tax credit of $0.021 per kwh is available for electricity produced from
utility-scale wind turbines under the PTC. However, the PTC has expired three times in the last
decade only to be restored. The importance of the PTC to the industry is apparent as installations
of wind power have consistently fallen in the year following the lapse of the tax credit.112 The
American Recovery and Reinvestment Act of 2009 (ARRA) (P.L. 111-5) extended the Section 45
Production Tax Credit “placed in service” date for wind to the end of 2012, and allowed PTC-
eligible facilities placed in service from 2009 and 2012 to choose a 30% ITC in place of the PTC,
or to receive a 30% grant.
Offshore wind power in the United States is a fledgling industry, having just received federal
authority in 2010 to go ahead with the first U.S. offshore wind farm in Nantucket Sound, off the
Massachusetts coast. Known as the Cape Wind project, it will involve 130 turbines (from the
German firm, Siemens AG) with a total capacity of 420 mw.113 The overall potential for U.S.
offshore wind power production capacity was estimated at 908 gw in 2005.114

109 AEO 2011.
110 AEO 2011.
111 CRS Report R40833, Renewable Energy—A Pathway to Green Jobs?, by Richard J. Campbell and Linda Levine..
112 See http://www.windpoweringamerica.gov/pdfs/2007_annual_wind_market_report.pdf.
113 Reuters, Cape Wind, first U.S. offshore wind farm, approved, April 28, 2010, http://www.reuters.com/article/
idUSTRE63R42X20100428.
114 Walt Musial, Offshore Wind Energy Potential for the United States, National Renewable Energy Laboratory, May
2005. http://www.windpoweringamerica.gov/pdfs/workshops/2005_summit/musial.pdf.
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Incentives, Subsidies and Procurement Programs
Government incentives, subsidies, and procurement requirements exist at both the federal and
state government levels in the United States. The federal government is the largest single
consumer of energy in the United States, and has defined procurement goals for the use of
renewable energy:
EPACT5 required federal agencies to increase their purchase of renewable energy to a
minimum of 7.5% of overall energy purchases by 2013. Agencies receive double-credit for
renewable energy generated on their facility sites. Presidential Executive Order (EO) 13423
required that at least one-half of the EPACT renewable energy requirement come from
“new” (i.e., put in service after January 1, 1999) renewable energy sources, preferably sited
on agency property for agency use. EO 13423 also allowed agencies to use new “non-
electric” renewable energy sources to meet the requirement for new renewable energy.
Examples of non-electric renewable energy include thermal energy from solar ventilation
pre-heat systems, solar heating and cooling systems, solar water heating, ground source heat
pumps, biomass-fueled heating and cooling, thermal uses of geothermal and ocean resources.
However, these non-electric renewable energy sources cannot apply to meeting the EPACT
renewable federal electricity purchase requirement. In 2010, an agency could use non-
electric renewables equal to 2.5% of its electricity to satisfy EO 13423, and then use old
renewable energy sources for 5% of its use to satisfy EPACT, for a total equivalent of 7.5%
of its electricity use from renewable energy.115
The Renewable Energy Production Incentive (REPI) was established by EPACT to provide
incentive payments for new projects generating and selling renewable electricity. Eligible
renewable energy technologies include solar, wind, and biomass (excluding municipal solid
waste). The payment of $0.015 per kwh (in 1993 dollars, indexed for inflation) was for the first
10 years of a facility’s operation, but is subject to availability of annual appropriations in each
federal fiscal year of operation.116 REPI was reauthorized by EPACT5 for FY2006 through
FY2026. REPI program funding is determined under the DOE budget process, and employs a
tiered decision process as to which projects have priority for payments.117
Under the Food, Conservation and Energy Act of 2008 (2008 Farm Bill) (P.L. 110-234), the U.S.
Department of Agriculture runs a grant program for developing renewable energy and energy
efficiency projects under the Rural Energy for America Program (REAP). REAP is intended to
encourage the adoption of renewable energy and energy efficiency technologies by rural small
businesses and farmers largely through the competitive issuance of grants and loan guarantees.
The program also funds energy audits and provides other renewable energy technology

115 CRS Report R41040, Identifying Incentives and Barriers to Federal Agencies Achieving Energy Efficiency and
Greenhouse Gas Reduction Targets
, by Anthony Andrews and Richard J. Campbell.
116 U.S. Department of Energy, Office of Energy Efficiency and Renewable Energy, Renewable Energy Production
Incentive
, April 10, 2007, http://apps1.eere.energy.gov/repi/about.cfm.
117 The current payment under REPI is $0.021 per kwh. If there are insufficient appropriations to make full payments
for electricity production from all qualified systems for a federal fiscal year, 60% of the appropriated funds for the
fiscal year will be assigned to facilities that use solar, wind, ocean, geothermal or closed-loop biomass technologies;
and 40% of the appropriated funds for the fiscal year will be assigned to other eligible projects. Funds will be awarded
on a pro rata basis, if necessary. See http://www.dsireusa.org/incentives/incentive.cfm?Incentive_Code=US33F&re=
1&ee=1.
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assistance. The 2008 Farm Bill provided for base funding of REAP at $55 million for FY2009,
$60 million for FY2010, $70 million for FY2011, and $70 million for FY2012.118
Discussion
With the process of urbanization continuing in China, a further 200 million to 300 million people
are expected to move to urban areas over the next 20 years. This shift in population is seen as a
driving force behind the change in focus from increasing GDP to increasing domestic
consumption in the 12th Five Year Plan. 119 The national government still owns or controls many
of the country’s large industries and enterprises, and sets goals for economic development in the
periodic Five Year Plans. As such, China’s industries and enterprises are still encouraged to meet
goals set in the national government’s economic plan. But today’s China also has a large and
growing private sector, and improving the employment and income prospects for its citizens
appears to be behind a shift to a market focus in many areas of China’s “socialist market
economy.” 120
The 12th Five Year Plan emphasizes the development new industries which can feed into the
future growth of its economy. One such sector is renewable energy, and in the last five years,
China has developed its manufacturing capabilities in wind turbines and solar panels and is using
these capabilities to serve its own needs to produce renewable electricity. China recognizes that
given the growing demand for energy at home, developing its domestic renewable energy
industry and building manufacturing capacity can lead to advantages in future export markets. In
late 2009, the Standing Committee of the National People’s Congress affirmed its support of the
development of the renewable power industry by building China’s domestic capacity. Grid
companies were directed to purchase all renewable electricity generated, with the State Council to
determine the proportion of renewable electricity to overall generating capacity in order to meet
national goals. 121 China has chosen to implement a Renewable Energy Law mandating minimum
deployment levels for renewable electricity technologies (in terms of gigawatts of capacity by a
target date), and to support these deployment goals with a complementary, national feed-in tariff
for selected technologies.
Officially, however, energy efficiency and conservation remain China’s top energy priority. These
are considered the “low-hanging fruit” in the quest to reduce energy use and cut demand. Energy
efficiency in China’s larger firms is approaching levels in Western countries. The 11th FYP saw
China’s energy consumption per unit of GDP (i.e., energy intensity) drop by 19.6%.122 The 12th
FYP may not result in the energy savings seen in the previous five years, since many small power
plants, less energy efficient coal-fired power plants, and steel mills were shut down. Few if any of
these less efficient producers remain open.123 Most of the energy savings in the 12th FYP are

118 See http://www.dsireusa.org/incentives/incentive.cfm?Incentive_Code=US05F&State=Federal&currentpageid=1.
119 S. Klamp, Chinese 12th 5-year plan – New Energy, New Energy Cars, Wordpress.com, November 8, 2010,
http://cleaninvest.wordpress.com/2010/11/08/chinese-12th-5-year-plan-new-energy-new-energy-cars/.
120 CRS Report RL30519, The Growth of the Private Sector in China and Implications For China's Accession to the
World Trade Organization
, by Wayne M. Morrison.
121 CENet.
122 Liu Jianqiang, Reining in China’s Energy Targets, Chinadialogue, March 2, 2011, http://www.chinadialogue.net/
article/show/single/en/4138-Reining-in-China-s-energy-targets.
123 Reuters, “China Small Power Plants Closures Ahead of Schedule,” July 3, 2010, http://in.reuters.com/article/2010/
(continued...)
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expected to come from structural changes in China’s economic structure and technological
improvements.124 Energy efficiency benchmarks have been established for China’s top 1,000
energy consuming industries (which accounted for 33% of national and 47% of industrial energy
usage in 2004) with energy reduction goals set for each enterprise.125 China is the world’s largest
market for new construction with approximately 2 billion square meters of floor space added
annually. China’s existing building codes (for both residential and public buildings) focus on
heating, ventilation, and air conditioning, as well as lighting, hot water and power use. New
standards have been in development since 2005 with national energy design criteria for
residential buildings.126 Energy efficient building codes are a key tool in establishing passive
measures for energy savings in new future housing stock.
The weak link in China’s electricity planning is transmission. Targets have been set for building
renewable electric power generation without similar planning for accomplishing grid connection
and integration, especially for remote wind power. China’s grid companies must accept
subsidized wind power, but costs of building transmission lines to connect to wind farms
(especially those in remote regions) are not subsidized. As a result, as much as one-third of wind
power generation in China is not connected to the grid due to a lack of transmission capacity.
When combined with low tariffs, this likely means that China’s wind power sector has been
operating at a loss.127 To help remedy the imbalance, the State Grid Corporation has begun to
build a pilot “Smart Grid” in China’s larger cities to help integrate renewable energy sources.
Formal goals for a Smart Grid are expected to be incorporated into China’s 12th Five Year Plan,
with a “unified strong and smart grid” to be built nationwide by 2020.128
China today is dealing today with some of the same issues that the United States is likely to face
as it considers building the infrastructure to take advantage of potentially huge wind and solar
resources of the west and southwest. China’s transmission system (like that of the United States)
is mostly regional in functionality, and could benefit from improved connectivity across regions if
renewable resources in remote areas are to be more fully harnessed. The cost of developing the
transmission system will be great in both countries, but China has begun to build efficient ultra-
high voltage (UHV) transmission lines (i.e., voltages of 1,000 kilovolt (KV) alternating current,
or higher, and 800 KV direct current, or higher). UHV can reduce transmission line losses and

(...continued)
07/03/idINIndia-49857620100703.
124 Yang Fuqiang, Hu Yangli, and Li Jingjjng, China Needs Higher Targets, Chinadialogue.net, March 3, 2011,
http://www.chinadialogue.net/article/show/single/en/4140—China-needs-higher-targets-.
125 Lynn Price, Xuejun Wang, and Jiang Yun, China’s Top-1000 Energy-Consuming Enterprises Program: Reducing
Energy Consumption of the 1000 Largest Industrial Enterprises in China
, Ernest Orlando Lawrence Berkeley National
Laboratory, LBNL-519E, June 2008.
126 B. Shui, M. Evans, and H. Lin, et al., Country Report on Building Energy Codes in China, Pacific Northwest
National Laboratory, April 2009, http://www.energycodes.gov/implement/pdfs/CountryReport_China.pdf.
127 China’s wind power sector is expected to be operating at a loss for some time to come, largely due to the practice of
awarding concessions to the bids with the lowest tariff and awarding contracts for the life of a project. As such, higher
government subsidies may be required for wind farm profitability, and building transmission infrastructure will still be
needed on a massive scale to bring this power to market. See Guardian.co.uk, “Wind Power Growth in China’s Deserts
Ignored Financial Risks,” May 14, 2010, http://www.guardian.co.uk/environment/2010/may/14/wind-power-china-
desert.
128 The “Smart Grid” is an intelligent system capable of seamlessly integrating renewable energy sources like solar and
wind power into the electricity network. See Xinhua News, “China Sets to Build Smart Grid to Tap Renewable
Energy,” March 13, 2010, http://news.xinhuanet.com/english2010/china/2010-03/13/c_13209617.htm.
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transmit more power over longer distances.129 China’s State Grid Corporation plans to invest $88
billion through 2020 to build UHV lines.130
In contrast to China’s socialist market economy, the United States has largely a market-driven
economy. Some observers argue that the current higher costs of renewable electricity do not favor
market adoption.131 However, the goals for increased use of renewable energy are diverse, and
include energy security, energy independence, cleaner air, and more recently anthropogenic
climate change, sustainability concepts, and economic development. Goals for reducing pollution
have been enforced by government regulations requiring changes in the fuels used for power
generation, and are often buttressed by requirements to install equipment to reduce particular
types of emissions. Such goals could reasonably be said to apply both to the United States and
China.
In the United States, while individual states may have renewable electricity mandates, there is no
federal law creating a market for renewable energy. Many believe that renewable energy
technologies need a federal policy driver which creates a national demand for renewable
electricity if it is to be a “significant” contributor to domestic power generation picture. This
opinion is largely based on the view that renewable energy technologies are not mature
technologies, and therefore cannot yet compete with conventional fossil-fueled power generation.
If increased deployment of renewable electricity technologies is a U.S. policy goal, a recent
analysis by the National Renewable Energy Laboratory suggests that the United States could also
implement both a renewable electricity standard and a FIT.132 Others believe that renewable
energy technologies should rely on venture capital and private sector investment alone, and the
market alone should dictate whether they are employed. However, it is noted that the United
States relies more on investment from venture capitalists for clean energy technology
development than the rest of the world combined.133 Venture capital has driven much energy
innovation in the United States in the past and will undoubtedly play a role in the future in
funding the next generations of clean energy technologies.
Creation of green jobs by developing a globally competitive renewable energy technology
manufacturing industry has been described as a cornerstone of U.S. economic policy. Developing
such a capability in the United States will likely require major investments from the federal
government. Such an effort may have to go beyond tax credits and loan guarantees as have been
used to this point in time if the development of renewable energy technology manufacturing
capacity and “green jobs” creation are goals. In some countries, these policies can be instituted at
the discretion of a central government. The massive allocation of government-funded resources
by countries seeking to build renewable energy technology leadership and global market share is

129 International Electrotechnical Commission, Energy Efficient Ultra High Voltage: The Future of Electricity
Transmission
, March 2007, http://electronics.ihs.com/news/articles/iec-uhv-electricity-transmission.htm.
130 Julian Wong and Andrew Light, China Begins Its Transition to a Clean-Energy Economy, Center for American
Progress, June 4, 2009, http://www.americanprogress.org/issues/2009/06/china_energy_numbers.html.
131 Jerry Taylor and Peter Van Doren , Evaluating the Case for Renewable Energy: Is Government Support
Warranted?
, CATO Institute, Policy Analysis no. 422, January 10, 2002, http://www.cato.org/pub_display.php?
pub_id=1281.
132 FITP.
133 “The United States continues to hold an overwhelming advantage in the area of venture capital/private equity
investment, accounting for 73 percent of the G-20 total in 2010.” See Pew Charitable Trusts, Who’s Winning the Clean
Energy Race
?, March 2011, http://www.pewenvironment.org/uploadedFiles/PEG/Publications/Report/G-20Report-
LOWRes-FINAL.pdf.
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an indication of the greater reliance these nations expect to have on the renewable energy
industry. The potential for product and equipment sales is key to their belief that such a transition
should be accelerated.
The United States has traditionally relied primarily on market forces and tax incentives to
encourage the development and deployment of new technologies. This would be the “business as
usual” model. However, several forces are in play that call the “business as usual” model for
innovation and deployment of renewable energy technologies into question: for example,
investment dollars are scarce at this time, as the nation struggles to emerge from a recession; and
other nations have aggressively used governmental powers to channel resources into renewable
energy programs that have permitted them to establish renewable energy industries whose
products and productivity often exceed those of the United States. Further, many believe that the
U.S.’s existing (mostly non-renewable) low-cost energy system limits market opportunities in the
short term, despite potential opportunities in the longer term or abroad. As a result, numerous
observers and pundits have argued for more aggressive governmental intervention to bolster and
accelerate U.S. activities relating to renewable energy. This is the backdrop for President
Obama’s declaration of a U.S. policy to invest in clean energy.
Like China, the United States relies most on coal for electric power generation with that fuel
providing about half of the U.S. power generation.134 Clean coal is seen as a part of China’s clean
energy future, and an opportunity exists for China and the United States to work together to
develop clean coal technology.135 However, China has decided that renewable electricity will also
be a significant part of that energy future, with current plans for renewable energy sources to
contribute 15% of its primary energy needs by 2020. Targets, planning, and investment have all
followed to further China’s renewable energy goals.
Unconventional sources of natural gas, such as coalbed methane and gas shales, may be resources
that both the United States and China can develop.136 Recent technological developments have
raised the potential for natural gas to be produced in abundance especially from tight,
impermeable shale formations. The outlook for renewable energy development could be affected
if these unconventional natural gas sources can be developed and economically produced in an
environmentally acceptable manner.137



134 U.S. Energy Information Administration, Net Generation by Energy Source: Total (All Sectors), May 14, 2010,
http://www.eia.doe.gov/cneaf/electricity/epm/table1_1.html.
135 See http://www.energy.gov/news2009/documents2009/US-China_Fact_Sheet_Coal.pdf.
136 Vello Kuuskraa and Scott Stevens, Worldwide Gas Shales and Unconventional Gas—A Status Report, Advanced
Resources International, December 12, 2009, http://www.adv-res.com/pdf/
Kuuskraa%20Condensed%20Worldwide%20Uncon%20Gas%2012_12_09.pdf.
137 CRS Report R40894, Unconventional Gas Shales: Development, Technology, and Policy Issues, coordinated by
Anthony Andrews.
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Author Contact Information

Richard J. Campbell

Specialist in Energy Policy
rcampbell@crs.loc.gov, 7-7905


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