Innovation and technology transfer through global value chains: Evidence from China's PV industry

China's success as a rapid innovation follower in the infant Photovoltaic (PV) industry surprised many observers. This paper explores how China inserted itself into global clean energy innovation systems by examining the case of the solar PV industry. The paper decomposes the global PV industrial value chain, and determines the main factors shaping PV technology transfer and diffusion. Chinese firms first entered PV module manufacturing through technology acquisition, and then gradually built their global competitiveness by utilizing a vertical integration strategy within segments of the industry as well as the broader PV value chain. The main drivers for PV technology transfer from the global innovation system to China are global market formation policy, international mobilization of talent, the flexibility of manufacturing in China, and belated policy incentives from China's government. The development trajectory of the PV industry in China indicates that innovation in cleaner energy technologies can occur through both global and national innovation processes, and knowledge exchange along the global PV value chain.     

Why is there overcapacity in China's PV industry in its early growth stage?

China has rich solar energy resources with great potential for future development. In recent years, encouraged and guided by China's central and local governments as well as international market, China's PV industry has seen a fast development, with increasingly expanded output. A complete industrial chain has taken shape. In 2011, the PV industry of China saw an annual output value of more than 300 billion RMB and total exports and imports of 142 billion RMB, providing jobs for 300,000 people. The development of China's PV industry mainly relies on the European market. Major factors driving the increase of its production capacity include: huge profits at early stage; great support of governments; lack of effective development planning; low-end processing and manufacturing; low admittance standards. The overcapacity in China's PV industry here refers to overcapacity of PV products such as silicon, polycrystalline silicon, solar cells and PV modules. Impacted by the US Financial Crisis and the European Debt Crisis, the market demand for PV products has been shrinking, resulting in more serious overcapacity of the industry. The Chinese government had hoped that the domestic PV market could absorb the overproduced PV products. However, it seems that, due to insufficient development and uncoordinated incentive system, the domestic PV market may not be able to promote significant change of the situation in a short period. Therefore, it should take a long time to solve the problem of overcapacity.     

Interactions between renewable energy policy and renewable energy industrial policy: A critical analysis of China's policy approach to renewable energies

This paper analyzes China's policy approach to renewable energies and assesses how effectively China has met the ideal of appropriate interactions between renewable energy policy and renewable energy industrial policy. First we briefly discuss the interactions between these two policies. Then we outline China's key renewable energy and renewable industrial policies and find that China's government has well recognized the need for this policy interaction. After that, we study the achievements and problems in China's wind and solar PV sector during 2005–2012 and argue that China's policy approach to renewable energies has placed priority first on developing a renewable energy manufacturing industry and only second on renewable energy itself, and it has not effectively met the ideal of appropriate interactions between renewable energy policy and renewable energy industrial policy. Lastly, we make an in-depth analysis of the three ideas underlying this policy approach, that is, the green development idea, the low-carbon leadership idea and indigenous innovation idea. We conclude that Chinas' policy approach to renewable energies needs to enhance the interactions between renewable energy policy and renewable energy industrial policy. The paper contributes to a deeper understanding of China's policy strategy toward renewable energies.     

Barriers' and policies' analysis of China's building energy efficiency

With the rapid economic growth and the improvement of people's living standards, China's building energy consumption has kept rising during the past 15 years. Under the effort of the Chinese government and the society, China's building energy efficiency has made certain achievements. However, the implementation of building energy efficiency in China is still far from its potential. Based on the analysis of the existing policies implemented in China, the article concluded that the most essential and the most effective ways to promote building energy efficiency is the government's involvement as well as economic and financial incentives. In addition, the main barriers in the process of promoting building energy efficiency in China are identified in six aspects. It has been found that the legal system and administrative issues constitute major barriers, and the lack of financial incentives and the mismatching of market mechanism also hamper the promotion of building energy efficiency. Finally, in view of the existing policies and barriers analysis, three corresponding policy proposals are presented.     

Contrasting perspectives on China's rare earths policies: Reframing the debate through a stakeholder lens

This article critically compares China's rare earth policy with perspectives upheld in the rest of the world (ROW). We introduce rare earth elements and their importance for energy and present how China and the ROW are framing the policy debate. We find strongly dissonant views with regards to motives for foreign direct investment, China's two-tiered pricing structure and its questionable innovation potential. Using the metaphor of “China Inc.”, we compare the Chinese government to a socially responsible corporation that aims to balance the needs of its internal stakeholders with the demands from a resource-dependent world. We find that China's internal stakeholders have more power and legitimacy in the REE debate than the ROW and reconceptualise various possible mitigation strategies that could change current international policy and market dynamics. As such, we aim to reframe the perspectives that seem to govern the West and argue in favor of policy formation that explicitly acknowledges China's triple bottom line ambitions and encourages the ROW to engage with China in a more nuanced manner.     

Analysis of the policy effects of downstream Feed-In Tariff on China’s solar photovoltaic industry

The Chinese government initiated the Feed-In Tariff (“FIT”) policy for downstream power generation in August 2013. The effectiveness of the downstream FIT policy has attracted the attention of academia and government. Using the quarterly data of listed solar PV companies between 2009 and 2015, this paper provides an empirical analysis regarding the effects of the downstream FIT policy. We find that (1) the FIT policy has significantly enhanced the inventory turnover of listed PV firms and improved their profitability; (2) the FIT policy has significant effects on the inventory turnover of midstream companies and mixed industry-chain companies mainly engaged in downstream operations; (3) FIT policy is more favorable towards increasing the inventory turnover of private enterprises. Our results indicate that the FIT policy can have substantial effects on the sustainable development of China's solar photovoltaic industry.     

Charging Chinese future: the roadmap of China's policy for new energy automotive industry

China's new energy vehicle (NEV) industry, which survives with powerful policy intervention and fostering, is an important branch of Chinese green energy policy revolution against climate change and circumstance issues. In the study, the roadmap of China's policy exploration on developing China's NEV industry within the time window of 2001–2020 was investigated systematically. Powerful policy intervention plays an important role in initializing the framework of China's NEV industry under the comprehensive situation when China's innovation capability and automobile technology were both at unsatisfactory state. China's policy of developing NEV market demonstrates that intense government intervention is necessary and successful at the starting stage of the NEV industry. Delicate balance between governmental intervention and market self-adjustment should be intensified by suitable policies. The pilot innovations and the serious lessons of China's policy explorations are of both practical and research significance for other developing countries.     

Temporal changes in China's production and consumption-based CO2 emissions and the factors contributing to changes

As the largest carbon emitter in the world, China is actively promoting carbon emission reduction and low-carbon sustainable development. To better formulate low-carbon transformation measures, we calculated and compared China's production-based carbon emissions (PD-CEs) and consumption-based carbon emissions (CD-CEs) from 2000 to 2014 based on the Multi-Regional Input–Output tables. We also performed a structural decomposition analysis (SDA) to investigate the factors contributing to changes in China's PD-CEs and CD-CEs. The study's findings are as follows: First, China's PD-CEs are continually larger than its CD-CEs, such that China is a net exporter of emissions. However, China's exported emissions and net exported emissions peaked at 2200 and 1786 Mt., respectively, as of 2007. In 2014, China's net exported emissions were 1371 Mt., down 23.25% compared with 2007. Second, China's PD-CEs mainly serve the domestic final demand, and China's CD-CEs are mainly emitted at home. Production and supply of electric power, steam and hot water is the biggest contributor to China's PD-CEs while Construction the largest contributor to China's CD-CEs. Third, the SDA results show that China's PD-CEs and CD-CEs mainly grew due to changes in China's final demand volume. The significant restraint to the growth of China's PD-CEs and CD-CEs is the effect of changes in the domestic emission intensity. Changes in China's ties with other economies have an important impact on China's carbon emissions. Developing economies are replacing developed economies as major destinations for China's emissions export. Fourth, the growth rate of China's PD-CEs and CD-CEs significantly slowed down and the factors contributing to the changes in China's PD-CEs and PD-CEs have changed after China's economy entered the new normal.     

Analysis of the market penetration of clean coal technologies and its impacts in China's electricity sector

This paper discusses policy instruments for promoting the market penetration of clean coal technologies (CCTs) into China's electricity sector and the evaluation of corresponding effects. Based on the reality that coal will remain the predominant fuel to generate electricity and conventional pulverized coal boiler power plants have serious impacts on environment degradation, development of clean coal technologies could be one alternative to meet China's fast growing demand of electricity as well as protect the already fragile environment. A multi-period market equilibrium model is applied and an electricity model of China is established to forecast changes in the electricity system up to 2030s. Three policy instruments: SO₂ emission charge, CO₂ emission charge and implementing subsidies are considered in this research. The results show that all instruments cause a significant shift in China's electricity structure, promote CCTs’ competitiveness and lead China to gain great benefit in both resource saving and environment improvement. Since resource security and environment degradation are becoming primary concerns in China, policies that could help to gain generations’ market share of advanced coal-based technologies such as CCTs’ is suitable for the current situation of China's electricity sector.     

Does carbon intensity constraint policy improve industrial green production performance in China? A quasi-DID analysis

Whether or not carbon regulation policies can achieve the “double dividend” of carbon reduction and economic growth is vital for realizing the sustainable development of a certain country. This paper investigates the effects of a carbon intensity constraint policy (CICP) that the Chinese government put forward in 2009 on the green production performance (GPP, i.e., the environmentally sensitive productivity growth considering carbon emissions to be an undesirable output) of industrial sector (the largest carbon emitter in China) for the first time. Based on a non-radial and non-oriented DEA (data envelopment analysis) measure method, we first adopt the Luenberger indicator to estimate the GPP of China's 36 industrial sub-sectors over 2001–2013. Furthermore, regarding the CICP proposed in 2009 as a natural experiment, we assess the effects of such a policy on China's industrial GPP by using the quasi-difference-in-differences (quasi-DID) method. The results show that China's industrial GPP presents a circuitous downward trend after experiencing a transient rise. The heterogeneity of the GPP among industrial sub-sectors exists, and the increase in industrial output is the crucial driver of improving the GPP. China's industrial GPP has deteriorated after implementing the CICP, and the negative effect of such a policy is larger and larger over time. Such empirical results indicate that although the carbon regulation policy in China has achieved a surface success, the policy causes a factor substitution effect to hinder the improvement of the GPP. Therefore, China's current CICP is not effective in realizing the “double dividend” of carbon reduction and industrial growth.     

How to stimulate renewable energy power generation effectively? – China's incentive approaches and lessons

The renewable energy power generation (REPG) in China has experienced tremendous growth in the last decade. To understand this rapid growth, it is necessary to explore how Chinese government triggers the remarkable development of the industry. This paper offers a systematic analysis of the incentive policy system for REPG in China, covering wind power, solar photovoltaic, small hydropower (single-unit power generation capacity less than 50 MW), biomass power and geothermal power. The incentive system contains laws, regulations, policies and industrial plans issued during the 11th and 12th “Five-year Plan” periods (2006–2015). Four major incentive strategies of the Chinese government are identified: research and development incentives, fiscal and tax incentives, grid-connection and tariff incentives, and market development incentives. The results show these incentive methods have played a significant role in promoting the development of REPG in China, but still there are some problems associated with them. International comparisons of the incentive policies with those of Denmark, Germany and US, as well as the strategies to further improve the Chinese incentive approaches are discussed. This comprehensive analysis of China's incentive policy system for REPG helps to understand China's experience in promoting renewable energy, contributing to better decision-making in policy.     

Wind power and photovoltaic power: How to improve the accommodation capability of renewable electricity generation in China?

China's wind curtailment and photovoltaic curtailment was one of the prominent issues in 2014, and the renewable curtailment worsened in 2015. With the rapid growth of renewables, the phenomenon of the insufficiency in renewable accommodation capability is becoming more and more serious in 2016. In that case, the problem of the insufficient accommodation capability is pointed out by analyzing China's development requirements. The renewable power generation scale, the renewable power consumption, and the restrictions on the renewable electricity generation are discussed from the China's market perspective. Meanwhile, the legal environment, the planning requirement, the institutional setting, and the policy tools are introduced from the perspective of governmental regulation. An empirical analysis, a cause analysis and a trend analysis are illustrated before explaining the problem of renewable curtailment and proposing a solution for enhancing the accommodation capability. According to the analysis results, the solution for addressing the wind curtailment and PV curtailment is offered with respect to the technology, the institution, the legislation, and the political aspect. Through the research, the research conclusions are drew finally and the corresponding policy recommendations are put forward.     

Applying the blockchain technology to promote the development of distributed photovoltaic in China

Access to energy has increasingly been provided by the Chinese Government via new alternative energy sources known as renewables in recent years. Meanwhile, the development and use of environmentally friendly renewables gradually become the basic requirements for the sustainable development in the future society. The integration of blockchain technology with distributed photovoltaic (PV) energy may break the existing pattern where the production, transportation, distribution, and sales of energy are centralized. This paper first reviews the current overall situation of China's distributed PV and further analyzes the policy environment with respect to the development of distributed PV. On the basis of the analysis of the status quo, the paper then discusses the internalities (strengths and weaknesses) and the externalities (opportunities and threats) that have driven the development of China's distributed PV by illustrating the SWOT analysis. The data structure and characteristics of blockchain are analyzed to identify the application mode of blockchain technology in the distributed PV industry for the first time. Through our research, some conclusions and policy proposals are finally put forward to provide support to the formulation of related policy in the Chinese Government and industry association.     

Household photovoltaic market in Xining, Qinghai province, China: the role of local PV business

This paper assesses the present and future market for household photovoltaic (PV) systems in rural Northwest China, especially from the PV commerce at Xining, Qinghai Province. This unsubsidised free market is now met by the emerging PV industry in China, which includes cell and module manufacturers, and PV system distributors and assemblers. For widespread deployment of such a renewable energy technology, the development of a local free market seems more successful than donor- or ‘government subsidy’-driven programmes. Presently, there is a thriving infant PV industry in Northwest China, mostly centred in Xining. Xining-based PV sales companies have extensive networks for selling, marketing and servicing household PV systems for rural farmers and nomads. Small systems are now ordinary items on sale in local shops. Based on interviews and fieldwork observations with seven major PV sales companies in Xining, the household PV market is assessed from the present business operations of these companies. Detail of primary sources is given with the aim of archiving seminal progress in the history of photovoltaic power. The results suggest that although the household PV market will continue to grow, current government and international sponsored PV programmes can create both opportunities and barriers for the infant PV market and industry in China.     

Renewable power for China: Past, present, and future

This paper briefly examines the history, status, policy situation, development issues, and prospects for key renewable power technologies in China. The country has become a global leader in wind turbine and solar photovoltaic (PV) production, and leads the world in total power capacity from renewable energy. Policy frameworks have matured and evolved since the landmark 2005 Renewable Energy Law, updated in 2009. China’s 2020 renewable energy target is similar to that of the EU. However, China continues to face many challenges in technology development, grid-integration, and policy frameworks. These include training, research and development, wind turbine operating experience and performance, transmission constraints, grid interconnection time lags, resource assessments, power grid integration on large scales, and continued policy development and adjustment. Wind and solar PV targets for 2020 will likely be satisfied early, although domestic demand for solar PV remains weak and the pathways toward incorporating distributed and building-integrated solar PV are uncertain. Prospects for biomass power are limited by resource constraints. Other technologies such as concentrating solar thermal power, ocean energy, and electricity storage require greater attention.     

Constraints on the effective utilization of wind power in China: An illustration from the northeast China grid

Even though China's wind power industry has experienced a rapid growth since the beginning of this century, the utilization of wind power is still worrisome. In 2010, about 30% of China's total installed capacity could not get access to the grid. And about 10% of China's total wind power generation was curtailed. The problem of wind power curtailment is more prominent in Northeast-China region. The main particularity of Northeast China Grid is as follows: during the long heating period in winter, combined heat and power thermal plants need to modify the turbine generator's output to meet the heating demand and thus the thermal power peak regulation capacity is reduced, as a result the barriers of wind power consumption are increased. This paper provides a new perspective of the constraints on the effective utilization of wind power in the Northeast China Grid. We argue that there are two categories of constrained factors: structural factor and operational factor. The former includes grid structure, wind source structure, power source structure, and market structure. The latter includes power price mechanism, dispatch mode arrangement, wind power integration codes, and wind power forecast. At last, we make policy recommendations: promote the coordination between wind farm investment and grid construction, strengthen interprovincial power trade mechanism, implement flexible pricing mechanisms as well as improve current dispatch mode, etc.     

A regulatory policy to promote renewable energy consumption in China: Review and future evolutionary path

Renewable energy has become the world's strategic choice to solve environmental pollution, address the energy crisis and achieve social sustainable development. The establishment of a regulatory system coincides with the development stage of renewable energy and electricity market operation is significant in standardizing the market competition and guaranteeing healthy development of renewable energy in China. This paper analyses the current situation of renewable energy development and the existing renewable energy regulation system in China, pointing out that the main problems restricting renewable energy development are institutional mechanisms and market factors. The existing regulatory mechanisms also have deficiencies, such as the inclination towards economic regulation and the lack of a market adjustment mechanism. This paper proposes that China should comprehensively consider the renewable energy development stage, electricity market trading mechanisms and other factors in electricity regulatory requirements when policy making, actively exploring a new renewable energy regulation model adapted to different development phases. In addition, this paper suggests China's regulatory policy path based on the forecasting of renewable energy developing models.     

What makes renewable energy successful in China? The case of the Shandong province solar water heater innovation system

The Chinese province of Shandong, and more particularly its cities Dezhou, Jinan and Rizhao, have established an international reputation of being hotbeds for solar water heating (SWH) technology development and dissemination. The article aims to unveil the evolution of this innovative environment by applying the Functions of Innovation Systems (FIS) approach to the Chinese province of Shandong. It examines the actors, institutions and policy instruments that shape Shandong's innovation system for SWH, the dominant drivers and barriers during the evolution of the TIS and also assesses the applicability of the IS approach to China. It appears that the presence of influential interest organizations and proactive support from local governments have acted as strong drivers for the emergence of Shandong's innovation system for SWHs. On the other hand, the lack of adequate personnel and an overreliance on government policies act as main barriers. With regard to the Chinese specificities potentially detracting from the relevance of applying IS theory to China, we did not find that the central government acted as an initiator of innovation nor that state-owned enterprises had dominant positions in the market. In this innovative industry the impetus for development came from the bottom up and from private corporations.     

The roles of inter-fuel substitution and inter-market contagion in driving energy prices: Evidences from China’s coal market

Coal has been dominating energy supply and consumption in China, with the country becoming the largest energy supplier and consumer worldwide. Due to inter-fuel substitution of crude oil and inter-market contagion of international coal market, China's coal price might be interrelated with crude oil price and international coal price. However, the precise roles of these two effects in determining China's coal price are unknown. This paper contributes to previous literature by investigating this issue. We find that co-movements between China's coal price and crude oil price largely hinge on the shares of oil and coal in China’s energy mix, while its co-movements with international coal price depend on scales of coal trade. Inter-fuel substitution dominated the interaction of China's coal market with other energy types, but the importance of inter-market contagion has been increasing. We also find that China might have become an originator for driving the returns of crude oil and international coal, in particular after 2008. Furthermore, China's coal market is still a net volatility recipient for shocks from both crude oil market and international coal market. Given the increased integration of global energy markets, we anticipate this paper to provide a better understanding on the dynamic changes in China's coal prices.     

Carbon emissions in China: How far can new efforts bend the curve?

While China is on track to meet its global climate commitments through 2020, China's post-2020 CO₂ emissions trajectory is highly uncertain, with projections varying widely across studies. Over the past year, the Chinese government has announced new policy directives to deepen economic reform, to protect the environment, and to limit fossil energy use in China. To evaluate how new policy directives could affect energy and climate change outcomes, we simulate two levels of policy effort—a continued effort scenario that extends current policies beyond 2020 and an accelerated effort scenario that reflects newly announced policies—on the evolution of China's energy and economic system over the next several decades. We perform simulations using the China-in-Global Energy Model, C-GEM, a bespoke recursive-dynamic computable general equilibrium model with global coverage and detailed calibration of China's economy and future trends. Importantly, we find that both levels of policy effort would bend down the CO₂ emissions trajectory before 2050 without undermining economic development. Specifically, in the accelerated effort scenario, we find that coal use peaks around 2020, and CO₂ emissions level off around 2030 at 10 bmt, without undermining continued economic growth consistent with China reaching the status of a “well-off society” by 2050.