Energy efficiency boosts transition to green economy

Higher energy-efficiency standards, rational prices on carbon and deep investments in urban energy infrastructure could quicken China's transition to a green economy, said Niels B. Christiansen, CEO of Danfoss, a world giant in green technology and business.

China could make financial savings and improve living standards by adopting tougher regulation governing energy efficiency of homes, offices and factories, among others, Christiansen told Xinhua in a recent interview.

ENERGY EFFICIENCY

"By raising these standards, the transition would get going, and a lot of good technologies will be deployed," he said.

"In the short term, raising standards is a bit expensive, so there will be a challenge in making sure it happens nevertheless, to make sure we eventually get savings," he added, referring to problems facing China's green transition.

The UN's Environment Program defines the green economy as one where "growth in income and employment should be driven by public and private investments that reduce carbon emissions and pollution, enhance energy and resource efficiency, and prevent the loss of biodiversity and ecosystem services."

China is greening its economy on multiple fronts under its ongoing 12th Five-Year Plan, including by reducing dependence on coal-fired plants with those run on renewable sources like biomass, wind energy and solar power, as well as wider and improved deployment of nuclear power.

Better insulation of homes and offices to cut heating bills, combined urban heat and power networks, improved energy-efficiency of production facilities, and alternative-fuel cars, are being implemented along with other solutions.

Danfoss, headquartered in Denmark, is a global leading manufacturer of energy-efficiency and temperature-control devices, and has extensive production, research and development facilities in China. It believes higher energy efficiency standards are urgently needed to improve the competitiveness and sustainability of Chinese industry.

"China needs to be thinking about getting to 'best in class' standards, because that is where the green transition actually will happen, and money will be saved. The way to go is to start to raise standards, so that everybody competing in that market will have to meet a certain level," Christiansen said.

To illustrate his point Christiansen mentioned the radiator thermostat, a product which provides 20 to 40 percent energy savings, and is found in radiators in most European homes. He said most Chinese homes "of similar level" do not have radiators with thermostats, meaning they simply miss out on these savings.

He added that solutions like thermostats, which are built on existing technology, are among "the low-hanging fruits which could help kick-start this transition" and should be made "mandatory."

CARBON PRICE

Meanwhile, putting a reasonable price on carbon dioxide (CO2) emissions, which are linked to global warming, would automatically provide a China-wide standard that all industries would have to adhere to.

"We have seen in many countries that a subsidized energy price, that is artificially low, makes the transition slower, because it keeps us using old technology for longer," Christiansen said.

He said energy must be priced "at its real cost" so that companies are urged to use energy-saving technologies, boost research and development into clean energy, and thus accelerate the green transition.

For its part, the Chinese government says it plans to increase the share of non fossil-fuel based energy in the country's total energy consumption to 11.4 percent in 2015, up from 8.3 percent in 2010.

Already, China is the world's leading maker of wind turbines and solar panels, and its largest market for wind power. Were energy prices to rise, thereby making it more expensive to use CO2-emitting fossil fuels, the appeal of renewable energy would likely increase.

Denmark is a successful case in point: its economy has grown 78 percent since 1980, while keeping energy consumption more or less constant, and slashing CO2 emissions.

The quest for energy efficiency and renewable power has led it to develop a world-class on-and-offshore wind-turbine industry, and a host of other companies specializing in clean technologies and environment-friendly solutions. Wind power itself is expected to contribute 50 percent of Danish electricity production by 2020.

URBAN HEATING

Danfoss typically manufactures products that improve energy efficiency of everyday equipment such as electric motors, refrigerators and technology for district heating networks, where heat generated by electricity plants is piped for heating homes and office.

Christiansen believes the latter technology can have rapid, widespread positive impact in China's urban areas by cutting energy use, improving energy efficiencies by utilizing waste heat, and thereby cutting power costs for consumers.

Along with local authorities, Danfoss recently rolled out a modern district-heating network in Anshan city, Liaoning Province. Under the plan, local homes are switching from heat supplied by old, small boilers, and are instead receiving waste heat piped from a nearby steel plant.

"Previously, that waste heat was simply dumped, lost in the air, and now it is utilized to provide heating comfort for one million people," Christiansen said.

Over time, such projects could make ordinary people more aware of their energy consumption, not least as they receive cheaper energy bills, and thereby understand the benefits of a green economy.

"That is another important element in the transition: to make the population aware of the benefit of being more efficient with energy," Christiansen said.

The total cost of the Anshan city district heating scheme, where Danfoss is the project's biggest technology provider, is around 400 million CNY (64 million U.S. dollars). While consumers access a stable heat source, the steel plant earns on what was previously a waste product, and the city authorities make energy and cost savings.

Christiansen said this model could be replicated around China as one "can probably find 50 or 100 cities with the exact same needs."

Although the necessary skills and technologies to implement such schemes already exist in China, the core infrastructure around energy networks needs to be developed to spur green growth.

Furthermore, project finance would have come from national or local governments, although public-private partnerships could be a future investment alternative, Christiansen added.