(February 4, 2011) This recent Economic Observer story provides a glimpse into the Chinese Government’s upcoming dam building frenzy. The original story can be found here.
By Xie Liangbing, Chen Yong
Chinese hydroelectric power generation has reached a turning point. Recently, in Beijing, the China Electricity Council issued the electric power industry research report for the 12th Five-year Plan. China Electricity Council vice chairman Wei Zhaofeng said that the development of hydroelectric power has become a priority, and that large and medium-sized hydropower projects will be granted approval.
On July 8, 2010 the Jinsha River Jin’an Bridge hydropower project received the approval of the National Development and Reform Commission (NDRC), a move considered as a symbol of the restarting of large and medium-sized hydropower projects. After that, Lu Di La and Long Kaikou hydropower stations were also granted permission to continue construction during the 11th Five-year Plan.
Over the past five years, hydropower development in China has been a controversial topic. Chinese Society of Hydroelectric Engineering deputy secretary-general Zhang Boting recently told our newspaper that over the last five years, only one third of the hydropower programs set out in 11th Five-year Plan have been completed, but that the rest will be resumed during the 12th Five-year Plan.
Lifting the Hydropower Ban
Nowhere is development more pressing than in the Nujiang Lìsu Autonomous Prefecture of Yunnan Province. Due to its unique geographic location and rich natural resources, Nujiang has been keen to develop hydropower for nearly ten years.
At present, small or medium-sized hydropower projects line the rivers in the Nujiang Lìsu Autonomous Prefecture. There are 88 new projects currently under construction and 44 completed projects. The total investment amounts to about 3.46 billion yuan. The development of Nujiang is back on track after years of controversy.
In response to our questions concerning the lifting of the ban on hydropower projects, the governor of the Nujiang Lìsu Autonomous Prefecture, Hou Xinhua, said that they had no power to interfere with the decisions made by state ministries, but the resumption of hydropower projects is the best outcome. Zhang Jin, director of the Nujiang Development and Reform Commission says they are still waiting for final approval from state ministries. “We must proceed. The resources here are too good; not to develop is not an option.”
A local official said that the Nujiang hydropower projects will be green lighted in the new energy development plan submitted by the National Energy Administration. He also stressed hydropower is not only the most important resource in the area, but it is renewable. For a remote and undeveloped area, the resource is especially precious.
A source close to the Chinese Ministry of Environmental Protection said that it will not be long till the Jinan Bridge hydropower stations will be granted permission to officially begin construction, and that the environmental evaluation reports for the Lu Di La and Long Kaikou hydropower stations have been approved.
The source also said that hydropower presents an ideal project for western China and a fitting goal for regional development. Combined with preferential policies for the western areas included in the 12th Five-year Plan, the west is expected to experience an economic boom. Tibet’s Zangmu Dam, built for hydroelectric power production, was completed on November 12, 2010. Experts anticipate Qinghai and Tibet provinces to be primary sites of hydroelectric development in the future. A Qinghai Province official has confirmed to the EO that the central government has promised opportunities for local hydroelectric development.
The lifting of the ban on hydroelectric development has caught the attention of many companies. On December 20th, China Power Investment Corporation General Party Manager Lu Qizhou met in Kunming with Yunnan Provincial Party Committee Member and Vice Governor Luo Zhengfu and Kunming Municipal Committee Secretary Qiu He about further cooperation in hydroelectric development.
Since 2010, China Power Investment Corporation has had considerable presence in southwest China, especially in hydroelectric development. An insider from the China Power Investment Corporation reports that their focus has been the middle and upper reaches of the Yellow River. But China Power Investment Corporation has the smallest share out of the five major state-owned power production groups; they are looking to expand.
A Yunnan Province official who wishes to remain anonymous told the EO that currently organizations and experts formerly involved in hydropower projects have met in Yunnan Province to discuss the current hydropower situation and hope that the government will officially announce the resumption of projects. “The central government is also trying to overcome prior obstructions,” said Zhang Boting.
Five Wasted Years
Many refer to the last five years as “lost time.”
Chinese Society of Hydroelectric Engineering deputy secretary-general Zhang Boting says that in the 12th Five-year Plan, the starting capacity for hydroelectric output was cited as 70 million kilowatts, but in reality, the number is around 20 million kilowatts, just 20 percent to 30 percent of the estimated figure. From 2008 to 2009, the whole country produced only 1 million kilowatts, none of which came from a large hydroelectric project.
Environmental protection organizations and problems involving population displacement are the main two obstacles to hydropower development. For example, one Nujiang station has been a center of controversy since 2003, and had to stop operations. From 2007 onward, approval for large hydropower projects had to come from State Council departments responsible for investment, not just local governments.
From Zhang’s perspective, the slow pace of development for hydropower is mainly due to the extreme reactions of environmental protection agencies. They have misled the media and overstated the problems which arise from the displacement of residents and the harmful impact on the environment. This has brought additional difficulties to seeking project approval.
The impact of hydropower development on the environment has always been a source of dispute. Under pressure from environmental protection organizations and the media, the government has been especially careful about its development. In a National People’s Congress meeting in 2009, Premier Wen mentioned the development of clean energy, but excluded any reference to “hydropower”.
Another source of resistance comes from population displacement. In the past, half of development costs were incurred due to the displacement of residents, and many displaced migrants return after development begins. Construction costs for a hydropower plant is 40 percent higher than a fossil fuel power plant, prompting many to question its worth.
But for local governments, development is a way to displace impoverished populations and reduce a county’s financial burden. A local official said: “displacing the population is a good way of reducing manmade environmental destruction; it is helpful for the environment.”
Zhang said that because of the slow development of hydropower, the demand for coal has been growing. “The demand for coal is much higher than its production and transport capacity, creating a supply-demand gap. The only way to fill the gap is to encourage the development of smaller mines.”
In his opinion, China’s hydropower development will counterbalance economic development. In the past few years, as the global community has advocated emission reduction, China’s emissions have increased yearly, breaking all the records.
Righting the Wrongs?
2010 marks the 100th anniversary of hydropower in China. The Southwest drought during the early months of 2010 and the fact that only one third of the hydropower programs laid out in the 11th Five-year Plan have been completed has convinced people that hydropower in China is underdeveloped.
Compared to developed countries where the degree of hydropower development has reached 60 percent, the degree of hydropower development in China has only reached 36 percent. In August 2010, National Development and Reform Commission deputy director, National Energy Administration director general Zhang Guobao stated that China will endeavor to increase the use of non-fossil fuels for energy production to 15 percent by 2020; hydropower will account for 9 percent. Among the 400 million kilowatts in available hydropower resources, 380 million need to be developed.
Zhang Boting told the EO that Chinese hydroelectric power generation is at a turning point, and its development has become a priority in the yet-to-be finalized 12th Five-year Plan. In the 12th Five-year Plan, the conventional hydropower target has been raised to 83 million kilowatts from 63 million kilowatts, and the pumped-storage hydropower generation target has been raised to 80 million kilowatts from 50 million kilowatts.
He also said that the Chinese government has made two promises: We will endeavor to increase the use of non-fossil fuels in primary energy consumption to around 15 percent by 2020; we will reduce carbon emissions by 40 percent to 50 percent from 2005 levels by 2020. “This will speed up hydroelectric development.”
Faced with clean energy projects, the five major power groups are keen to make hydropower development a priority, since they have ready access to high quality resources. A report by CITIC Securities shows that the coming decade will be a golden age for the hydropower industry, and the gross installed capacity is only 200 million kilowatts, which needs an additional 180 million kilowatts to reach the target for 2020.
The lift on the hydropower development ban is welcomed as an impetus for local economic development. According to Guotai Junan, the NDRC has approved 30 hydropower projects since 2010.
A Qinghai Province official said that the central government promised to create more opportunities for local hydropower development. Reducing carbon emissions is the most effective reason for developing hydropower. “The displacement problem and the environmental effects can be fixed later. We need large projects to narrow the gap between central and western China, sacrifices are inevitable.”
Is this going to be a great leap forward for hydropower development? Zhang Boting said that the companies had already bought the projects in the 11th Five-year Plan; they were subsequently refused project approval. So during the 12th Five-year Plan they will be carrying out the original plan.
However, disputes among environmental protection bureaus and organizations over hydroelectric power are likely to continue. When the 100th anniversary of the conference of China hydropower development was held in Yunnan, disputes over development and environmental protection still existed. The conference was in the name of energy conservation and emission reduction, but the environmental protection bureaus never received an invitation.
On December 22, 2010, at the “China Water Pollution Control and Policy Innovation Seminar”, the Environmental Protection Department’s deputy director of pollution prevention Ling Jiang said, “Hydropower can produce more pollution than a fossil-fuel power plant. Some media reports stated that environmental officials directly raised questions about the dams themselves. This was very rare in the past.”
This article was edited by Ruoji Tang and Paul Pennay
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