China New Energy Cooperation – UHV, Smart Grids, Bio-Jet Fuel

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U.S.-China Strategic Economic Dialogue: Deeper cooperation in new energy.

The third round of U.S.-China Strategic Economic Dialogues ended in Washington on May 10th. The Chinese and American sides came to agree on several areas of energy cooperation, thorough cooperative development of smart power grids, large scale wind power development, distributed energy natural gas, shale gas, and bio-jet fuel, along with promises to share information pertaining to energy management experience.

During the 12th Five-year Plan China will invest over 280 billion RMB($43.06 billion USD) in its smart grid

As far as China and America are concerned, everything revolves around new energy, and will continue to for the foreseeable future.

Energy is the focal point of the new round of globalization, and the center of the global energy reform is electricity. One of the points that came out of the 2011 U.S.-China Strategic Economy Dialogue framework was support for “Chinese-American Cooperative Energy Projects”, furthering their cooperation in electricity, especially electric power management systems and electric power project strategy. Both sides are looking forward to the seeing the fruits of 2 smart grid research and development projects financed and supported by the China State Grid Corporation and The U.S. Commercial Service

References to “U.S.-China Cooperative Energy Projects” can be found as early as January 18 of this year. Chinese President Hu Jintao went on a visit to America in the hope of promoting Chinese-America cooperation in new energy. The clean energy field alone is worth $20 billion USD. The cooperative agreement both sides signed included the Chinese State Grid and American Electric Power cooperating, including areas such as high tech equipment and technology, on advanced projects in 6 fields such as power transmission and smart grid technology.

Jiang Kejun, researcher at the NRDC(National Development and Reform Commission) Energy Research Institute, told reporters that power grid development, particularly the rapid development of ultra-high voltage transmission and smart grid technology, will become the engine of the new energy revolution. It is already obvious that ultra-high voltage transmission and smart grid technology has become one of China’s national energy strategies, China is hoping to grab the opportunity presented by the global industry restructuring, establishing a foothold in one of the great new markets of the next round of development.

According to statistics published by the State Grid, during the 12th Five-year Plan smart grid construction will enter the “full scale” phase. According their numbers for smart grid investment, it is estimated that 2011-2015 smart grid investment will exceed 280 billion RMB($43.06 billion USD), an annual average of roughly 50 billion RMB($8.61 billion USD). This is a 60% increase since the estimates at the beginning of the year, it now represents a much larger portion of power grid development as a whole.

Bio fuel development depends on technological breakthroughs in non-grain based bio ethanol production

Practical cooperation in bio-jet fuels is one of the high points on the list coming out of the discussion.

Also on the list of points is Chinese and American cooperation in projects relating to China using bio-jet fuels. Both sides agreed further discussion the mater is required and it depends on financial conditions. They are primarily considering promoting research and development in second generation non-grain based bio ethanol material systems.

Chen Pengyu, analyst for CEBM says that, regardless, for both China and America, it all depends on technology breakthroughs in non-grain based ethanol production.

In order to prevent grain based bio ethanol from competing with food crops, The U.S. ruled that 2022′s 36 billion gallons of bio fuel must come mostly from second generation fiber based bio ethanol.

Chen Pengyu says first generation bio ethanol technology uses basically the same methods as tradition beer brewing, whereas second generation bio ethanol technology is very complicated and very valuable. Even though America has already invested $1 billion USD in subsidies, America has yet to produce a domestic second generation bio ethanol plant that is commercially viable. In other words, President Obama’s great energy plan all depends on whether tangible breakthroughs in technology can be made in time.

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