China needs to pump an additional $398 billion, or $33 billion per year, into low-carbon investment to make its alternative energy account for 16 percent of the total energy consumption mix by 2020.
This is a newly published investment calculation from the UK-based environmental organization Climate Change Group. It says stronger environmental policies from the Chinese government are creating an increased demand for low-carbon investment.
As a coal-dependent country, renewable energy consists of 7.5 percent of China's current power mix.
In the report titled "China's Clean Revolution," Climate Change Group says China's current trajectory will ensure it remains a strategic global hub for low-carbon investment, innovation and growth over coming decades.
China invested over $12 billion in renewable energy in 2007, second only to Germany. The nation needs to invest another $398 billion to reach its 2020 renewable energy goals, an average of $33 billion a year, the report says.
The organization has hailed China as the world's leading renewable energy producer, overtaking more developed economies in spurring new economic growth and creating new jobs while leading the development of critical low-carbon technologies.
The kudos came after the newly established National Energy Bureau announced that China will invest more in nuclear power and alternative energy to satisfy the country's ever-increasing demand.
The national bureau's other mission will be developing renewable energy, which is targeted to account for 10 percent of China's energy mix by 2010 when the total energy consumption is projected to reach 3 billion tons of standard coal equivalent.
China will also tap hydropower, which is predicted to reach 190 million kW by 2010, up from 117 million kW in 2005. And wind farms are expected to generate 10 million kW by 2010, going up from 1.31 million kW in 2005.
Solar power and bio-fuels will also play a bigger role. Solar power is predicted to generate 300,000 kW by 2010, up from 70,000 kW in 2005. And by 2010, it is hoped bio-fuels will produce 55 million kW, up from 2 million kW in 2005.
Steve Howard, CEO of the Climate Group which has its base in Britain, and offices in the United States, Australia, China and India, says: "The reality is that China's government is beginning to unleash a low carbon dragon which will power its future growth, development and energy security objectives."
China's transition to a low carbon economy is well underway, led by supportive government policies which are not only driving innovation in low carbon technologies but also diverting billions of dollars of investment into efficient and renewable energy.
The report says, the low carbon economy is just as attractive to developing nations like China, as it is to richer countries such as Britain, Japan and Germany.
Over the next 12 months, China is also set to become the world's leading exporter of wind turbines and expected to compete aggressively in other low carbon markets including solar water heaters, energy efficient home appliances and rechargeable batteries.
Despite its coal-dependent economy, says the report, the Chinese government and businesses have embarked on a clean revolution that has already made it a world leader in the manufacturing of solar photovoltaic technology (Solar PV).
China's combination of cost advantages, a clear policy framework, a dynamic and entrepreneurial business environment and abundant abatement opportunities, is proving that developing nations have as much, if not more, to gain from investment in low carbon solutions to create green-collar jobs, social benefits and economic growth, it says.
Changhua Wu, China director of the Climate Group, says: "Far from ignoring climate change, Chinese leaders have already committed to improving energy efficiency and scaling up the growth of low carbon industries. China is beginning to pull its weight on climate change and the targets and policies in place are in line with those being taken by 'leading' countries like the UK and Germany."
Investment in renewable energy in China is almost level with world leader Germany as a percentage of GDP (gross domestic product), says the report. The country is also the world's top manufacturer of solar cells and will be the leading exporter of wind turbines by 2009.
China, which leads the world in production of solar photovoltaic technology, has doubled its output of solar panels in each of the last four years, according to the report.
Suntech Power Holdings Co, based in Jiangsu, is the world's third- biggest supplier of solar cells. China's six largest solar-cell makers had a market value of over $14 billion at the beginning of this year.
Lu Yongxiang, vice-chairman of the Standing Committee of the 11th National People's Congress says China should become a global leader in energy efficiency by 2050 when nuclear power and renewable energy is likely to account for at least half of the country's energy mix.
Lu urges policymakers to come up with strengthened efforts to draw up such a long-term "strategic roadmap" for China's energy industry while focusing on clean energy development.
"We should have a clear strategic roadmap," Lu says. "It is not only for 2020, but also for 2030 and 2050."
"By 2050, China should become a global leader in energy efficiency while advocating cleaner energy development," says Lu, who is also president of the Chinese Academy of Sciences.
In his own roadmap, Lu says nuclear energy may consist of 25 to 30 percent of China's total energy consumption by 2050, with renewable energy such as hydropower likely to account for 20 to 25 percent of China's energy consumption by that time.
"By then, our fossil energy dependence can be reduced to 50 percent and I personally believe this goal should be reachable," he says.