BEIJING - Beijing is promising new subsidies to develop China's solar power industry -- policies already under fire from the United States as a possible trade violation.
The Finance Ministry announcement late Thursday came amid global talks in Cancun, Mexico, on controlling output of gases blamed for changing the climate. China and the United States are the world's biggest greenhouse gas emitters.
Beijing has rejected binding emission limits but is pushing to develop solar and wind power technology to reduce reliance on imported oil and gas and to profit from growing global clean power demand. The government wants at least 15 per cent of China's power to come from renewable sources by 2020.
Beijing will create 13 industry zones and pay up to half the price of equipment for solar power projects, the Finance Ministry said. It said other costs will be covered by a subsidy of 4 to 6 yuan (60 to 90 U.S. cents) per watt of generating capacity.
"China will invest more in construction projects with solar power applications," the ministry said on its website.
Environmentalists have welcomed China's promotion of clean power. But foreign business and labour groups complain Beijing is improperly subsidizing its manufacturers and hampering access to its large, fast-growing market.
The U.S. government is investigating a September complaint by the United Steelworkers union that says subsidized Chinese producers sell equipment at unfairly low prices, destroying American jobs. If Washington supports the complaint, it could file a World Trade Organization case and seek permission to sanction Chinese goods.
The latest announcement gives too few details to know whether it might trigger new trade complaints, said Frank Haugwitz, a renewable energy consultant in Beijing. He said suppliers will have to wait to see how the government carries out the policy.
China has major solar equipment producers but most of their goods are sold abroad due to the technology's higher cost, while domestic renewable energy has relied heavily on wind and hydroelectric dams. Beijing launched an initiative last year, dubbed Golden Sun, to promote domestic use of solar power.
Thursday's announcement said the government wants to install at least 1,000 megawatts of solar generating capacity -- the equivalent of two standard coal-fired power plants -- annually starting in 2013.
"This confirms the political commitment to support all renewable energy technologies," said Haugwitz. "They are saying, since our industry is doing fairly well in the export business, the product must be pretty good and we can support local deployment."
Government-subsidized domestic sales could help Chinese producers that have seen exports weaken since demand in Spain, a major market, collapsed in 2009 due to the global crisis and France and Germany reduced rates paid for solar-generated power.
Solar generating capacity in China costs 20,000 to 30,000 yuan ($2,900 to $4,400) per kilowatt-hour, up to seven times the price of coal-fired power, according to figures reported by Jiang Liping, a researcher for State Grid Corp., which runs most of China's power distribution grid, at a September conference in Beijing.
