Why is China Investing in Solar Energy?

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Answer from Michael Barnard, low-carbon innovation analyst:

Is it right for China to invest in solar rather than coal? Absolutely yes, with a shaving of nuance.

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First off, is solar a good energy generation type to invest in? Yes, completely.

It’s not quite as cheap as onshore wind generation at utility scale right now, but it’s now price competitive with natural gas generation in a large number of companies including some of the biggest such as the USA, China and India. And it’s getting cheaper fast. The last projection of completely apple-to-apple generation prices indicated that wind and solar prices will intersect around 2022 and be so cheap that other sources would have to be even more heavily subsidized through multiple tax breaks, local build incentives and waived insurance to begin to compete. Even then, it will still be faster to build new solar than anything except new wind. That’s a big part of the reason why China installed more solar in one year than the USA has installed ever.

2017-03-19T103243Z_1_LYNXMPED2I06U_RTROPTP_4_TILLERSON-ASIA-CHINA

China's President Xi Jinping meets U.S. State of Secretary Rex Tillerson at the Great Hall of the People in Beijing, China, March 19. Thomas Peter/Reuters

It’s mostly free of negative externalities such as pollution and CO2 emissions, and the manufacturing, distribution and construction are, and will become, lower emissions as grids shift to solar and transportation shifts to electric. Solar is virtuous that way, just as wind energy is. The more you put in, the less lifetime emissions new solar has. That means that China can help meet two major goals: clean air and climate change mitigation. Both are obvious as solar displaces coal generation, and the latter is a large source of air pollution and CO2 emissions.

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China has a formal goal to be a clean energy leader for the world and is already the biggest supplier of solar panels globally. They have a big part of this rapidly growing market which means good things for their economy and their people. They have the same goal related to wind energy but don’t have the leading firms yet. Vestas out of Denmark is still bigger than any single Chinese firm, as is GE if memory serves.

Coal for thermal generation is dying globally. It’s a negative growth market, so investing in it is a contrarian play or a failed asset aggregation play for ten cents on the dollar. China doesn’t need to make that play as it’s making the clean energy play. It’s getting out of coal and moving to the future.

China doesn’t have sufficient coal reserves to power all of its generation. As such, it has been dependent on imports of coal. However, it has more than enough sun and wind to power the vast majority of its energy needs. Eliminating an unnecessary import cost and taking advantage of existing energy flows inside its borders makes strong sense for its economy. Australia is hooped, but that’s not China’s problem.

There is no metric above which suggests anything but that China is very right to invest very strongly in solar over coal.

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But, the current President of China is returning to a stronger central and authoritarian control model and the regime is becoming more oppressive again. The more benign and slightly greater openness under the previous regime is swinging back. Human rights violations are escalating.

China’s focus on being a climate change and green technology leader is providing them moral capital which they are spending on the human rights front.

China is still China.

Is it right for China to invest in solar rather than coal? originally appeared on Quora - the place to gain and share knowledge, empowering people to learn from others and better understand the world. You can follow Quora on Twitter, Facebook, and Google+. More questions:

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