Cooperation on Renewable Energy Transition: A Study of the Sino-German Energy Relationship

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Cooperation on Renewable Energy Transition:

A Study of the Sino-German Energy Relationship

MSc Political Science: International Relations

Thesis Research Project: The Political Economy of Energy

University of Amsterdam, Graduate School of Social Sciences

5

th

_{June 2020}

Author:

Patricia S. Wild (12691836)

Supervisor:

Dr. Mehdi P. Amineh

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Abstract

This thesis is about the energy relations between China and Germany. The study analyses the Sino-German energy cooperation with a focus on the expansion of renewable energy and out-lines the domestic and external implications of this relationship. Hereby, concepts of critical geopolitics and geopolitics of renewable energy form the theoretical framework. China and Germany have structural similarities and share common interests. Due to their energy transi-tion, with which they both aim to address the issues of energy security and environmental degradation, they have established bilateral energy relations. The Sino-German cooperation on energy transition is allocated at the governmental level, between specialised institutions and academia, and the business level. The study shows that investment and research evolved into a field of cooperation between China and Germany. While Germany seeks market access and investment, China aims for technological know-how and expertise. Although the Sino-German cooperation shows positive economic as well as political outcomes and implications on energy security, their relations face tensions resulting from differing normative structures and roles of the state power. Additionally, the Sino-German relationship has an external di-mension by supporting an interconnection of Eurasia and challenging the United States.

Keywords: China, Germany, renewable energy transition, energy relationship, energy

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Acknowledgements

I want to express my gratitude to those who supported me during the process of writing my thesis and in the course of my student career. The circumstances related to the COVID-19 pandemic have made the process of writing this thesis an even more challenging time. First and foremost, I want to thank Dr. Mehdi P. Amineh for his guidance and assistance in the development and implementation of my research. I never had a supervisor before who was this engaged and continuously challenging. My appreciation goes out to my second reader Dr. Wina H.J. Crijns-Graus for commenting on my thesis. Additionally, I want to thank Dr. Mi-randa Schreurs for her recommendations, and those who have responded to my requests. I wish to thank my friends and fellow students. Moreover, I am grateful for my partner Álvaro who motivated me, gave me the strength to stay focused, and made me laugh. Finally, I want to express great gratitude to my mother for allowing me to focus on my studies, her endless support, and always believing in me.

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Timeline

Timeline of the Sino-German Relations

(Compiled by author) 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 Si no -Ge rm an St ra te gi c Pa rt ne rs hi p Si no -G er m an St ra te gi c E ne rgy Pa rt ne rs hi p Si no -Ge rm an Co m pr eh en si ve St ra te gi c Pa rt ne rs hi p Si no -Ge rm an An nu al in te rg ov er nm en ta l co ns ul tat io ns Si no – EU St ra te gi c P ar tne rs hi p G er m an c han ce llor M er ke l m et D al ai La m a Fi na nc ia l a nd ec onom ic c ri si s Si no -Ge rm an En er gy C oo pe ra tio n G er ha rd Sc hr öde r – Soc ia l D em oc ra tic P ar ty (1998 -2005) A nge la M er ke l – C hr is tia n D em oc ra tic U ni on (s inc e 2005) St ar t of E ur o c ri si s H u J int ao ( 2003 -2013) X i J inpi ng ( si nc e 2013) C hi ne se P re si de nt M aa s m et W ong Si no -Ge rm an jo in t co m m un iq ué E st abl is hm ent of N D R C BM W i r ec ei ve s re spons ibi lit y f or re ne w abl e e ne rgy B egi nni ng of c los e coope ra tion N D R C & B M W i

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Maps

Map of China

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Map of Germany

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Map of Asia

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Political Map of Europe

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List of Figures

Figure 1.1: Relevant actors in the Sino-German cooperation on the expansion of renewable

energy and their relationship which are the focus of this study……..………4

Figure 2.1: Regional shares of coal production in 1973 and 2018………...…18

Figure 2.2: Hydro, wind, and solar electricity capacity for major countries in 2016………...20

Figure 2.3: Germany’s energy production by source from 1998 to 2018……….22

Figure 2.4: Energy Consumption in Germany from 1995 to 2019………...……23

Figure 3.1: Chinese investments in Germany from 2007 to 2019 in million USD…………...42

Figure 3.2: German FDI flows to China from 2003 to 2018 in billion USD………42

Figure 3.3: Chinese FDI transactions in EU member states from 2000 to 2018 in billion EUR………...43

Figure 3.4: Chinese M&A projects in Germany by sectors from 2005 to 2010 and 2011 to 2017………...45

Figure 3.5: German greenfield and M&A projects in China by number from 2013 to 2018...46

Figure 3.6: Structure of the Sino-German Energy Partnership……….51

Figure 3.7: Market shares of the top 10 wind turbine manufacturers in 2018………..56

Figure 4.1: Formal FDI restrictions of selected countries………82

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List of Tables

Table 3.1: China's imports from Germany from 2004 to 2018……….39 Table 3.2: China’s exports to Germany from 2004 to 2018……….40 Table 3.3: Categories of Germany's exports to China from 2000 to 2017 in million USD…..41 Table 3.4: Categories of China's exports to Germany from 2000 to 2017 in million USD…..41 Table 3.5: Top countries and regions investing in China in 2018………44 Table 3.6: Top industries by number of German greenfield projects in China from 2013 to 2018………...………47 Table 3.7: Sino-German dialogues on energy transition and sustainability………...…..49

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List of Abbreviations

AIIB Asian Infrastructure Investment Bank BDI Federation of German Industries

BMU Federal Ministry for Environment, Nature Conservation, Building and Nuclear Safety

BMVI Federal Ministry for Transport and Digital Infrastructure BMWi Federal Ministry for Economic Affairs and Energy

BMZ Federal Ministry for Economic Cooperation and Development BRI Belt and Road Initiative

CNREC China National Renewable Energy Centre

CO2 Carbon dioxide

CEO Chief Executive Officer CPC Communist Party of China

CREEI China Renewable Energy Engineering Institute CTGC China Three Gorges Corporation

DB Deutsche Bahn AG

dena German Energy Agency

EEG Renewable Energy Source Act

EPPEI Electric Power Planning & Engineering Institute

EU European Union

EUR Euro

FDI Foreign direct investment

FYP Five-Year-Plan

GDP Gross domestic product

GHG Greenhouse gas

GIZ Gesellschaft für Internationale Zusammenarbeit Goldwind Xinjiang Goldwind Science & Technology Co., Ltd.

GW Gigawatt

IR International Relations

KfW Kreditanstalt für Wiederaufbau

kWh Kilowatt hour

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MEE Ministry of Ecology and Environment Meerwind Meerwind South / East

MENA Middle East & North Africa

MOFCOM Ministry of Commerce

MOST Ministry of Science and Technology

Mt Million tonnes

Mtoe Million tonnes of oil equivalent

MW Megawatt

M&A Merges and acquisitions NEA National Energy Agency

NDRC National Development and Reform Commission ODA Official Development Assistance

OE Oil equivalent

PMDD Permanent magnet direct-drive

PJ Petajoule

PV Photovoltaic

R&D Research and Development

Siemens Gamesa Siemens Gamesa Renewable Energy SME Small- and medium-sized enterprise SOE State-owned enterprises

UK United Kingdom

UN United Nations

US United States

USD United States dollar

Vensys Vensys Energy AG

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Chapter 1: Research Design

1.1 Introduction

Climate change is one of the biggest challenges the current generation is facing. However, mitigating climate change can only be successful by worldwide and joint efforts. Energy is playing a crucial role in climate change since greenhouse gas (GHG) emissions related to en-ergy production and usage account for two-thirds of the global GHG emissions. Consequent-ly, a significant change in the global energy system away from fossil fuels is inevitable (C. Chen et al., 2019, pp. 1249–1250). China is indispensable for achieving global climate tar-gets. The country’s fast economic growth has led to a decisive increase in energy consump-tion, making China the worldwide largest energy consumer (BP, 2019b, p. 8) and energy related GHG emitter (EIA, 2015). At the same time, due to growing energy imports, China’s concern about energy security is growing (BP, 2019a, p. 1). On the other side of the Eurasian supercontinent, Germany also faces energy security challenges due to its high energy imports. Germany is the largest energy consumer (EIA, 2016) and emitter of carbon dioxide (CO2)

emissions in the European Union (EU) (Eurostat, 2020c, p. 2).

China and Germany have obtained a leading role in the renewable energy transition. Strong investments in Germany and the EU have made wind and solar power mainstream energy sources (Knopf & Kejun, 2017). Today, China is leading the investments in renewable energy (BloombergNEF, 2020a, p. 1) and is essential due to its energy technologies (Andrews-Speed & Zhang, 2019, p. 1). Technology and policy instruments are necessary for decarbonising energy production and utilisation. China and Germany play an important role for establishing both instruments. Thus, China and Germany share a strong common ground for cooperation on energy transition. Both countries are cooperating beyond the Sino-EU partnership. They have developed a comprehensive bilateral strategic partnership, which includes the coopera-tion on energy transicoopera-tion. Nevertheless, China and Germany are also major competitors (Knopf & Kejun, 2017). This is the first study to analyse the Sino-German cooperation on technology and policy instruments essential for a renewable energy transition and the implica-tions of this exchange.

1.1.1 Objectives and Delineation of Research

The main objective of this thesis is to analyse the nature of the Sino-German energy relation-ship and to what extent this has increased China’s and Germany’s energy security. In this re-search, the Sino-German cooperation on renewable energy transition is examined whereby the focal point is the business dimension. The assessment focuses on the collaboration on the governmental level, between specialised institutions, and on the business level. Objectives are

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to gain insight into what factors enhanced the intensification of the Sino-German energy rela-tionship, the involved actors, mechanisms and dynamics of interaction, and domestic as well as geopolitical and geo-economic implications.

The research studies the Sino-German relations with a focus on the timeframe from 2004 to 2019. 2004 marks the beginning of China’s and Germany’s “partnership in global responsibil-ity” (Federal Government of Germany, 2004). Since then, an intensification of the Sino-German relations took place. Minor references are made on developments before 2004 and after 2019. Some data and figures not available for the chosen timeframe are used from the most recent year available. Geographically, the study focuses on China and Germany. Since Germany is part of the EU, the EU is besides a relevant actor. The EU, together with the United States (US) and the Eurasian region, are essential for evaluating the geopolitical and geo-economic dimensions of the Sino-German relations.

The relevant actors of this study are located on three levels: (1) the governmental level, (2) the institutional level including public agencies and academia, and (3) business level comprising companies of the renewable energy sector. While this study focuses on these levels, the im-portance and contribution of other actors, such as NGOs or foundations, in the energy transi-tion is not denied. In Germany, the federal government is the executive power and has certain control over the ministries. Hence, it is the most important actor in formulating energy poli-cies. These legislations have mainly been drafted by the Federal Ministry for Economic Af-fairs and Energy (BMWi) (Egenter et al., 2017), which is since 2013 responsible for all renewable energy issues (Steinbacher & Pahle, 2016, p. 79). In addition to the Federal Minis-try for Environment, Nature Conservation, Building and Nuclear Safety (BMU), the Federal Ministry for Transport and Digital Infrastructure (BMVI), and the Federal Ministry of the Interior, Building and Community are, where applicable, involved. Legislations must pass the German parliament before becoming law (Egenter et al., 2017). The Energy Concept 2010 (BMWi, 2010) is the main strategic paper of Germany’s energy transition. The Federal For-eign Office and the Federal Ministry for Economic Cooperation and Development (BMZ) are responsible for promoting Germany’s energy policy externally and for establishing coopera-tion with other countries (Auswärtiges Amt, 2015, pp. 11, 14; Egenter et al., 2017). Apart from German public institutions, European institutions are formulating climate and energy policies, such as the Green Paper 2020 and 2030 by the European Commission (Directorate-General for Energy, 2010; European Commission, 2013). Germany has to comply with EU law (Egenter et al., 2017; Kemfert & Horne, 2013, p. 3). Several German public agencies, government advisory bodies, associations, and research institutes are furthermore important actors in the energy transition (Auswärtiges Amt, 2015). The Deutsche Gesellschaft für Inter-nationale Zusammenarbeit (GIZ) is Germany’s leading service providing agency for

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interna-tional development and working on behalf of German federal ministries (Auswärtiges Amt, 2015, p. 62; Egenter et al., 2017).

In China, the dominating political force is the Communist Party of China (CPC). It exercises control over state and society (Amineh & Guang, 2017, p. 20). The social entities influencing China’s energy transition policy are primarily the National People’s Congress, the party’s Politburo, and the State Council (D. Chen et al., 2019, p. 8; Lawrence, 2014, pp. 3–6). The key actors in the formulation of renewable energy transition strategies are the State Council and several subordinated ministries. For policies on climate and energy issues, the National Energy Commission, the National Development and Reform Commission (NDRC), the Min-istry of Ecology and Environment (MEE), and the MinMin-istry of Commerce (MOFCOM) are most relevant. The National Energy Agency (NEA), a state administration under the NDRC, and the MEE are responsible for policy formulation and implementation (D. Chen et al., 2019, pp. 17–20, 22, 24; Cunningham, 2015, pp. 7–10). Important policies are the Energy Supply and Consumption Revolution Strategy (2016-2030) by the NEA and NDRC (IEA, 2019b), the 13th_{Five-Year-Plan (FYP) (Central Committee of the Communist Party of China, 2016), and}

the Renewable Energy Law 2005 (Junxia Liu, 2019, p. 213; MOFCOM, 2013). The Ministry of Foreign Affairs and the MOFCOM are responsible for external relations and bilateral co-operation (D. Chen et al., 2019, pp. 21–23). Additionally, many different agencies and re-search institutes are supporting the Chinese energy transition (D. Chen et al., 2019, pp. 9, 31; Meidan et al., 2009, p. 596).

The relevant involved actors in the Sino-German Energy Partnership and their relationships are shown in figure 1.1. High-level cooperation between the German Federal Government and the State Council of the People’s Republic of China is taking place. In Germany, the primarily responsible institution for the Sino-German Energy Partnership is the BMWi. On the Chinese side, the NDRC and the NEA are accountable for the general coordination. The collaboration between the BMWi, NDRC, and NEA includes defining concrete subjects of the energy co-operation (Yuxia et al., 2019, p. 3). The GIZ is responsible to the BMWi for implementing the partnership (Auswärtiges Amt, 2015; Egenter et al., 2017). On the Chinese side for the coop-eration on the expansion of renewable energy the China Renewable Energy Engineering Insti-tute (CREEI), the Electric Power Planning & Engineering InstiInsti-tute (EPPEI), and the China National Renewable Energy Centre (CNREC) are the implementing actors (Yuxia et al., 2019, p. 3). To analyse the concrete economic collaboration between China and Germany, three case studies illuminate the interaction of economic actors from the wind power sector. The first case studies Siemens Gamesa Renewable Energy (Siemens Gamesa) supplying wind turbines to Xinjiang TBEA Group and thereby examines the activities of Siemens AG (Sie-mens) in China. The second case is outlining the takeover of majority shares of the German offshore wind farm Meerwind South / East (Meerwind) planned and constructed by WindMW

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GmbH (WindMW) through the Chinese state-owned enterprise (SOE) China Three Gorges Corporation (CTGC). The last case investigates the acquirement of the German company Vensys Energy AG (Vensys) by the Chinese firm Xinjiang Goldwind Science & Technology Co., Ltd. (Goldwind).

Figure 1.1: Relevant actors in the Sino-German cooperation on the expansion of re-newable energy and their relationship which are the focus of this study

(Compiled by author)

1.1.2 Relevance

The relevance of this study is based on the essentialness of energy, the rising demand for this commodity, the decline of fossil fuel resources, and growing environmental degradation. Hence, in the long-term, energy transition is inevitable. However, until now, there is a lack of feasible technologies and policies. Research on China and Germany is crucial for several rea-sons. Energy is a strategic concern for both strong exporting countries. China is playing a cen-tral role in the energy sector due to its high energy consumption and energy related emissions. At the same time, China is significant regarding energy technologies and a major investor in renewable energy. In the context of the energy transition, Germany is also a key actor and holds a leading position. Due to China’s and Germany’s economic and political role, the ex-change of expertise and technological know-how between these countries is highly relevant.

Federal Ministry for Economic Affairs and Energy (BMWi)

State Council Federal Governement

NDRC NEA

Siemens Gamesa Renewable Energy Governmental level

Institutions

Industry Sector: case studies

Deutsche Gesellschaft für Internationale Zusammenarbeit (GIZ)

responsible for practical implementation of the cooperation

China Renewable Energy Engineering Institute (CREEI) Electric Power Planning & Engineering Institute (EPPEI) China National Renewable Energy Centre (CNREC) responsible for practical implementation of the cooperation National Development and Reform Commission (NDRC)

National Energy Agency (NEA)

Xinjiang TBEA Group

Meerwind Sourth / East

Vensys Energy AG

China Three Gorges Corporation

Xinjiang Goldwind Science & Technology Co., Ltd.

Federal Republic of Germany People‘s Republic of China

acquired acquired produces for cooperate cooperate responsible to responsible to

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This cooperation is of great importance for the EU since the EU lacks alternative resources to fulfil the targets of the 2020 and 2030 framework for climate and energy policies. The part-nership has to be seen in the context of the US withdrawing from the Paris Agreement and the country’s decline as the leading power in the international system.

This study aims to add an analytical and explanatory value. It focuses on the two most current research topics of the political economy of energy: (1) the energy security of major energy importing countries and (2) energy transition. This research adds academic value by studying bilateral cooperation on energy transition and its implications. Thus, it contributes to an un-derstanding of strategic partnership as a mode of state interaction, the external dimension of China’s and Germany’s energy transition, and changes in the international energy system.

1.1.3 Research Questions

To study the defined objectives, the following research question has been developed: What

are the driving forces constituting the Sino-German cooperation on renewable energy transi-tion, and to what extent does this partnership impact China’s and Germany’s energy securi-ty?

In order to answer the main research questions, three sub-questions, which are addressed in the course of this thesis, are formulated.

Chapter 2: What are China’s and Germany’s domestic energy situations, the resulting energy

transition policies, and how are the Chinese and the German political economies of energy constituted?

Chapter 3: How have diplomatic and economic relations between China and Germany

evolved between 2004 and 2019, and what are the strategic background, the involved forces, and dynamics of the Sino-German energy relationship?

Chapter 4: What are the implications of the Sino-German energy cooperation on China’s and

Germany’s energy security and the geopolitical economy of energy?

1.2 Literature Review

This section examines the existing body of literature related to the Sino-German cooperation on energy transition, by briefly introducing the literature on China’s and Germany’s partner-ship, their energy transition policies, and the cooperation on energy transition.

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China (Fulton, 2019; Strüver, 2016; Yue, 2019; Zhongping & Jing, 2014) and Germany (German Federal Government, 2012, p. 6; Heiduk, 2015, p. 132; Narlikar & Plagemann, 2016; Quitzow et al., 2019) are building up new bilateral partnerships, which is in the litera-ture referred to as partnership diplomacy. Strüver argues that strategic partnerships are charac-terised by a structured framework, flexibility, goal-drivenness, and process orientation (2016, pp. 7–9). The Federal Republic of Germany and the People's Republic of China are having diplomatic relations since 1972 (Federal Foreign Office, 2019a). In 2004, China and Germany entered a strategic partnership (Chinesische Botschaft in Deutschland, 2004), which was up-graded in 2014 towards a comprehensive strategic partnership (Presse- und Informationsamt der Bundesregierung (BPA), 2014c). Scholars agree that the partnership between China and Germany is primarily based on economic interdependencies (Heiduk, 2014; Kundnani & Parello-Plesner, 2012, p. 1; Schnellbach & Man, 2015).

China’s and Germany’s energy transition policies have been subject to several analyses. Jun-xia Liu (2019), Q. Liu et al. (2018), Yang et al. (2016), and Zhongying & Sandholt (2019), among others, have analysed China’s energy transition. In 2014, China proclaimed its “Ener-gy Revolution”. The country aims to revolutionize its ener“Ener-gy production, ener“Ener-gy technolo“Ener-gy, and energy system. According to Strunz (2014, p. 150) and the EIA (2016), the German ener-gy transition, known as “Energiewende”, intends to change the countries enerener-gy system by setting targets for phasing-out nuclear and coal power. Other scholars add that one key objec-tive of the German energy transition for stakeholders is to generate followers (Steinbacher & Pahle, 2016, p. 78). As Steinbacher & Röhrkasten (2019, p. 204) show, the external dimensi-on of Germany’s energy transitidimensi-on dimensi-only recently received research attentidimensi-on, primarily by German think tanks. C. Chen et al. (2019) and Proskuryakova (2018, p. 211) demonstrate that China and Germany are sharing similar objectives with their energy transition such as reduc-ing GHG emissions, increasreduc-ing the share of renewable energy, energy efficiency, energy secu-rity, strengthening stability and security of the energy system, as well as targeting energy self-sufficiency. C. Chen et al. (2019, p. 1250) and Scholl & Westphal (2017, p. 6) agree that co-operation is necessary for countries for a successful energy transition.

C. Chen et al. (2019, p. 1250) emphasize commons between China and Germany offer the potential for profitable cooperation. Quitzow et al. (2019) provide a general overview of Germany’s energy partnerships and thereby mention the partnership with China. The energy-political partnership between China and Germany started in 2006 and was upgraded in 2013. Both countries have interests in exchanging experience and knowledge between each other (BMWi, 2016b) and to reduce energy imports (Presse- und Informationsamt der Bundesregierung (BPA), 2014a, p. 9). The Sino-German energy cooperation is based on the important role both countries are seeing themselves in a global energy transition (Presse- und Informationsamt der Bundesregierung (BPA), 2014a, p. 9). Germany is seen as a leader in the

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renewable energy transition (C. Chen et al., 2019, p. 1250; Westphal, 2012, p. 2), in particular in renewable energy technology (Rutten, 2014, p. 26; Steinbacher & Pahle, 2016, p. 73). Steinbacher & Pahle even regard Germany because of its objective to gain followers for an energy transition as a “[…] unilateral and active leader” (2016, p. 84). Varying opinions on China’s leading role in the energy transition prevail by scholars and governmental documents. The NDRC states in China’s Energy Revolution Strategy (2016–2030) that China is a leader of energy efficiency, energy technology, and a major actor in the international energy govern-ance (Q. Liu et al., 2018, p. 81). Besides, Yang et al. (2016, p. 85) and Chiu (2017, p. 4) em-phasize China being a renewable energy world leader. On the other side, Junxia Lui sees “[…] still a large gap between China and other countries regarding the core technologies and innovation capabilities” (2019, p. 214).

Zenglein & Holzmann (2019) remark that China is profiting more from the Sino-German co-operation by receiving support and know-how from the German government and German companies. On the other side, the BMWi and the partnership secretariat are describing the mutual sharing of knowledge as the main advantage of the energy partnership (BMWi, 2016b; Yuxia et al., 2019). Not only both governments (BMWi, 2016b; Ministry for Foreign Affairs of the People’s Republic of China, 2017) believe in major benefits of the Sino-German coop-eration, but also C. Chen et al. see a significant benefit in Sino-German coopcoop-eration, and Quitzow et al. (2016, p. 30) note that Germany’s energy cooperations benefit Germany and the global energy transition. Heiduk (2014) adds that the Sino-German cooperation became the most important bilateral partnership to Germany.

This body of literature gives insights on the partnership diplomacy, energy transition policies in China and Germany, and Sino-German cooperation. The addressed academic literature does not provide an in-depth of study the energy cooperation between China and Germany. Partnerships on energy transition, cooperation between major energy importing countries, and consequently the Sino-German cooperation on energy transition are not yet profoundly inves-tigated. Resulting from these severe gaps in the literature, the following questions remain: First, what the main driving forces for establishing the Sino-German cooperation on energy and its intensification are. Second, the role each partner is playing in this cooperation, since German documents and academic literature have differing views on the balance within the partnership. Finally, the third unissued aspect being how the Sino-German energy relationship contributes to energy security, which is identified as a primary goal of energy transition and the Sino-German cooperation.

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1.3 Theoretical Framework and Concepts

The objective of this thesis is to analyse the Sino-German cooperation on renewable energy transition. The study is guided by the critical geopolitical theory and geopolitics of renewable energy. Concepts of both theories are combined to compose the framework of analysis. Therefore, critical geopolitics helps to study the geopolitical and geo-economic dimensions of the Sino-German cooperation, while distinguishing the political and economic systems of China and Germany. In addition, geopolitics of renewable energy is applied to this study for acknowledging the geopolitical dimension related to a renewable energy transition. The ap-plied concepts of these two theories are outlined in this section.

1.3.1 Critical Geopolitics

The rise of a country influences the global geopolitical structure. Thus, China’s rise needs to be studied in the framework of the theory of geopolitics (Hu & Lu, 2016, p. 1769). Critical geopolitics constitutes one approach to the study of International Relations (IR) (Houweling & Amineh, 2004, p. 322). It is a response to the classical geopolitical theory going beyond the state-centric approach (Amineh & Van Driel, 2018, pp. 65–66). Not only the nation-state but also socio-economic factors and human development are regarded as influencing geopolitics. The theory of geopolitical economy, which builds on one stream of the critical geopolitics, includes geopolitical as well as geo-economic dimensions (Amineh & Guang, 2017, pp. 29– 30; Amineh & Van Driel, 2018). Consequently, the theory of geopolitical economy incorpo-rates the territorial as well as the capitalistic logic of power (Amineh & Guang, 2017, p. 30). The geopolitical dimension of power presents political power exerted in or in between state-systems. The geo-economic dimensions of power is about trade flows, investments, and fi-nance beyond national borders, taking into account political interests (Amineh & Van Driel, 2018, p. 66).

Robert Cox is a leading critical theorist of IR. Cox’s ideas are“ […] capable of understanding the actors and structures found in a particular period of history” (Moolakkattu, 2009, p. 441). Historical structures, which are the configuration of forces, are forming the framework for actions. Different forces interacting and imposing pressure on individuals and groups can be categorised in institutions, material capabilities, and ideas (Cox, 1981, pp. 135–136). Institu-tions created by states are at the centre of the state-society complex (Amineh & Guang, 2017, p. 12). The historical structures are applied to three spheres of activities: the social forces, forms of state, and world orders. These spheres are interrelated (Cox, 1981, pp. 137–138). Internal characteristics of states determine their external behaviour (Moolakkattu, 2009, p. 442). Through the internationalisation of the state, an axis of influence emerged, connecting international policy networks, central national public agencies, and major companies. As a

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result of direct investment, international production expanded (Cox, 1981, p. 146). The goal of direct investment is to occupy knowledge and technical control (Cox, 1981, p. 147). Cox’s approach helps to connect the domestic spheres with the global spheres.

This research aims to understand the actors and structures of a certain period. It is important to identify the configuration of forces in the energy cooperation between China and Germany. These are, as previously mentioned, at the high-governmental level, the State Council of the People’s Republic of China and the Federal Government of Germany. However, even more important are, on the subordinated level, the institutions focusing on energy transition: the NDRC, NEA, and BMWi. Institutions can be agents of change. The ideas, as a categorisation of forces, are in this case national energy transition policies. Material capabilities constitute technology and accumulated resources (Moolakkattu, 2009, p. 447) such as investment, know-how, expertise, and labour force.

Instead of primarily focusing on the state, the first unit of analysis of geopolitical economy is the configuration of the state-society/market complex. Two ideal types of state-society com-plexes are distinguished. The first one is the liberal state-society complex, which Germany is associated with, and the second is a centralised state-society complex, as China is categorized (Amineh & Guang, 2017, p. 12). “The centralized state-society complex is characterized by the relative differentiation between those governing and those ruling, who are in theory sepa-rated in the liberal state-society-complex” (Amineh & Guang, 2017, p. 12). Additionally, in the centralised state-society complex, social forces are underdeveloped and cannot act inde-pendently of the state power. In order to, nevertheless, further economic development, the Chinese state power has introduced a development strategy to mobilize forces for reaching industrialisation. The development strategy is accompanied by a foreign policy declaring its sovereignty (Amineh & Guang, 2017, p. 13). While in liberal state-society complexes, such as Germany, business interests are dominating, in the centralised state-society complex, the state power rules the society. In China, the state power influences economic factors (Amineh & Guang, 2017, pp. 13–14). In liberal state-society complexes, the business class provides input for political decisionmakers (Amineh & Yang, 2018, p. 12). Private companies are to a certain extent operating independently of the state power, different than in centralised states where the state guides companies in strategic sectors (Amineh & Guang, 2017, p. 14). In China, the energy sector is controlled by the state. The state-society complexes are interacting with each other through foreign policy. “Cross-border activity connects domestic society and its institu-tions to the external world” (Houweling & Amineh, 2004, p. 325). The actors engage in inter-actions to get access to resources beyond national state borders (Houweling & Amineh, 2004, p. 325).

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To both state-society complexes, energy security is a strategic concern (Amineh & Yang, 2018, p. 14). Therefore, this research aims to investigate whether the Sino-German energy cooperation improves both countries’ energy security. The concept of energy security is based on the importance of energy to modern societies worldwide (Matsumoto et al., 2018, p. 1737). “[…] [E]nergy security can be defined as the availability of energy at all times in various forms, in sufficient quantities, and at reasonable and/or affordable prices, without unaccepta-ble or irreversiunaccepta-ble impact on the environment” (Amineh & Crijns-Graus, 2018, p. 148). Ac-cordingly, affordability, availability, applicability, and acceptability are defined as leading indicators of energy security (Yao & Chang, 2014, pp. 597–599). These four dimensions are important for the analysis of a country’s energy security. The energy security situation of a state depends on country-specific factors, like geographic location, strategy, and external rela-tions with other narela-tions (Szulecki, 2018, p. 8). Therefore, a framework of demand and supply induces and structural scarcity, which major importing countries as China and Germany are facing, is built (Amineh & Crijns-Graus, 2018, p. 148).

1.3.2 Geopolitics of Renewable Energy

Geopolitics understands that the global energy system and energy relations between states are crucial factors influencing IR (Criekemans, 2018, p. 1). China’s and Germany’s engagement in furthering a transition towards a renewable energy system and cooperation in this regard has to be analysed in the theoretical framework of the geopolitics of renewable energy.

“Renewable energies are energy sources that are continually replenished by nature and de-rived directly from the sun […], indirectly from the sun […], or from other natural move-ments and mechanisms of the environment […]” (Ellabban et al., 2014, p. 749). Renewable energy technologies convert these sources into usable forms of energy (Dincer, 2000, p. 167). Consequently, fossil fuels and nuclear power do not count as renewable energy sources (Ellabban et al., 2014, p. 749). Energy production from renewable sources is seen as essential for a clean energy system (Dincer, 1999, p. 849). A transition of energy is a shift from one energy system to a system mainly depending on another energy source and technology (Fouquet & Pearson, 2012, p. 1). Energy transition is defined as “[a] particularly significant set of changes to the patterns of energy use in a society, potentially affecting resources, carri-ers, convertcarri-ers, and services”(O’Connor, 2010, p. 2). It is a long and complex process, lasting over decades and in the past, even over centuries (Fouquet & Pearson, 2012, p. 1). In history, energy transition has been driven by economic growth, innovation in technology and infra-structure (Amineh & Guang, 2017, p. 305). The energy transition currently underway, which is also meant with the term energy transition in this research, is a shift from hydrocarbons to renewable energy sources. This transition is primarily driven by the scarcity of fossil fuel

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re-sources and constraints on emissions. It is a process requiring technological, economic, social, and political changes (Amineh & Guang, 2017, p. 305; Berkhout et al., 2012, p. 109) and in-volving multiple actors (Fattouh et al., 2018, p. 5).

Several geographical and technical characteristics of renewable energy systems are differing from an energy system based on non-renewable energy sources. These contain potential geo-political implications (Global Commission on the Geopolitics of Energy Transformation, 2019, p. 23; Scholten & Bosman, 2013, p. 4, 2016, p. 10). First, renewable energy sources are not scarce. However, some countries have a higher potential for renewable energy production and can generate renewables more efficiently than other countries (Scholten & Bosman, 2013, p. 2, 2016, p. 10). Most renewable energy sources are weather dependent, which leads to sup-ply fluctuations imsup-plying changes for the current demand-driven energy market. In addition, production of renewable energy technology sometimes demands rare earth materials, which are only supplied by a few countries (Scholten & Bosman, 2016, p. 11). It is expected that electricity becomes the main energy carrier, implying differences since energy transport re-quires interconnection by grid and supply and demand need to be balanced at any time (Scholten & Bosman, 2013, p. 2, 2016, pp. 11-12). The geography of renewable energy sources changes power relations between countries compared to the current energy system. All countries become potential energy producers, but some countries will be able to generate energy more efficiently than others (Scholten & Bosman, 2016, p. 12). This changes the rela-tions between energy producers, consumers, and transit states. The energy market of a renew-able energy system is connected to the size of the grid. Thus, energy markets are expected to be national or regional, with global trade of energy technologies and necessary materials (Scholten & Bosman, 2016, p. 13).

Two scenarios help outline the geopolitical impactions of renewable energy systems. In reali-ty, most likely a mix of both scenarios exists (Scholten & Bosman, 2016, p. 18). In the first scenario, the Continental scenario, countries prefer cost-efficiency. States producing energy the most efficient will be energy producers, and others will rely on cheap energy imports. Thereby, tensions will be caused more by economic issues (Scholten & Bosman, 2013, p. 19). In this scenario, a strategic focus on energy infrastructure is expected (Scholten & Bosman, 2016, p. 15). Countries with a large storage capacity can take a strategic position (Scholten & Bosman, 2016, pp. 15–17). In the second scenario, the National scenario, countries generate their energy domestically and are, thereby, having control over their energy supply. As a re-sult, energy-geopolitical implications are diminishing. However, on the material input, such as raw earth materials, geopolitical concerns remain. Globally operating clean-technology firms will have a key position in this scenario, and countries will have strategic interest that critical technology is developed and produced in their country. Germany is a country mainly following this National scenario (Scholten & Bosman, 2013, p. 22, 2016, pp. 17-18).

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In renewable energy systems, geopolitical tensions can rise on primarily three different issues: (1) critical rare earth materials, (2) technology and finance, and (3) the electric grid (Scholten & Bosman, 2013, p. 23). First, there are rare earth materials critical to renewable energy tech-nology production as batteries or wind turbines, which can result in geopolitical tensions. China is by far the dominant supplier of these materials (O’Sullivan et al., 2017, pp. 11–13). As a result, new dependencies will arise (De Ridder, 2013, pp. 4–5). The power of rare earth mining countries will increase with the transition towards a renewable energy system (De Ridder, 2013, pp. 19–20). Second, technology plays a central role in the geopolitics of renew-able energy (Criekemans, 2018, p. 6). “International energy competition may […] shift from control over physical resources and their locations and transportation routes to technology and intellectual property rights” (Overland, 2019, p. 38). The geotechnical ensemble conceptualis-es this. New technologiconceptualis-es will determine the new geopolitical context. Thus, statconceptualis-es which are involved in developing these new technologies and standards will have a better starting point and a better chance to exercise power (Criekemans, 2018, p. 6). In view of this, geographic and technical potential to bring them to the market will be central in the design of a renewable energy system (Scholten & Bosman, 2013, p. 4). A state’s position in the renewable energy technology competition determines its geopolitical position (Criekemans, 2018, p. 6; Global Commission on the Geopolitics of Energy Transformation, 2019, p. 27). Consequently, states are having a strategic interest in producing key technologies (Scholten & Bosman, 2016, p. 18), since countries are expected to increase their global influence through technological dom-inance (Global Commission on the Geopolitics of Energy Transformation, 2019, pp. 39, 42). Investment and research and development (R&D) are necessary to further develop renewable energy technologies and need to be seen from a geopolitical perspective (O’Sullivan et al., 2017, p. 14). Countries with high investments in renewable energy are going to gain power (De Ridder, 2013, p. 20). Technology and investment obtain a status of cooperation and geo-political rivalry (O’Sullivan et al., 2017, p. 14). Third, changes in the electric grids imply ge-opolitical changes such as new cooperation, interdependencies, and vulnerabilities (O’Sullivan et al., 2017, pp. 19–21). Micro-grid and off-grid solutions become possible. These can decrease state interdependencies, but also the control of centralised governments (O’Sullivan et al., 2017, pp. 21–23). Finally, fundamental changes in the energy system, as the transition towards renewable energy, transform power relations between states and within states (Criekemans, 2018, p. 3; Global Commission on the Geopolitics of Energy Transformation, 2019, pp. 12, 26; Scholten & Bosman, 2013, p. 17). Energy transition sup-ports the development of more multipolarity in the international system (De Ridder, 2013, p. 19).

However, it must be critically noted that scholars of the geopolitics of renewable energy focus mainly on geopolitical implications and widely leave out geo-economic factors. Thus, differ-ences between the two theories of geopolitical economy and geopolitics of renewable energy

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appear. In the geopolitical economy, the state-market complex constitutes the unit of analysis, and the geopolitical and geo-economic dimensions of power are intertwined. In contrast, the geopolitics of renewable energy has a state-centric approach, whereby the state and its policy are in focus while the capitalist logic of power is left out. Despite these differing approaches, both theories are nonetheless valuable to the study of the Sino-German cooperation on energy transition. The configuration of the state-market complex constitutes the unit of analysis of this research and reveals differences between China and Germany. The changing power rela-tions between states related to a renewable energy transition, which geopolitics of renewable energy outlines, is the context in which the Sino-German cooperation has to be seen. There-fore, critical geopolitics helps to understand the differences in the relation between business classes and the state power as well as the state’s position in the international system. Where-by, geopolitics of renewable energy provides the framework for understanding geopolitical factors of the energy transition. Therethrough it is valuable to study the nature and dynamics of the Sino-German cooperation and the external dimension.

1.4 Argumentation and Hypotheses

The theoretical framework builds on concepts of the two theories critical geopolitics and geo-politics of renewable energy. In this study, the following set of concepts is utilised: (1) the geopolitical and geo-economic dimensions of power, (2) the state-society complexes, (3) en-ergy transition, (4) enen-ergy security, and (5) the geotechnical ensemble. Analyses of the do-mestic energy situations and policy responses will show that China and Germany are energy import dependent, and energy security is a major concern to both states. Energy transition offers a way to reduce their emissions and meet the need for energy security (Amineh & Guang, 2017, pp. 305–306). China and Germany have established institutions, created ideas, and own material capabilities, to promote energy transition. Institutions are playing a key role. The internal forces of institutions, ideas, and material capabilities are determining energy rela-tions. The two state-society complexes of China and Germany interact with each other through foreign policy, utilised to gain access to resources. Regarding the configurations of the state-society complex, Germany exhibits a variation of a liberal state-society complex and China is associated as a centralised state-society complex. This implies different roles and interactions of state institutions and market forces in China and Germany. While the Chinese business classes are not operating independently but rather guided and controlled by state in-stitutions, the German business classes are dominating and providing input to German state institutions. Thus, the relation of the renewable energy business sector towards state institu-tions defer in China and Germany.

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The transition towards renewable energy systems is resulting in changing relations between countries. In reality, the energy transition supported the emergence of the Sino-German part-nership. Investment and research became a field of cooperation between China and Germany, while this can lead to rivalry with other states. China and Germany favour national renewable energy production over importing energy in order to improve their energy security. In a re-newable energy system, a state’s power position is determined by technological control and spending on R&D for renewable energy technologies. China and Germany, as strong manu-facturing exporters, aim to gain influence through technological dominance. Thus, clean-technology companies are of strategic interest to both states. Economic and technological ex-change is playing a central role in the Sino-German cooperation on energy. Thereby, through cooperation, China and Germany can increase their renewable energy instalments and im-prove their energy security. The collaboration also increases their technological dominance in the renewable energy sector. Through their strains on energy transition and bilateral coopera-tion, China and Germany increase their geopolitical and geo-economic dimensions of power within the region and beyond. The following two sets of hypotheses are formulated:

H1: The Sino-German cooperation on energy transition has positive implications on China’s

and Germany’s energy security.

H1-0: The Sino-German cooperation on energy transition has no/negative implications on

China’s and Germany’s energy security.

H2: The Sino-German relationship increases China’s and Germany’s geopolitical and

geo-economic dimensions of power.

H2-0: The Sino-German relationship does not increase China’s and Germany’s geopolitical

and geo-economic dimensions of power.

1.5 Research Method

This study applies qualitative methods for data collection and analysis. The foundation, in particular of the second chapter, is a comparative analysis. Comparison aids to analyse histor-ical developments (Ragin & Zabet, 1983, p. 732). Therefore, the comparison of a system of units from an identified time period is conducted (Sjoberg, 1955, p. 106). The two units that are compared are Germany and China, whereby similarities and differences in their energy situation, policy responses, and their state-market relations are examined. The energy struc-tures are studied by collecting information provided by quantitative data such as British Petro-leum (Statistical Review of World Energy 2019) and European Commission (Energy Statistical Pocket Book 2018). China’s and Germany’s resulting energy transition policies and

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the political economy of renewable energy are analysed by examining policy documents, data from specialised institutions such as International Energy Agency, think tanks, peer-reviewed journals, and books. Data from quantitative databases like the World Bank and BloombergNEF are added to outline the countries’ economic situation and the energy sector. To analyse the evolvement of diplomatic ties between China and Germany government doc-uments, statements by high-level officials, data by public agencies, and peer-reviewed jour-nals are utilised. Additionally, for the study of economic ties between China and Germany, quantitative data is extracted from sources such as the American Enterprise Institute. For the study of the Sino-German cooperation on energy and its implications, besides governmental and scholarly documents, data from newspaper articles and companies are used. Due to lim-ited publications in journals, the research relies on insights from several important German think tanks such as Stiftung Wirtschaft und Politik (SWP) and the Institute for Advanced Sus-tainability Studies (IASS). The study makes use of three quantitative case studies on the issue of business-to-business interactions.

1.6 Organisation of the Thesis

This thesis is divided into five chapters, and every sub-question is answered in one chapter. In the second chapter, the German and Chinese domestic energy landscape, their energy transi-tion policies, the relatransi-tion between state and market, economic development, and economic strategies are comparatively outlined. The third chapter analyses the diplomatic and economic ties, such as trade, investment, finance, of China and Germany. This is followed by examining the Sino-German cooperation on energy, including the study of channels of interaction and concrete activities on the governmental level, between institutions, and companies. In order to understand the collaboration on the business level, three case studies are conducted. In the fourth chapter, the implications of the Sino-German cooperation are outlined. Firstly, domes-tic results as economic, polidomes-tical, and energy security impediments are highlighted. This is followed by the study of the dimensions of tensions between China and Germany in the form of normative issues and concerns on the relation between state and market. Finally, the impli-cations of the Sino-German partnership for Eurasia, and interactions with the US are investi-gated. The last chapter presents a conclusion.

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Chapter 2: The Political Economy of Renewable Energy in China

and Germany

2.1 Introduction

This chapter focuses on the energy situation, energy transition policy, involved actors, and renewable energy sector of China and Germany. The primary objective is to provide an over-view of the Chinese and German political economy of renewable energy and thereby establish the context which the following chapters of the analysis of the Sino-German energy coopera-tion are built on. The guiding sub-quescoopera-tion of this chapter is: What are China’s and

Germa-ny’s domestic energy situations, the resulting energy transition policies, and how are the Chinese and the German political economies of energy constituted?

This sub-question is answered in six sections. To describe the Chinese and German energy structure, their energy situations is outlined by looking at indicators, such as domestic energy resources, energy production, energy imports, energy consumption, GHG emissions of the energy sector, energy security, and the renewable energy landscape. Afterwards, the resulting renewable energy transition policies are examined. This is first executed for China in section 2.2, followed by the analysis of Germany in section 2.3. In section 2.4, China’s governance and the political economy of energy is analysed, ensued by the analysis for Germany in sec-tion 2.5. Therefore, first, the power structure is investigated, followed by the economy, and key economic strategies. The political economy of energy is mapped by looking at the renew-able energy sector, domestic investments, and innovation. Finally, section 2.6 completes the chapter with a conclusion.

2.2 China’s Energy Structure and Renewable Energy Policy

This section depicts China’s energy situation by examining its energy reserves, domestic en-ergy production, consumption, enen-ergy related GHG emissions, and the resulting enen-ergy transi-tion policies.

2.2.1 China’s Energy Situation

China possesses the second largest hard coal reserves worldwide (Andruleit et al., 2019, p. 56). However, the country only has minor oil and natural gas reserves. China’s total proven oil reserves amount to 1.1 billion barrels, which equals 0.1% of the global proven oil reserves (BP, 2019b, p. 14). China owns 3.1% of the global proven natural gas reserves (BP, 2019b, p.

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30). Furthermore, China is the largest energy producer worldwide (EIA, 2015). The country’s energy production increased by 178% since 1990 and reached 2,449 million tonnes of oil equivalent (Mtoe) in 2017 (IEA, 2018a). As figure 2.1 depicts, while China had a share of 13.6% of the global coal production in 1973, in 2018 China’s coal production made up 45.6% of the global production (IEA, 2019d, p. 16). China produced 189.1 million tonnes (Mt) of oil in 2018 (BP, 2019b, p. 17).

Figure 2.1: Regional shares of coal production in 1973 and 2018

(IEA, 2019d, p. 16)

The country is the worldwide largest importer of oil, natural gas, and coal (BP, 2019a, p. 1; EIA, 2015). Whereby the Middle East is the largest source of China’s oil imports (EIA, 2015). China’s coal imports further increased in 2018. In 2018, China accounted for 24% of global energy consumption (BP, 2019a, p. 1) and 34% of the primary energy growth (BP, 2019b, p. 3). As a result, with 3273.5 Mtoe, China is the worldwide largest energy consumer (BP, 2019b, p. 8). Between 2000 and 2018, China had an annual average electricity consump-tion growth of more than 10% (IEA, 2019e, p. 31). Since 2010 energy consumpconsump-tion has been growing in all industry sectors and for households (Energy Brainpool, 2017, p. 9). China’s per capita energy consumption reached 96.9 gigajoules in 2018 (BP, 2019b, p. 12). The Chinese energy mix is dominated by fossil fuels, making up 90% of the energy consumption in 2018 (CNREC & Energy Reform Institute of Academy of Macroeconomic Research/NDRC, 2019, p. 1). China’s coal consumption almost tripled from 2000 to 2013 (EIA, 2015). The country was responsible for 50% of the world’s coal consumption in 2018 (BP, 2019b, p. 45), while coal had a share of 58% in China’s total energy consumption (BP, 2019a, p. 1), followed by oil with a 20% share (BP, 2019a, p. 2). Other energy sources accounted for a relatively small

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share in the Chinese energy mix (EIA, 2015). In 2018, nuclear power accounted for 10.9% of China’s energy consumption (BP, 2019b, p. 48). The country’s vast coal consumption is an essential factor for its high CO2 emissions and air pollution (EIA, 2015; Yang et al., 2016, p.

84). The total CO2 emissions of China increased from 2,089 Mt in 1990 to 9,258 Mt in 2018

(IEA), making up a share of 27.8% of global CO2 emissions (BP, 2019b, p. 57). China is the

worldwide leading emitter of energy-related CO2 emissions (EIA, 2015, p. 2). Its emissions

related to energy use increased by 2.2% in 2018. Moreover, China faces major energy securi-ty challenges. Since China’s energy imports are increasing, concerns on energy dependency are rising (BP, 2019a, p. 1). The country’s dependence on energy imports is a threat to its en-ergy supply security due to geopolitical risks in enen-ergy resource-rich regions and risks at the country’s energy transporting routes (Amineh & Yang, 2017, p. 25; Zhou & Song, 2017, p. 145).

2.2.2 China’s Renewable Energy Situation

China has major potential for photovoltaic (PV) capacities (Energy Brainpool, 2017, p. 15), wind power (IRENA, 2014, p. 5), and large potential for hydropower (EIA, 2015). The coun-try has made rapid progress in the development of renewable energy (Yang et al., 2016, p. 84). More than 28% of the global renewable energy is generated in China. In 2018, China generated 634.2 terawatt-hours by renewable energy (BP, 2019b, p. 52) and was the country with the largest increase of renewable energy production (BP, 2019b, p. 2). China accounted for 45% of the global growth in renewable energy power generation in 2018 (BP, 2019b, p. 6). As figure 2.2 shows, China had the worldwide largest hydropower, solar power, and wind power instalments in 2016 (UN Department of Economic and Social Affairs, 2019, p. 23). Renewable energy accounted for 25% of China’s power generation, with a share of 20% hy-dropower, 4% wind power, and 1% solar power (Energy Brainpool, 2017, p. 6). Thus, in 2018, hydropower made up 8.3% of China’s total energy consumption (BP, 2019a, p. 2). For non-fossil fuel energy sources, solar power consumption expanded the fastest in 2018 (BP, 2019a, p. 1). China’s solar instalments increased between 2006 and 2015 by 100.3% (Yang et al., 2016, p. 84).

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Figure 2.2: Hydro, wind, and solar electricity capacity for major countries in 2016

(UN Department of Economic and Social Affairs, 2019, p. 34)

Rare earth materials play a substantial role in the production of renewable energy technolo-gies. China owns more than 23% of the global proven natural graphite, 37% of rare earth met-als, and 7% of lithium reserves (BP, 2019a, p. 58). In 2016, China accounted for 80% of the global rare earth materials production (Gambogi, 2016, p. 5). In 2018, China produced 8,000 tonnes of lithium content which corresponded to 13% of the global production. Furthermore, China accounted for more than 70% of the global natural graphite and rare earth metals pro-duction (BP, 2019b, p. 58).

2.2.3 China’s Renewable Energy Policy

Renewable energy policies are connected to energy security strategies, climate change poli-cies, and energy efficiency policies (Amineh & Guang, 2017, p. 2). China aims to diversify its energy imports by expanding the number of energy import origin countries and, at the same time, increasing domestic energy production (Proskuryakova, 2018, p. 211). The Chinese state has been promoting the development of renewable energy since the 1990s, starting with a multi-sector renewable energy development introduced by the China Electric Power Act in 1995 (Dent, 2015, p. 35). The Renewable Energy Law of the People’s Republic of China was adopted in 2005 and amended in 2009. This is the basic law for renewable energy develop-ment in China. It demands the prioritisation of renewable energy production and consumption (Junxia Liu, 2019, pp. 212–213; MOFCOM, 2013). In 2014, Xi Jinping, the president of Chi-na, proclaimed an Energy Revolution (Q. Liu et al., 2018, p. 78). China’s Energy Revolution refers to a change in the way energy is produced and consumed by revolutionizing energy

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technology and building a new energy system. The striven modern energy system will be low carbon, safe, efficient, and will ensure China’s energy security (Central Committee of the Communist Party of China, 2016, p. 84; Q. Liu et al., 2018, p. 78). Renewable energy is an important measure identified to further China’s Energy Revolution (NDRC Energy, 2016, p. 3). The Chinese 13th_{FYP for Economic and Social Development (2016-2020) strengthens the}

push towards an energy revolution (Central Committee of the Communist Party of China, 2016, p. 84). The FYP is a strong policy tool and serves as a basis for the state to provide pub-lic services (Yu et al., 2020, p. 2). The 13th_{FYP states that China will use modes of}

produc-tion and lifestyles, which are eco-friendly and low carbon (Central Committee of the Communist Party of China, 2016, p. 17). The plan is to strive for a strategy-driven and fron-tier-oriented development with technology breakthroughs (Central Committee of the Communist Party of China, 2016, p. 23). Additionally, the NDRC drew up the Energy 13th

FYP (Yu et al., 2020, p. 2) and the Renewable Energy 13th_{FYP (NDRC Energy, 2016). These}

plans formulate a coal cap and targets for expanding renewable energy, gas power, and nucle-ar power (Gosens et al., 2017; Yu et al., 2020, p. 2). China’s energy transition aims for a shnucle-are of 15% fossil fuels in the primary energy consumption by 2020 and a share of 20% non-fossil fuels in the energy mix by 2030 (IEA, 2018b). China officially committed itself that, CO2 emissions should be reduced by 60-65% per unite of gross domestic product (GDP)

compared to 2005. CO2 emissions should peak around 2030 (Q. Liu et al., 2018, p. 78). In

2017, the Energy Supply and Consumption Revolution Strategy (2016-2030) was released by the NDRC outlining a roadmap and concrete targets for guiding the revolution. This strategy is a response to Xi Jinping’s call for an energy revolution (Q. Liu et al., 2018, p. 81). This strategy goes beyond the 13th_{FYP, setting up targets for 2030 and a vision for 2050 (IEA,}

2019b; Yu et al., 2020, p. 3). Thus, resulting from its energy structure, China has introduced institutions and developed ideas which address its challenges through promoting energy tran-sition.

2.3 Germany’s Energy Structure and Renewable Energy Policy

This section outlines Germany’s energy situation by referring to its energy reserves, domestic energy production, energy consumption, energy related GHG emissions, and policy respons-es.

2.3.1 Germany’s Energy Situation

Coal is Germany’s main domestic energy resource (EIA, 2016). The country only has minor proven natural gas (BP, 2019b, p. 30) and oil reserves (Andruleit et al., 2019, p. 18).

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Germa-ny’s minor oil and gas fields are being increasingly depleted (Andruleit et al., 2019, p. 17). As can be seen in figure 2.3, the country’s energy production is declining. Germany’s energy production declined by more than 39% between 1990 and 2018 to reach 112 Mtoe (IEA, 2019c). Domestic energy production covered 30% of Germany’s primary energy consumption in 2018 (Ziesing, 2019, p. 11). Germany is the eighth largest coal producer worldwide (IEA, 2019d, p. 17). Lignite accounted for 38% of Germany’s domestic energy production (Ziesing, 2019, p. 11). The country is the largest lignite extractor obtaining 166.3 Mt in 2018 (BMWi, 2019e). Nevertheless, Germany’s coal extraction is declining (Andruleit et al., 2019, pp. 17– 18). Germany has a minor domestic oil and gas production (European Commission, 2019a, p. 188). Thus, domestic production accounted for 2% of oil and 7% of natural gas consumption in 2017 (Andruleit et al., 2019, p. 17). Germany’s fossil fuel production and nuclear produc-tion have been decreasing significantly over the last decade (IEA, 2020, p. 22).

Figure 2.3: Germany’s energy production by source from 1998 to 2018

(IEA, 2019c, p. 22)

The country is importing most of its energy (Andruleit et al., 2019, p. 17). Consequently, Germany’s import dependence reached 63.9% in 2017 (European Commission, 2019a, p. 189). Net energy imports increased from 167 Mtoe in 1990 to 200 Mtoe in 2018 (EIA, 2016). Germany’s energy imports in 2018 comprised 39.7% oil imports and 42.9% gas imports (AG Energiebilanzen e.V., 2019b, p. 6). Russia and Norway are Germany’s most important oil suppliers (Andruleit et al., 2019, p. 12). Over 90% of Germany’s gas consumption is covered by imports, which makes the country a major gas importer (Andruleit et al., 2019, p. 13). Since its last hard coal mines closed in 2018, Germany is also importing hard coal. Corre-spondingly, 43.2 Mt of hard coal were imported in 2018 (BMWi, 2019e). Germany was the sixth largest energy consumer worldwide in 2016 (UN Department of Economic and Social Affairs, 2019, p. 2). However, Germany’s energy consumption reached in 2018 the lowest

Cooperation on Renewable Energy Transition: A Study of the Sino-German Energy Relationship