BEIJING: The region that the late Chairman Mao Zedong affectionately referred to as China's "eldest son" during the planned-economy era is now known as the country's "rust belt" after decades of suffering from economic stagnation.

The three northeastern provinces of Liaoning, Jilin and Heilongjiang are hampered by declining populations and a reliance on ineffective state-owned businesses that focus on dying industries such as coal and steel, despite repeated promises of revitalization.

In their most recent effort to buck the trend, the region's provincial authorities are putting their money on renewable energy.

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Some analysts claim that recently announced clean-energy projects in the northeast could give Beijing a chance to shed its derogatory "Rust Belt" nickname and become a major player in the country's green transition as it aims to go net-zero by 2060. In the race to get emissions.

Many obstacles still stand in the way of such institutional reform, according to some pundits, to overcome deep-rooted energy policies that have "stunned" economic and social advancement.

Authorities in Liaoning province, which has the most people and the largest economy in the Northeast, announced a large-scale green energy construction in September, including nuclear, wind, solar and hydrogen power power stations.

The 600 billion yuan (US$83 billion) project is scheduled to be finished in 2030 and is projected to produce a total of 60 gigawatts (GW) of electricity generation capacity, roughly equivalent to the total generating capacity of a medium-sized Chinese economy. Nations like Vietnam or Egypt.

Trivium China, a consulting firm with offices in Beijing, called the roll-out "one of the first meaningfully coordinated provincewide buildouts of the new energy era, [which] should become a model for its neighbors" in a statement following the announcement. described as.

Cosimo Reis, an energy analyst at Trivium, told the Post that the buildout could create tangible opportunities in renewable-technology manufacturing, energy exports and other decarbonization efforts, which Liaoning lacks, in addition to offering high-quality jobs and investment opportunities. .

Liaoning will be attractive to investors looking to decarbonize their manufacturing facilities, which they say may not be able to access green energy along the coast and south because of cheap and plentiful renewable energy resources.

Other Rust-Belt provinces are also betting on clean energy development. Heilongjiang officials launched a program for low-carbon economic development in January. By 2025, the province's non-fossil energy installations will make up more than 50% of its total installed capacity, and its clean-heating rate will increase to 80%.

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Jilin's authorities also rely heavily on manufacturing clean hydrogen fuel using renewable energy sources.
They published a roadmap for hydrogen energy earlier this year that included a relatively short-term objective of becoming a major supplier of hydrogen fuel by 2025.

The province intends to rely heavily on the 12 GW combined capacity of its solar and wind power plants to meet its energy needs.
As polluting industries are phased out and renewable energy becomes more important, there are plans to establish a "Harbin-Changchun-Dalian" hydrogen energy corridor that will cross all three provinces and encourage them to adopt the clean-energy transition. would encourage.

According to Rees, in the medium to long term, green energy will continue to create economic opportunities unlike coal.
"China's decarbonization task is huge, and renewable energy still accounts for a relatively small share of all electricity consumption [in the country], so there's plenty of room to grow," he said.

According to the National Bureau of Statistics, clean energy consumption, which includes natural gas, hydropower, nuclear power, wind power, and solar power, accounted for 25.5% of total energy consumption in 2021, compared to coal consumption, which will account for 56.0%. was responsible for ,

The North Eastern region, which has been struggling for some time to reduce its dependence on highly polluting industries, needs the growth engines of the future. Officials at the federal and provincial levels have unveiled several plans since the 1990s to promote innovation and economic growth.

Yet, despite these efforts, the sector's contribution to China's overall GDP has declined from about 11% in 1990 to only 5% in 2021. The per capita GDP of all three provinces is below the national average.

And last summer, President Xi Jinping doubled down on his efforts to make "general prosperity" the driving force behind the country's economic growth, using Liaoning province as the backdrop.

The provincial governments must take advantage of the opportunities presented by green energy, according to Liang Qidong, vice president of the Liaoning Academy of Social Sciences, a government think tank.

He praised the benefits of developing clean energy in the northeast, pointing out that it is a coastal area abundant in natural resources with many opportunities to increase wind power generation. 

Additionally, he emphasised that the provinces are home to some of the top research universities in the nation in addition to the area's "strong industrial atmosphere," which has long been present.

I have high hopes for the growth of new energy in the northeast," he declared. However, a number of issues—both recent and historical—could prevent the northeast from fully benefiting from the buildout.

According to Ries with Trivium, the most urgent among these is the requirement for further power-market reform to enhance the interprovincial trading system.

Interprovincial trading is still a big issue right now, he said. "A significant question is whether this power can actually be sold to the provinces where it is most needed."

The power markets in China today are highly regulated, with central planning for production and consumption, price setting that is not in line with supply and demand, and bilateral provincial energy contracts that are better suited for conventional energy sources like coal.

Part of the country's recent energy crises have been attributed to this system, which has also been blamed for promoting the use of polluting fuel-derived energy sources over renewable alternatives.

According to Qin Yan, lead carbon analyst at data provider Refinitiv, "the lack of liberalised power market[s] constrains the effectiveness of the carbon market in driving the green transition." "This has resulted in a situation where the power sector has impeded social and economic advancement."

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Beijing has indicated, however, that it understands the significance of market reform in the industry. Following the devastating energy crisis of 2021, it started giving up price control. 

Additionally, the National Development and Reform Commission earlier this year disclosed plans to create a primary national energy market by 2025 to complement current provincial markets.