Friends of Nature v. State Grid Cases

This is a pair of cases where the environmental NGO Friends of Nature (FON) sued the State Grid Electric Power Companies based in the provinces of Gansu and Ningxia. The plaintiffs alleged the defendant power companies, both subsidiaries of the state-owned State Grid Corporation of China, refused to purchase all of the electricity produced by renewable energy sources with the region. Friends of Nature alleged the companies' decision to generate power using coal-fired power plants instead of available renewable energy increased air pollution and released greenhouse gases contributing directly towards climate change. This case is significant as it is considered to be the first climate litigation case brought in China.

Background
The environmental NGO Friends of Nature sued State Grid Electric Power Companies of both Gansu and Ningxia in August 2016 due to the power companies refusing to buy all of the renewable energy generated from wind and solar sources. The refusal to purchase led to high rates of curtailment, or waste of unsold excess energy produced by renewables. Instead, the power companies purchase electricity generated by coal-fired power plants. In their complaint, FON alleged that the power companies had violated Article 14 of the Renewable Energy Law, which requires licensed power companies to purchase the full amount of renewable energy generated within their grid coverage. . Among the demands in common in both cases were for 1) the defendant to fully purchase all electricity generated by wind and solar generators and 2) for the defendant to pay for the cost of environmental damage caused by use of coal power instead of renewable energy from 2015 to 2016. The amount of damages was calculated by the plaintiffs to be 1.718 billion yuan ($270 million USD) in Gansu, and 310 million yuan ($48.4 million USD) in Ningxia.

On August 4, 2018, the Lanzhou Intermediate Court ruled against FON on the grounds that the State Grid Gansu Electric Power Co. only purchased, sold, and deployed power supply, and did not generate it themselves; therefore, the company did not directly cause any environmental pollution or ecological harm through their actions. However, FON appealed to the Gansu Higher People's Court, which overturned the Intermediate Court's decision and remanded the case to the Gansu Kuangqu People's Court. In addition, the defendants in the Ningxia case argued similarly that the power company only played a small role in the curtailment of wind and solar power, and that the decision was the result of a long supply chain of generation, transmission, distribution, supply, and consumption. In addition, the Ningxia defendants also argued that the power companies were not responsible for the emissions produced by power generators.

Relevant Law and Principles

 * Case Summary of Friends of Nature v. State Grid Gansu Electric Power Co.
 * Renewable Energy Law of the People's Republic of China
 * Environmental Protection Law of the People's Republic of China

Status
Both cases are still ongoing as of October 2021. However, in the meantime, rates of renewable curtailment have decreased in from 20% in Gansu and 10% in Ningxia to under 5% in both provinces due to improvements in the grid.

Takeaways
Friends of Nature hopes this case will inspire similar cases in other provinces, as well as spurring power companies to seek government aid to achieve compliance with renewable energy purchasing requirements. The reduction of coal burning and increased use of renewable energy in China will help China meet its goal of becoming carbon neutral by 2060, as China is currently the world's largest user of coal power.

China does not follow a system of common law precedent, so the cases will not have a direct precedential effect. However, the Gansu case was cited by the Supreme People's Court in China's 2019 Environmental Resource Trial White Paper as a typical case regarding climate change response and mitigation, which can serve as persuasive authority for implementing public policy and case guidance.

Links

 * https://ejatlas.org/conflict/friends-of-nature-sued-state-grid-for-refusing-to-purchase-clean-energy-in-gansu-china
 * https://www.reuters.com/article/china-renewables-waste-idAFL3N1RP2SI