The Worldwatch Institute report, Powering China's Development: The Role of Renewable Energy, has found if China persists with its commitment to diversifying its energy supply and becoming a global leader in renewables manufacturing then renewable energy could provide over 30% of the country's energy by 2050.

The findings are more optimistic than the recent 'World Energy Outlook' report from the International Energy Agency, which found energy demand is growing most notably in China and India. The two countries account for 45% of the projected increase in global energy demand – with fossil fuel based energy still dominating the mix.

But the Worldwatch report found more than US$50 billion ($56 billion) was invested in renewable energy worldwide in 2006, and China is expected to invest over US$10 billion in new renewables capacity in 2007, second only to Germany.

Wind and solar energy are expanding particularly rapidly in China, with production of wind turbines and solar cells both doubling in 2006.

China is poised to pass the world's leading solar and wind technology manufacturers in Europe, Japan and North America in the next three years, and it already dominates the markets for solar hot water and small hydropower.

"A combination of policy leadership and entrepreneurial savvy is leading to spectacular growth in renewable energy, increasing its share of the market for electricity, heating, and transport fuels," said report co-author Eric Martinot.

"China is poised to become a leader in renewables manufacturing, which will have global implications for the future of the technology."