The central government in Beijing has set a target of generating 15% of all electricity from renewable sources by 2020, and the effects of China going green are sure to be felt all around the world. Although China adopted an aggressive approach at the recent Copenhagen summit on climate change, and though some countries accuse Beijing of trying to hijack the talks and now question China’s environmental commitment, the smart money is on China’s efforts to boost green technology and clean energy options. In November, China pledged to cut the intensity of carbon emissions per unit of its GDP in 2020 by between 40% and 45% against 2005 levels. While this will not cut the overall amount of emissions, with China’s GDP in 2020 expected to be around three times that of 2005, it is a step in the right direction. 

“The opportunity in China is large,” says Bozena Jankowska, manager of the Allianz RCM Sustainable Research team. RCM is the global equity company within Allianz Global Investors. She visited China in November to see 11 green technology projects, which covered everything from smart grids to wind components, wind farms, waste-to-energy and solar ventures, returning impressed by the progress made. 

Firing this enthusiasm is the fact that China remains underdeveloped on this score, although Jankowska believes that for the time being the opportunities are most likely to be in the domestic Chinese sector as the government looks to localize the business and build up local expertise. The opportunities lie not in innovation out of China, where it still trails the West, but on China’s ability to make things cheaply, she explains. 

DESPITE MUSCULAR NEGOTIATING tactics at the climate summit in Copenhagen, most people working in the industry in China believe that its commitment to sound environmental practice remains intact. 

“Post-Copenhagen, China needs to continue its efforts to improve green technology and sustainability, and I’m confident it will,” says Yang Ailun, head of Climate and Energy at Greenpeace China. “There is no doubt that China is committed to developing clean energy because of all the domestic imperatives to do so. It’s good for energy security and it’s good for economic development. Announcing a target was an effort to be seen as willing to do its fair share,” Yang adds. 

The Chinese government is investing serious resources to tackle pollution problems. In 2006, China spent 1.22% of its GDP (around $33 billion) on investments to control pollution. Binding reduction targets have been included in the central government’s 11th Five Year Plan to control the discharges of key water pollutants such as chemical oxygen demand (COD) and sulfur dioxide.  

Li Ganjie, China’s Vice Minister of Environmental Protection, said in December reaching these goals would yield a reduction in carbon dioxide emissions of 250 million tons. 

For Yang, the main potential in clean energy lies in energy efficiency and technology. “China is already a world leader in electric cars, while other areas include wind and solar energy, where China is already a top three manufacturer,” she explains. “The solar market is mainly manufacturing for export but growth is slowing, so it’s now crucial for the government to give support to the domestic market.”

THERE ARE EVER MORE signs that China is taking the issue of going green more seriously. Prof. Dr. Ottmar Edenhofer, chief economist at the Potsdam Institute for Climate Impact Research (PIK) and chair in Economics of Climate Change at the Technical University of Berlin, both in Germany, is one of the four lead authors of RECIPE, a comprehensive pan-European analysis of decarbonization pathways for the global economy. He is reassured by the Chinese government’s interest in establishing the extent of environmental damage. 

“The Chinese government commissioned a report to find out the impacts of climate change on the Chinese economy – when, say, the glaciers melt in Tibet, what the costs for China would be,” he says. 

Stuart Leckie, founding director of Stirling Investors, is assisting the Chinese government to set up the Clean Development Mechanism Fund to help finance projects to combat climate change, such as sustainable energy. “This illustrates the seriousness with which China is taking climate change, global warming and the degradation of the environment,” he explains. 

Despite the gradual increase in the use of more environmentally friendly energy sources, coal provides nearly 70% of China’s energy needs, and this is something that is unlikely to end anytime soon. What is crucial is the mix. At the same time as China keeps using coal to supply its power needs, it is looking to other sources of energy. 

“Mostly, clean tech is seen as a business opportunity and a way of making money,” says Bozena Jankowska. “They are concerned about the broader implications of coal, dirty coal and waste management, but people are seeing an opportunity for business. The average Chinese person is concerned about making money and improving  quality of life,” she adds. 

Meanwhile, Huang Ming, founder of the Himin Solar Energy Group in Dezhou, is on a quest to convince his fellow Chinese of the need to go green in China. 

“China has already made a promise on emission reduction. It shows that the Chinese government is committed,” says Huang passionately. “This promise is not only a challenge, but also a huge business opportunity. It lifts China onto the global political and economic stage.”

Published by PROJECT M in April 2010

(Photo: action press/Xinhua)