In Sept 2020, China announced its target to reach peak carbon emissions by 2030 and achieve carbon neutrality (net zero) by 2060. China is the biggest CO2 emission country, accounting for 28% of the world’s total emission (although in terms of per capita emission, China ranked 47th). To reduce all this emission while maintaining a high growth rate is a task of tremendous magnitude. In addition, China leaves only 30 years to drop the emission from peak to zero while most developed economies would be 40-60 years, which means much more dramatic changes in policy and technology adoption.
All this will lead to exciting investment opportunities! ATC Sustainable Investment, a new program by ATC Initiative, powered by CNW Capital Service Ltd., will capture the various sustainable investment themes in China through our researches, interviews and our Green-Connecting project.
China is the biggest issuer of Green bond worldwide and has an active Green Bond Market with about EUR 125 billion labelled green bonds outstanding. The 2021 new version of The Green Bond Support Project Catalogue issued by PBoC (China Central Bank) adjusted the qualified green industry sectors in line with international standard and made the Chinese green bond more desirable to global climate-aware investors. Various Green Bond Indices issued by China Central Depository & Clearing (CCDC) and other index providers since 2016 and a few Green Bond Funds offerings also provide investors more investment opportunities.
As the biggest manufacturing country, China boasts of very complete industry chain for various green business sectors. In Chinese stock market investors would be able to find a good supply of listed companies along each of these industry chains to include in their portfolio. For illustration, we collated the listed equities in the three industry chains: New Energy Vehicles, Solar Photovoltaic, Wind Power.
Technology provides the ultimate solution to solving the human’s common issue—global warming. China, in particular, is in need of a variety of cleantech to address its environment issues in air, water, waste, industrial development. In the global cleantech map, China should be able to play a range of collaborative roles in partnership with other countries—its huge market potential can provide excellent test-bed and commercial scale-up opportunities for technologies developed globally; in the areas where China has advantage with indigenous innovation China can become technology exporter; Chinese corporate and venture capital can work closely with their global peers in supporting cleantech start-ups both in China and elsewhere. It is a fast-evolving technology field, but we have tried to identify a few technology categories that pose tremendous growth potential in China. There are also a great number of regional cleantech initiatives in China in the forms of themed industrial parks and incubators/accelerators.
The Current Cleantech Investment Themes In China
Hydrogen and Fuel Cell, E-Mobility, Sustainable Agriculture And Food, Energy Efficiency and Renewable Energy are some current cleantech investment themes in China.
In order to better support the development of new energy companies, more than 30 hydrogen energy industrial parks and more than one hundred new…
Renewable Energy Infrastructure
As renewable energy electricity prices gradually enter the era of grid parity in most parts of the country from 2020 in China, renewable energy infrastructure investment has become increasingly attractive due to its stable cash flow prospect and clear policy support. China has already had the world’s largest installed capacity in solar, wind, hydro and bio-mass power generation, at 930 Gigawatts (GW). The installed capacity of solar and wind power is expected to more than double in the next 10 years to reach 1200 GW in 2030, given China’s 2030/2060 commitment.
The carbon pricing mechanism is an effective tool that can help countries and enterprises achieve a low-carbon economy and reduce carbon emissions. On 6 July, 2021, China officially launched the National Emissions Trading System (ETS), meanwhile, the Chinese ETS pilots should gradually be incorporated into the national ETS in the future. With the continuous improvement, China’s national ETS will grow into a large market with an annual transaction volume of more than 100 billion yuan, and provide price signals and even financial support for the carbon reduction behaviours of the whole society.