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CHINA CLEAN ENERGY – SECTOR NOTE

​The global economy has, over the past couple of centuries, seen a significant rise in the consumption of fossil fuel resources. As a result, global carbon emissions have increased tremendously and the subsequent impact on climate change is more direct and visible than ever before. Through this report we highlight the initiatives taken by the world economies in curtailing carbon emissions and promoting the use of clean energy resources.

Further, we take a detailed look at China’s growing role in the clean energy sector. Driven by government investments and incentives, clean energy production has grown rapidly in China. The report provides an overview of the clean energy sector in China and companies which are likely to be beneficiaries of the change.

• ​ Clean Energy: In December 2015, global leaders met in Paris to negotiate a legal instrument to mitigate climate change from the year 2020. Representatives from 195 countries, including China, adopted the treaty. The treaty defined the contribution that each individual country in would make in order to achieve their individual clean energy goals.
  
• ​China pledges to curb carbon emission: China, the largest contributor of global greenhouse gas (GHG) emissions in the world (25.4%) has pledged to reduce the proportion of fossil energy. To fulfil its goal of a clean, low-carbon, secure and reliable energy system by 2050, China has set the following energy targets: Coal consumption to peak before 2020; Fossil energy consumption peak will be realized by 2025; By 2050, clean energy will account for over 91.0% of the total electricity consumption

Wind is projected to be the largest source of clean energy (39%), followed by solar power (31%).

• ​China leads the world in clean energy investments: China has emerged as a leader in renewable energy investments. During 2010-15, its investment soared from U$39 bn to $103 bn. As a consequence, the total share of non-fossil fuels in primary energy consumption increased from 8.3% in 2010 to 12.0% in 2015, surpassing the country’s target of 11.4%. China is well on track to meet its Copenhagen pledge to reach 15.0% by 2020 and Paris commitment to reach 20.0% by 2030.
•  Clean energy sector faces impediments in its growth: Curtailment is a major problem for the Chinese renewable sector. It has resulted in close to 10.0% of solar capacity remained untapped during 1H 2015, while around 15.0% of wind power was wasted in 2015. Renewable projects are also hampered by delayed government subsidy payment and lack of project finance at reasonable rates.
• Government has taken several initiatives to accelerate shift towards low carbon economy: The central government has ordered 13 provinces to suspend coal-fired power plant approvals in the current pipeline, and another 15 provinces to delay new construction of projects that have already been approved. It has also set an annual minimum purchase guarantee for renewable power generation.