Green Shoots

Clean Tech in China---an article from the economist

 

A new venture hopes to promote clean-technology investment in China.

 

China is not feted for its stewardship of the environment. One recent World Bank report found that 16 of the world's 20 most polluted cities were in China; and a draft version of another puts the total economics cost of outdoor air and water pollution at around $100 billion a year, or 5.8% of China's GDP. By some estimates, China has now overtaken America to become the world's largest producer of greenhouse gases. Environmental protests, such as one that took place in Xiamen last month in response to a plan to build a chemical plant in the city, are on the rise.

The pollution that has resulted from China's growth is huge problem, but to investors it presents an enormous opportunity. Venture-capital investment in clean tech in China is picking up, increasing by 147% from $170m in 2005 to $420m last year, according to the Cleantech Group, an industry research body. Most of this investment was in solar energy, a booming field in which several Chinese firms have gone public in the past year. But though China has now become the world's third-largest manufacturer of solar panels, most of them are exported, thanks to the subsidies offered in the developed world.

Several initiatives aim to promote the development and deployment of clean technologies within China itself. The most prominent is the Clean Development Mechanism (CDM) of the Kyoto Protocol, the United Nation's treaty on climate change. Under the CDM, projects that reduce emissions of greenhouse gases in poor countries earn credits, which can be purchased by rich countries in lieu of reducing their own emissions s required by the treaty. The Chinese government has already approved 524 such projects; China accounted for 61% of the CDM market last year, which was worth nearly $5 billion.

(to be continued)