USA – 2017 saw China increasingly becoming the world’s dominant player in the building and financing of clean energy technology globally, a report published by the Institute for Energy Economics and Financial Analysis (IEEFA) says.
The report notes that there are indications that renewable energy will dominate global power capacity additions for at least the next two decades and China is preparing now to lead this new energy world.
Tim Buckley, co-author of the report and IEEFA’s director of energy finance studies, said that the U.S.’s withdrawal from the Paris climate agreement along with an increased U.S. government emphasis on coal and away from renewables is at odds with the direction being taken by China.
“The clean energy market is growing at a rapid pace and China is setting itself up as a global technology leader while the U.S. government looks the other way,” Buckley said.
“Although China isn’t necessarily intending to fill the climate leadership void left by the U.S. withdrawal from Paris, it will certainly be very comfortable providing technology leadership and financial capacity so as to dominate fast-growing sectors such as solar energy, electric vehicles and batteries,” added Tim Buckley.
IEEFA has identified a growth in large Chinese international clean energy projects between 2016 and 2017.
The total for large projects (valued at US$1 billion or more) in 2017 exceeds US$44 billion. This compares to US$32 billion identified in 2016, which was itself a record year for Chinese low-emissions-sector investment overseas.
The IEEFA report analyses China’s further progress in clean energy sectors during 2017, including advancements led by the nation’s large and influential state-owned utility, engineering and finance companies.
Growing Chinese dominance is led by the Belt and Road Initiative (BRI) that is driving outbound infrastructure investment along ancient trading routes. 2017 saw the significance of the BRI further enhanced. Despite encountering some headwinds in 2017, it remains a central feature of China’s foreign and economic policy.
Chinese mergers and acquisitions activity in countries that are part of the BRI soared in 2017. In 2016, BRI related acquisitions totalled US$31 billion and in 2017 this figure was surpassed by the month of August.
China’s solar manufacturing leadership was cemented in 2017 with the country accounting for about 60% of global solar cell production. At the same time major Chinese wind energy companies, including the world’s largest wind power developer, continued to expand overseas.
In 2017 large Chinese hydro power firms also continued to either acquire or to win contracts to build major hydro projects as Latin America, Africa and Asia continue to be areas of focus for Chinese hydro companies.
While State Grid Corporation, the world’s largest power utility, leads persistent Chinese international investment in power grids, Chinese companies have positioned themselves to dominate the cobalt market with the majority of supply heading back to China. Chinese miners are expected to have been responsible for 62% of global cobalt supply in 2017.
The securing of new energy commodities will allow China to dominate battery and electric vehicle (EV) manufacturing.
China’s energy sector has many major financial institutions at its disposal to support its overseas energy ambitions into the future.
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