Beijing’s global role in green power contrasts with Trump rhetoric on retrenchment

January 5, 2017 by: Andrew Ward, Energy Editor

China is strengthening its dominance of the global renewable energy industry after increasing investments in green technology overseas to more than $32bn — far in excess of the amounts deployed by any other country.

The 60 per cent surge in Chinese capital last year highlights the country’s increasing economic commitment to low-carbon forms of energy even as Donald Trump, the US president-elect, threatens to weaken Washington’s backing for the shift away from fossil fuels.

China is already investing more than $100bn a year in domestic renewable energy projects — more than double the US figure — and the latest data show that Chinese money also dwarfs US green finance globally.

“As the US owned the advent of the oil age, so China is shaping up to be unrivalled in clean power leadership today,” said Tim Buckley, director of energy finance studies for the Institute for Energy Economics and Financial Analysis, a US-based think-tank.

Chinese companies made 11 outbound investments in excess of $1bn in 2016, adding up to a combined $32bn, compared with eight deals for a combined $20bn in 2015, according to research by IEEFA.

These ranged from an offshore wind farm in Germany and a solar power project in Egypt, to an Indonesian hydropower plant and lithium production for electric vehicle batteries in Chile.

Four of the five biggest renewable energy deals worldwide in 2016 were made by Chinese companies, according to Mr Buckley, and he predicted this trend would continue irrespective of any change in approach by the US.

“Whether it’s for energy security, or the need to improve air quality, or the need to create jobs and find outlets for capital; by any of these logics China is totally committed to renewable energy,” said Mr Buckley. “Until recently it was a domestic story but in the past year or two China has started to invest globally.”

By far the biggest of the deals struck in 2016 was the acquisition of a controlling stake in CPFL Energia, one of Brazil’s biggest generators and distributors of renewable power, by State Grid Corporation of China as part of a proposed takeover expected to total $13bn once completed.

Mr Trump, who once tweeted that climate change was a Chinese hoax to undermine US competitiveness, promised before his election to withdraw the US from the Paris climate accord and sweep aside many of the commitments to cut fossil fuel emissions that the US had pledged as part of the agreement. However, he has since said he has an “open mind” on the issue.

Sam Geall, a specialist on low-carbon technology in China at the University of Sussex, said Chinese capital had become a more important driving force behind the expansion in renewable energy capacity around the world than US policy.

The 2015 UN climate agreement in Paris was only possible, he said, because of the rapidly declining cost of replacing fossil fuels with renewable energy — a trend he attributed in large part to Chinese investment. Five of the world’s top six solar panel manufacturers are Chinese, as are five of the top 10 wind turbine manufacturers.

“That was the result of smart long-term industrial policy in China and the Trump presidency will not change that,” said Mr Geall. “What it may mean is that, if the US does not support its own renewable industry, it will lose out to China.”

China invested $103bn in domestic renewable energy in 2015, according to Bloomberg New Energy Finance, compared with $44bn by the US. China’s National Energy Administration this week committed to further increases in years ahead with a plan for Rmb2.5tn ($363bn) of domestic investment in clean energy by 2020.

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