Going green in China

Sustainability is on everyone’s agenda for a good reason.

China’s approach to this issue makes it clear that this is generally a good place to seek potential business opportunities if you are a foreign investor, and this article gives a quick overview of renewable/green energy status and discusses where to find room for investment in China’s energy market.

I.Sustainability at its Finest
During recent years, we have observed sharp increases in global investment related to renewables, especially in wind, solar, biomass, and hydrogen energy. China has not lagged and continues its work towards becoming a leader in research, development, and implementation of renewables. In fact, China has codified the role of renewable energy through various pieces of legislation and regulation. Chief among these are the Law of the People’s Republic of China on Renewable Energies, the Electric Power Law of the People’s Republic of China, and the Five-Year Plans for Energy Development.

II.Realities of Wind and Solar Power in China
China’s interest in wind energy traces back to 2002, but the real boom in the industry started around 2008. Wind farming quickly ramped up, and in some ways outstripped demand. With expectations outshining reality, more windmills were built than sold or connected to the grid. So, wind power in China is at a bit of an impasse.
China approached solar energy slightly differently. At the very beginning, China heavily invested in the development of photovoltaic (solar) plants. These are considered centralized solar energy sources, and usually located far from the biggest cities. Therefore, power transmission could be problematic, if not impractical. So, the industry switched gears. Now, the focus is on a micro model, investing heavily in decentralized solar power, which usually means installing solar panels on buildings’ rooftops.
So, in China nowadays, solar and wind are quite fully developed. This basically means that the capacity for both has plateaued for the time being, and might not be incredibly lucrative, unless you have game changing products or ideas.

III.Biomass and Hydrogen Energy are Growing
Both biomass and hydrogen energy are currently ‘trending globally’ in the world of renewables. China is no different. The primary biomass resources in China are found in municipal solid waste, residues from agriculture and forest industries, animal manure, and sewage from medium and large-scale livestock farms. This organic waste can be broken down to produce biogas (like ethanol) that serves as a biofuel. The most commonly used technologies in China are anaerobic digesters and small-scale thermochemical gasifiers.
Hydrogen, since it is a gas in the first place, is seen as a more perfect power supply. It is already seen as one of the most promising sustainable solutions and is a key technology for China’s developments in the new energy vehicle market.
The issue here, of course, is how to obtain hydrogen from renewable bio-sources, as nowadays the vast part of it is achieved from fossil fuels. There will likely be a major push in this direction, so it might be worth examining business opportunities related to integrating new sustainable solutions. Indeed, according to China’s energy plan and strategy, it looks like demand will grow during the coming years.

While it might tempting for some to engage in the old thinking that renewables are a pie-in-the-sky solution to climate change and our dependence on things like fossil fuels, the reality is that more and more they will factor into our (and by our, we also mean humanity’s) future.
On top of this, in China and elsewhere, these technologies are no longer inconsistent, questionable resources; they are becoming some of the most reliable sources of energy – where they are correctly incentivized and deployed.
In short, if you are seeking ways to expand your business and invest in implementation of a sustainable energy solution, China’s energy market might be the place to do it. DaWo’s lawyers can help you clarify the above and identify potential opportunities, so please do not hesitate to contact our team.