May 25th, 2009 | China Daily $30b set aside for green stimulus to double alternative fuel use
China is emerging as fertile ground for green investment, with the government supporting the growth of a green economy.
As part of the country’s 4 trillion ($586 billion) stimulus package, the National Development and Reform Commission will put $30 billion into green projects. Now China is planning to draft another stimulus package to double the nation’s 2007 output of alternative energy by 2020, according to Liang Zhipeng, director of Renewable Energy Department, National Energy Administration.
The plan to boost investments in the production of fuel – with hydro, wind and solar – will be announced this year, Shi Dinghuan, the chief director of China Renewable Energy Society said, earlier this month.
China said it would spent 2 trillion yuan on its alternative energy industry from 2006 through 2020. Now it will add another 1 trillion yuan, said Liang.
The New York Times reported that environmental protection and energy savings have huge development potential, with the Chinese government’s supportive green policy boosting the confidence of foreign investors.
HSBC estimates that of China’s roughly $586 billion package, $221 billion has green features, making it the largest green stimulus package in the world, followed by the US at $112 billion and South Korea at $31 billion. HSBC’s green features included ‘rail’ and ‘electricity grid’, which are not mentioned under the green package in the original stimulus.
“The central government’s leadership in creating the largest green stimulus package in the world is to be applauded,” said Ellen Elle Carberry, Venture Partner, Hao Capital and Co-Managing Director of China Greentech Initiative.
“China has huge renewable energy resources and we are bullish on the country’s green investment sector,” said Sun Hao, an officer from the International Finance Corporation, a member of the World Bank.
He noted that more and more international investment institutions are eyeing renewable energy sectors in China.
KK Chan, previous head of investments Greater China, Climate Change Capital said clean energy sectors will contribute to local green GDP and get more support from the government.
But he questioned the prospect of foreign green investment in China. “Theoretically it should attract more foreign funds. But the truth is, foreign funds need seasoned Chinese teams to find good projects, something which is not easy to implement,” he said. The Chinese government set a goal in 2007 for the country’s renewable energy to account for 1.8 million kilowatts of solar power capacity, 300 million kilowatts of hydropower, 30 million kilowatts of wind power and 30 million kilowatts of biomass power by 2020.
The nation’s solar power capacity may rise to 10 million kilowatts by 2020, helped by government subsidy, Wang Zhongying, the renewable energy development director at the research center of the NDRC, told Bloomberg earlier this month at an energy conference.
But, there are still some voices questioning about the feasibility of the new target.
“Firstly, some of the technology, for example battery storage from solar power, is still years away from being perfected,” said Chris Devonshire-Ellis, Founding Partner, Dezan Shira & Associates.
“And economically, solar power, is four times more expensive than China’s conventional energy source of coal. So, in order to gauge whether or not the Clean Energy Initiative is feasible, one needs to pay attention to the economics of the plan,” he said.
By Zhang Qi