Cleantech and Chinese economic success

As the UN Climate Change Conference to be held in Copenhagen in December 2009 approaches, international pressure on the world's largest carbon dioxide emitter is growing. Also, the environmental impact of more than 20 years of virtually uncontrolled economic growth is no longer deniable for the Chinese government. For these reasons, cleantech investments in China have moved into the focus of both the Chinese government on the one hand and foreign technology companies and venture capital investors on the other. Many regulations are in place already and must be observed by foreign companies.

Naturally, the energy sector will be central to the measures aiming to curb carbon dioxide emissions; in China, coal-fired power plants still produce about 80% of the country's energy. The Chinese government has been promoting renewable energy for some time now: According to the 2005 PRC Renewable Energy Law (中华人民共和国可再生能源法), by 2020 at least 15% of China's energy shall be supplied by renewable sources. This has to be taken with a grain of salt, however. For instance, considering the adverse consequences experienced in other areas, the initial euphoria about biomass energy has yielded to a growing reservation: The Foreign Investment Industrial Guidance Catalogue as amended in early 2008 classifies the production of biofuel as “restricted”, and biofuel projects are subject to more detailed examination by the Chinese regulatory authorities than before.

All projects involving wind and solar energy, however, still enjoy the “encouraged” category under the Catalogue, which means that foreign investors in any such projects enjoy certain privileges in the approval procedure and during project implementation. A multitude of additional detailed requirements must be observed when planning an investment, however. For example, the Renewable Energy Law requires a 70% localisation rate for the construction of wind energy plants, which makes investments into component manufacturing very interesting but imposes additional specifications on plant engineering as such.