China now has an estimated GDP of US$11.3 million dollars with an annual growth rate of 6.5%
Opening up to the world
Foreign Direct Investment
2013 2014 2015
FDI Inward Flow (million USD)
123,911 128,500 135,610
Presenter
Presentation Notes
After decades of being one of the world’s fastest growing economies, China is now considered by many as the economic success story of the past 50 years. Lifting millions out of poverty and opening its market to the world, China now has an estimated GDP of 11.3 million dollars with annual growth rate of 6.5 per cent. According to United Nations Conference for Trade and Development, China has become the world’s largest FDI recipient with a wealth of employees and potential partner’s eager to learn and evolve, highlighting its attractiveness to international companies. The market has become extremely competitive with both foreign and local players across most industries with the most dominant being mining, manufacturing – particularly fertilizers, steel and cement, construction and energy. The nation’s reliance on heavy polluting industries has resulted in over ten million tons of CO2 being released into the atmosphere, nearly twice the amount of the United States.
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China’s Energy Position & Role of Central Government
In 2015, China spend 2.5x more on clean energy than the European Union
Worlds largest clean technology investor
101.
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39.9
C H I N A E U R O P E A N U N I O N
Total Investment in Clean Energy China vs. European Union (USD billion) 2015
Presenter
Presentation Notes
China’s soaring air pollution, resource scarcity and climate change problems are common knowledge, and as the world’s largest clean technology investor since 2009 it has become a powerhouse in this sector. As it moves from an investor role to an innovator, China is becoming the largest market for clean technology products and services in the world. The most recent 13th Five Year Plan put forth by the Central Government highlights China’s intent to dominate clean technology markets domestically and internationally and in recent years the nation has caught up to the European Union on clean energy investment per capita. The central government in China plays a key role and are able to influence the selections of services, products and vendors and most importantly are a driving force in financing the sector.
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Challenges & Barriers
Lack of transparency Legal uncertainty Intellectual property infringement Favourable measures for local business
Market entry
Presenter
Presentation Notes
Certain factors make this markets one of the hardest to succeed in. Lack of transparency, legal uncertainty, low level of protection of intellectual property rights, corruption and protectionist measures that are in favor of local businesses are among the main challenges when navigating this market.
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Water
Out of China’s 662 cities, 300 have insufficient water supply
13th Five-Year Plan outlines RMB 1.9 trillion for water supply, water treatment and wastewater treatment project development
Freshwater supply, wastewater treatment & water solutions
Presenter
Presentation Notes
Freshwater supply, and the treatment solutions for wastewater are pressing issues in China. Out of China’s 662 cities, 300 have insufficient water supply. The government plans to inject RMB 1.9 trillion to develop this sector and develop water supply, and wastewater treatment projects.
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Air Pollution
Motor vehicle emissions and coal burning for industrial applications account for 85% to 90% of airborne urban pollution
Air purifier market to grow 34% by 2018, reaching US$ 22 billion market value
Crisis air quality levels
Presenter
Presentation Notes
Air pollution issues in China are a result of decades of economic growth driven by industrial sector development combined with the lax implementation of environmental pollution regulations on a national scale. Motor vehicle emissions and coal burning for industrial applications account for 85% to 90% of airborne urban pollution.
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Waste Management
300 waste to energy plants built across China in the next 3 years
High end on-site sorting and pre-treatment technology for use in downstream projects
Waste to energy (WTE) solutions
Presenter
Presentation Notes
Waste management is the correct handling, utilisation and if needed storage of waste produced, including the utilisation of waste for use in Waste-To-Energy (WTE) projects. Low level technology used in waste management systems across China, in particular in the lower tier cities has led to a situation that is ripe for European waste management companies to offer high end technologies.
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Recycling
3.3 – 5.6 million people are involved in the informal recycling sector, China’s largest employer behind agriculture
End goal is a circular economy – closing industrial loops to turn outputs from one manufacturer into inputs for another
Informal recycling sector
Presenter
Presentation Notes
For China to promote a more responsible and sustainable environmental policy through recycling it will have to reign in and regulate its informal recycling sector. The central government has started to implement strict enforcement procedures and is investing in expertise to develop urban recycling facilities and modern treatment and reprocessing practices with the aid of foreign technology.
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Noise Protection
Third largest environmental hazard behind air pollution and water pollution
Noise protection barrier industry worth RMB 5.9 billion, growing at 10.9% per year
Urban noise
Presenter
Presentation Notes
The impact of noise pollution as a result of rapid urbanisation has affected both rural and urban areas, and is rated as the third largest environmental hazard behind air and water pollution. Housing construction and infrastructure projects have played major roles in the increasing problem of noise pollution. Noise barriers, noise mapping and monitoring, and hearing protection products will see increases in demand.
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Biogas
36% of global biogas production can be attributed to non-OECD countries, of which China produces 98.4% of total output
Industrial biogas production received a RMB 2.5 billion government investment in 2014
Household, agricultural and industrial biogas
Presenter
Presentation Notes
Biogas production in China can be divided into three segments – household, agricultural and industrial. In 2015, the Chinese government began to focus on industrial biogas development and has invested RMB 2.5 billion primarily for large scale biogas projects.
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Aero-thermal
Domestic heat pump market valued at RMB 9 billion
European companies provide expertise and/or capital, while China partner provides manufacturing capabilities
Heat pump market
Presenter
Presentation Notes
Aero-thermal products, especially air-water heat pumps used as water heaters and air-source heat pumps used for air conditioning, are gaining more prominence than ever. China’s domestic heat pump market is valued at RMB 9 billion, with air source heat pumps (ASHP) accounting for 42% of the total market. Domestic manufacturers are capitalising on growing demand for air-source heat pump water heaters and are increasingly demanding more efficient systems
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Geothermal
China has one-sixth of the world’s geothermal resources
Historically monopolised by state owned enterprises but now opening up to private investment
Developing geothermal capacity
Presenter
Presentation Notes
With one-sixth of the world’s geothermal resources, China is now beginning to turn its attention to develop its geothermal energy capacity. The Beijing-Tianjin-Hebei Area is one part of the three grand regional integration initiatives which are strategic priorities for development in the next five years. European expertise in exploration, training, and R&D to address technical obstacles such as drilling for access will be needed in the near future.
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Hydrothermal and Ocean Energy
Exploitable hydrothermal resources are estimated at 570 GW, current capacity is 5 MW
China is a location to pioneer and commercialise ocean energy
Tidal energy
Presenter
Presentation Notes
China is emerging as an important testing ground for ocean energy due to its 32,000 km of coast line, 11,000 km of which are rich with ocean energy potential and are currently seen as an ideal location to pioneer and commercialise ocean-energy technologies.
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Hydropower
Hydropower makes up more than 20% of power production
China has the potential to nearly double its current hydropower capacity to 540 GW by 2050 (currently 320 GW)
Expansion
Presenter
Presentation Notes
Hydropower is China’s second-largest energy source after coal and more than 80,000 dams are located throughout the country. If China exploited its remaining hydropower sources, it could meet a fifth of its peak energy demand and displace about 1.3 billion tons of coal. Foreign involvement in this sector is becoming increasingly prevalent.
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Biomass
The 2006 Renewable Energy Law resulted in the construction of 260 biomass plants by 2014
Technical expertise and systems management are at infancy stages
Agricultural waste and municipal waste
Presenter
Presentation Notes
Biomass’s development in China is focussed on the Jiangsu, Jilin, Henan and Shandong areas owing to a combination of those regions having a relatively plentiful supply of feedstocks. Foreign participation in this sector may be very limited outside of joint ventures with Chinese parties as typically the technology behind the production of biomass is copied and reproduced with cheaper costs than the original provider making competing with local firms difficult.
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Landfill Gas
Municipal solid waste (MSW) is disposed of using traditional landfill methods that do not consider the recovery of methane gas
Methane capture
Presenter
Presentation Notes
China has environmental regulations in place to help deal with the management of landfills and to encourage the utilisation of LFG. It has only been in recent years that doors have begun to open for private-public partnership in the landfill gas sector. This breakthrough has been a result of a massive effort from multi-national energy companies in explaining the advantages of the PPP (private-public-partnership) model and importing better technology.
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Sewage Treatment Plant Gas and Biogas
Sludge production in China experienced annual growth of 13% from 2007-2013
Microbial electrolysis cell and microbial fuel cells are both new hot topics in sludge treatment
Anaerobic digestion and sewage sludge
Presenter
Presentation Notes
China’s investment in renewable waste treatment processes is being viewed as a positive move in the right direction for developing countries. Total sludge production in China has had an average annual growth of 13% from 2007-2013 with 6.25 million tons of dry bio solids being produced in 2013.
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Carbon Capture, Storage Technologies and Carbon Services
China invested more than RMB 3 billion into CCS R&D and established nine pilot projects
CCUS research team established with international assistance
Pilot projects
Presenter
Presentation Notes
Since 2008 the Chinese government has invested more than RMB 3 billion into CCS R&D and nine pilot projects have been implemented with several large-scale demonstrations in action. Opportunities are arising for foreign investors who can work with local power companies and institutions.
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Energy Efficiency and Conservation
China’s energy efficiency has improved by 70% in comparison to the 1980’s
Innovation in power plant efficiency is needed in the chemical, steel, and automobile manufacturing sectors
Meeting carbon intensity targets
Presenter
Presentation Notes
The Central Government has highlighted energy efficiency and conservation as one of its highest priorities in order to meet new carbon intensity targets. Overseas capital to develop highly efficient and low emissions coal power generation and enforcing emissions taxes and pricing policies is playing a key role in developing this sector. Industry experts believe that opportunities are developing fast throughout China, especially in tier 1, tier 2, and tier 3 cities.
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Electric Vehicles
12th Five-Year Plan outlines NEV’s as one of the seven Strategic Emerging Industries (SEI)
Accelerating NEV commercialisation through policy reform
New energy vehicles (NEV)
Presenter
Presentation Notes
2014 saw China’s NEV industry become the world’s 2nd largest in terms of production and sales volume, which accounted for around 25% of global levels. The industry is predicted to grow into the world’s largest by 2015.
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Biofuel Technology
2016 fuel ethanol production is forecasted at 3.1 billion litres up 2.6% from 2015
Government target of producing 300 million tons of cellulosic and non-grain based ethanol by 2020
Bio ethanol and bio diesel
Presenter
Presentation Notes
China has been focusing on the development of "first generation" biofuels, bio ethanol and bio diesel, which are derived from cereal and grains, such as wheat, corn, and soybean. Investments in the research and development of cellulose processing through enzymes, the commercial application of this process is still sometime away. As a result, many domestic companies have entered into partnerships with American and European technology firms to produce cellulosic ethanol.
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Cogeneration
CHP will reach 400 GW by 2020
Installed cogeneration capacity increased from 69.81 million KW (2005) to 283.26 million KW (2014)
Combined heat and power (CHP)
Presenter
Presentation Notes
Installed capacity of cogeneration has grown from 69.81 million KW in 2005 to 283.26 million KW by the end of 2014, which accounted for 29.12% of total thermal power capacity at the time. Forming a strong relationship with the major Chinese power generation companies is critical for new market entrants.
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Soil Prevention
19.4% of arable land is contaminated with heavy metals
12th Five-Year Plan designated US$ 4.8 billion to address soil pollution
Heavy metal pollution of agricultural land
Presenter
Presentation Notes
The government has reacted in a number of ways to soil pollution issues, in the 12th Five-Year Plan US$ 4.8 billion was set aside to assist in addressing soil pollution.
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Foreign Investment Catalogue
Lists industries into three categories – encouraged, restricted and prohibited
