China takes lead in solar support
Benefits for rest of world seen from country’s strong backing of renewables
On a huge area of land 10 times bigger than New York’s Central Park, the world’s biggest solar farm is taking shape. When completed next year, the $4 billion (3.5 billion euros; £3.1 billion) Benban park in Egypt will generate 1.8 gigawatts of electricity and directly avoid 2 million metric tons of carbon dioxide emissions, which otherwise would have been created by alternative power-generation sources.
The 36-square-kilometer solar project is a flagship success story in the green finance industry, which has grown at a quicker pace in recent years as the threat of climate change has become more apparent.
But one key factor that has made this park not just an ecological showcase but also a financially profitable project is the global fall in the cost of producing solar energy — thanks to China’s financial support, which has allowed this renewable sector to achieve efficiencies of scale.
Harry Boyd-Carpenter, head of power and energy utilities at the European Bank for Reconstruction and Development, says: “The scale, the innovation and the brutal competition of China’s domestic solar market has driven prices down. This has allowed a country like Egypt to access cheap solar panels.”
China has become the new leader in renewable energy investment in recent years, anchoring clean energy industries with confidence, especially after the United States’ decision to withdraw from the Paris climate agreement.
Last year, China invested more than $44 billion in clean energy projects, a significant increase from the $32 billion in 2016. These investments have resulted in technological breakthroughs for a variety of renewable resources, including hydro, wind, solar and bioenergy.
The benefits are not restricted to China. The solar sector, for instance, realized a 70 percent reduction in production costs from 2010 to last year, making projects such as the Benban park financially viable.
“Chinese solar panel manufacturers have competed to drive down costs for the domestic market, and the rest of the world is getting benefits from this,” says Boyd-Carpenter.
The country’s commitment to sustainable investments has also made it a leader in green finance.
For example, in 2016, when China launched its green bond market, such bonds issued in the country reached a whopping 205.2 billion yuan ($29.5 billion), making it the world’s largest issuer of the bonds, and accounting for 40 percent of those issued globally.
This year, China became the first country to make it compulsory for all listed companies and bond issuers to disclose environmental, social and governance risks associated with their operations by 2020.
The country has also led green finance regulatory advancement overseas. In 2016, it used its presidency of the G20 Global Leaders