China takes lead in so­lar sup­port

China Daily European Weekly - - Business - By CECILY LIU in Lon­don [email protected]­nadai­

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.

Un­prece­dented growth

The coun­try has also led green fi­nance reg­u­la­tory ad­vance­ment over­seas. In 2016, it used its pres­i­dency of the G20 Global Lead­ers

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