Why China’s big plan to cut emissions is good for tech business

What China does to curb its emissions is good both for the environment and for tech companies looking for a large market. So it’s worth paying attention to a report released Monday that argues that the world’s largest polluter could double its renewable energy use between 2010 and 2030 by investing $145 billion annually.

The report, by the International Renewable Energy Agency, said China could do more to boost renewable energy generation for electricity, transportation, industrial production and other areas so that clean energy can account for 26 percent of its energy use by 2030, up from 13 percent in 2010.

Without more investments, the current policy in place will likely increase that share to 17 percent by 2030, said the energy agency, which promotes renewable energy development and counts the world’s biggest producers of greenhouse gas emissions — China, U.S., India, the European Union — and over 100 countries as its members.

china wind farm wind turbines

The report, which the energy agency produced with help from the China National Renewable Energy Centre, offers a snapshot of China’s ambition to cut emissions and boost renewable energy use, which will help to continue to fuel its economic growth, including the growth of its own solar equipment, advanced batteries and electric car manufacturing industries. China became world’s largest solar energy market in 2013 by installing more solar panels (over 12 gigawatts) than any other country.

China’s plan to reduce emissions will also create market opportunities for tech developers abroad. Tesla Motors started selling its Model S this year and is considering making its cars in China. U.S. solar panel makers and project developers, such as SunEdison and SunPower, recently entered China through joint ventures to make solar panels and develop power generation projects.

Chinese companies also have been snapping up U.S. tech startups in recent years because they are betting that carbon reduction policies at home and in other countries will create large, new markets. Several high-profile U.S. lithium-ion battery startups have been bought or gotten significant investment from Chinese companies, such as A123 Systems Boston-Power. A123, which was sold to Wanxiang Group, bought Leyden Energy, a California lithium-ion battery startup backed by NEA and Lightspeed Ventures, earlier this year. China’s Hanergy bought two Silicon Valley thin film solar startups — MiaSole, whose investors included Kleiner Perkins, and Alta Devices.

Tesla first delivers in HK

The new report by the energy agency comes less than two weeks after China and the U.S., the world’s two largest polluters, announced a historic agreement to cut emissions. That agreement calls for the U.S. to reduce emissions by up to 28 percent by 2025, compared to 2005. China pledged to cap its emissions by 2030 by increasing the use of renewable energy to account for 20 percent of the total by 2030. These two largest polluters in the world had been unwilling to make strong and formal commitments to cut emissions through the Kyoto Protocol (never signed by the U.S.).

The energy agency’s report said China could do better and increase that renewable energy mix to 26 percent by 2030. The country is capable of adding even more solar and wind farms and improving its electric grid to achieve that higher goal, the report said. Much of the solar energy development is happening in large-scale projects, and the report noted that China should promote rooftop installation in homes and businesses. Its industrial operations use about 62 percent of all sorts of energy produced but rely very little on the renewable kind.

It’s no guaranteed, of course, that China will achieve its carbon emission goal. But tying that goal with technology and economic development creates better motivation than to characterize the plan as simply good for the environment. And China, unlike the U.S., has a top-down political system that can carry out big national mandates because its policies aren’t influenced by dueling political parties and the priorities of whomever controls the legislative and executive branches of the government.

Images courtesy of Flickr / Mike Locke and Tesla