China already far outstrips the US in terms of its investments in renewable energy, and is now stepping up investments in a bid to dominate in the global renewables boom
On January 5, the Institute for Energy Economics and Financial Analysis released a report forecasting that China’s global leadership in renewables will widen in the future, due to expansions in Chinese investment, as well as the upcoming change in US leadership.
China currently represents well over a third of global investments in renewables, investing $103bn in 2015 alone. Its funding of renewables dwarfs that of the US, with domestic investment amounting to two and a half times that of the US in 2015, according to Bloomberg New Energy Finance.
China is set to strengthen its current position further by turning its sights overseas with a ‘going global’ strategy, as well as its ‘One Belt, One Road’ programme, which focuses on developing Chinese presence in Eurasia. Furthermore, China is looking to expand renewables investment in Africa, Europe, the Middle East and South America. As part of this global expansion, Chinese firms have stepped up the value of their international investments. The number of foreign investment deals that exceed $1bn rose by 60 percent from 2015 to 2016, with a total investment of $32bn over the course of the last year.
This wave of investments will ensure that China makes up a large share of global renewable capacity growth. According to the IEA World Energy Outlook 2016, from 2015 to 2021, Chinese capacity growth is forecast to climb to 36 percent, 40 percent and 36 percent of the global total in hydro, wind and solar power respectively.
As the US owned the advent of the oil age, so China is shaping up to be unrivalled in clean power leadership today
“Going forward, this China presence can be expected to increase as the second-largest economy in the world sees strategic advantage in becoming the global leader in renewable energy”, said the report.
This ambitious strategy comes at a time when the US is actively turning away from climate commitments, with President-elect Donald Trump having pledged to pull out of the Paris Agreement. It thus marks a key divergence in the approach of the world’s two largest economies, especially given that Trump has made it clear that he sees climate measures as a drain on productivity. China, on the other hand, “sees a huge opportunity in extending its domestic renewable energy build-up overseas with ambitions of making the country the global leader in the new energy technology”, according to the report.
“As the US owned the advent of the oil age, so China is shaping up to be unrivalled in clean power leadership today”, said Tim Buckley, Director of Energy Finance Studies for the Institute for Energy Economics and Financial Analysis, according to the Financial Times.