the china greentech report tm 2009 overview of key findings september 2009

The China Greentech ReportTM 2009

Overview of Key Findings

September 2009

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The China Greentech Report 2009

The China Greentech ReportTM 2009 is the culmination of an open source, commercial collaboration of leading organizations

The China Greentech Initiative:

Includes over 80 of the world’s leading technology companies, entrepreneurs, investors, NGOs and policy advisors

Represents cross section of global community (1/3rd China, 1/3rd North America, 1/3rd rest of world)

Participants provided time, expertise, introductions, resources and funding

Open and Collaborative Research Process:

Hundreds of people in China and around the world over a nine month period

Input from Initiative’s partners and advisors combined with dedicated strategic research team

Collected and consolidated data from wide range of Chinese and English sources

Conducted interviews with partners, strategic advisors and other industry experts

Facilitated 21 in-person working sessions (3 per sector) to frame and prioritize issues, test preliminary insights and validate findings

2

Background

Introduction



The report addresses important questions facing participants in China’s complex and rapidly-changing greentech markets

How should one frame and define the greentech opportunities that exist in China?

What are the most important environmental issues impacting China and what are the forces driving them?

How are China’s government and the international regulatory community responding to these issues?

Which existing and emerging greentech solutions are most attractive for China in the short, medium and long terms?

What are the biggest challenges facing China’s greentech markets?

How might stakeholders overcome these challenges in order to accelerate China’s greentech market development?

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Key Questions

Introduction



The findings are largely optimistic, tempered by the complexity of China’s markets and the challenges remaining to be overcome

1. Tremendous Greentech Market Potential Exists

With hundreds of solutions across multiple sectors, the total potential addressable China greentech market could be as large as US$1 trillion annually

2. First Signs of Green Transformation Appearing

China is already laying the foundation for greentech market growth, with first signs of a green transformation already appearing

3. Government Policies Enabling Market

China’s government is implementing policies that positively impact the environment and enable greentech markets

4. Challenges Remain to Be Overcome

While markets are generally attractive, market, technology, financing and regulatory challenges remain to be overcome

5. Clear Opportunities Exist to Accelerate Markets

Clear opportunities exist for stakeholders to accelerate greentech markets and create an environmentally sustainable China

4

Key Findings – The China Greentech Report 2009

Key findings

Source: The China Greentech Report 2009



With hundreds of solutions across multiple sectors, the potential addressable China greentech market could be US$1 trillion annually

Greentech Definition

Technologies, products and services that deliver benefits to users of equal or greater value than those of conventional alternatives, while limiting the impact on the natural environment and maximizing the efficient and sustainable use of energy, water and other resources

Hundreds of Solutions across Multiple Sectors

China’s greentech markets include a broad range of sectors, segments and solutions:– Report focused on seven distinct sectors: Cleaner Conventional Energy,

Renewable Energy, Electric Power Infrastructure, Green Building, Cleaner Transportation, Cleaner Industry and Clean Water

– Identified 300+ greentech solutions available now or soon in China– Evaluated 125 solutions with highest environmental impact and commercial

value

Growth and Environment Driven

Greentech markets driven by China’s continued economic growth and the accompanying environmental pressures

Tremendous Market Potential

Total potential addressable market for greentech solutions in China could be US$500 billion to US$1 trillion annually, comparable to approximately 15% of China’s forecasted GDP in 2013

5

China Greentech Market Potential

#1

Key findings – 1. market potential




China’s greentech markets are driven by continued economic development and the resulting environmental pressures

Economic Growth – Three decades of formidable economic growth have transformed China into a colossal and resilient economy:

– 10% annual growth has created 3rd largest economy and 2nd largest consumer of energy in world– Improved living standards, massive urbanization and emerging consumer market– Resilient economy with world’s largest foreign reserves, 2nd largest stimulus plan and continued growth– Colossal scale in terms of population, infrastructure and energy requirements

Environmental Costs – Yet China’s economic growth has come at significant environmental costs:

– Polluted air (largest emitter of greenhouse gases and significant particulate matter)– Strained water resources (limited fresh water resources, high demand, inefficient use and pollution)– Land degradation (desertification and land contamination)

Vision for Sustainable China – China’s economic development will become environmentally sustainable out of necessity

Greentech Environmental Benefits – Greentech solutions hold the potential to greatly mitigate the impact of economic activities on the environment

6

Driven by Economic and Environmental Pressures

Key findings – 1. market potential – economic and environmental pressures




The first signs of a green transformation are appearing in China, with a number of greentech segments experiencing rapid growth

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First Signs of China’s Green Transformation

Key findings – 2. green transformation – emerging leader


#2

Renewable Energy

Wind capacity grown at nearly 100% annual rate for the past four years Domestic Solar Photovoltaic market growth has accelerated, reaching 50% in 2008 China is worldwide leader in adoption of Solar Water Heaters, with 1 in 10

households using one

Road Transportation

Electric Two Wheelers represent the greatest adoption of battery technology in transportation worldwide

New Energy Vehicles (such as Electric Vehicles and Hybrids) have been announced by a number of auto manufacturing companies as a key focus for future development

Internal Combustion Engines are becoming more fuel efficient and less polluting

EnergyEfficiency

Energy intensity of GDP has been continuously declining for decades Green buildings and sustainable communities are being introduced Energy efficiency of home and office appliances is increasing



China is rapidly ramping up its power generating capacity from renewable sources, and has established ambitious targets

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Source: 1. Pullen, Angelika et al., Global Wind 2008 Report (Brussels, Belgium: Global Wind Energy Council, 2009), 252. Li, Junfeng et al., China Wind Power Report (Beijing, China: China Environmental Science Press, 2007), 15 3. Renewable Energy World, “China’s New Focus on Solar,” May 22, 2009, http://www.renewableenergyworld.com/ 4. National Development and Reform Commission, Medium and Long Term Development Plan for Renewable Energy in China (Beijing, China: NDRC, September 2007); CGTI analysis

China Wind Capacity1, Gigawatts

12.2

5.92.61.30.80.60.5

2008200720062005200420032002

China Solar Photovoltaic Capacity2,3, Megawatts

150

100807065

4519

2008200720062005200420022000

Source4 2005 Actual

2010 Target

2020 Target

Energy from renewable sources

7% 10% 20%

Hydro power 117 GW 190 GW 300 GW

Wind power 1.3 GW 10 GW 100 GW

Solar PV 0.07 GW 0.3 GW 20 GW

Solar water heating capacity

80 million m2

150 million m2

300 million m2

Biomass power(agriculture/forestry)

2 GW 5.5 GW 30 GW

Bioethanol1

million tons3

million tons10

million tons

Biodiesel0.05

million tons0.2

million tons2

million tons

Key findings – 2. green transformation – emerging leader

#2



China’s government has established policies which positively impact the environment and enable greentech markets

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Government Policies Enabling Greentech Markets

Key findings – 3. government policies

#3


China’s Supportive Government

Guided by policy principles, China’s government is establishing plans and programs, laws and standards, fiscal incentives and subsidies, industrial promotion and price management policies supporting greentech markets

International Policy Environment Influence

International policy organizations, principles, agreements and relationships are promoting the development of China’s greentech markets



The Initiative identified 12 overall market, technology, financing and regulatory challenges which remain to be overcome

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Challenges Remain to Be Overcome

Key findings – 4. challenges remain


#4

Category Market Development Challenges

Market Inadequate awareness about greentech solutions Underdeveloped value chains Highly-concentrated markets

Technology More expensive than conventional alternatives Lacks adaptation to China’s specific market requirements Intellectual property and technology transfer issues

Financing Fewer financing options Financing practices lack synergy with greentech requirements

Regulatory

Complex regulatory environment Developing policy incentives Uneven compliance with existing policies Limited policy visibility



The Initiative identified five overall opportunities to accelerate China’s greentech market development…

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Overall Opportunities to Accelerate China’s Greentech Markets

Key findings – 5. clear opportunities – overall


#5

Overall Opportunities Description

Raise Decision-Maker Awareness

Help decision makers understand the benefits, costs and risks of green technologies

Drive the Maturity of Standards-Based Technologies

Support evolution of standards-based technologies to enable widespread adoption

Support Fair Market Playing Fields

Include costs into regulatory and market frameworks which properly value impacts of pollution and resource use

Enhance Capabilities Build greentech skills necessary to design, develop, market, finance,

implement, monitor and regulate greentech solutions

Promote Collaboration Strengthen collaboration between public and private sectors and

throughout value chains, at all stages of greentech solution life cycles



… and clear complementary opportunities exist for each stakeholder to accelerate greentech markets in China

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Clear Opportunities Exist to Accelerate Greentech Markets

Key findings – 5. clear opportunities – stakeholders


#5

Stakeholders Key Opportunities

SolutionAdopters

Promote sustainability Buy green Improve compliance

SolutionProviders

Match solutions to local market requirements Educate adopters to greentech benefits Minimize life cycle costs of end-products Leverage partners

Financial Investors

Enhance capabilities Utilize new financing mechanisms Participate in environmental asset markets

GovernmentRegulators

Refine policies Optimize standards Enforce compliance Liberalize markets

OtherStakeholders

Drive greentech training Engage other stakeholders Sponsor research Monitor compliance



China’s greentech opportunities are tremendous – while challenges remain, clear steps exist to accelerate greentech markets

Tremendous greentech market potential exists for hundreds of solutions across multiple sectors, driven by China’s continued economic growth and environmental challenges

The first signs of a green transformation are appearing, as China is already laying the foundation for greentech market growth

China’s government is implementing policies that positively impact the environment and enable greentech markets

While China’s greentech markets are generally attractive, market, technology, financing and regulatory challenges remain to be overcome

Clear opportunities exist for stakeholders to accelerate greentech markets and create an environmentally sustainable China

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Summary – The China Greentech Report 2009

Conclusion



This report is a starting point for defining and framing China’s greentech market issues and opportunities

Full version of the report to be released by October

Join the CollaborativeDiscussion on theChina Greentech website

Provide Feedback

Executive Overview of report released today Detailed analyses of seven greentech sectors will be released over

next few weeks

Readers of The China Greentech Report 2009 are invited to join the interactive conversation by visiting www.china-greentech.com:

– Download electronic copies of the Executive Overview, full report and individual sector chapters

– Order printed versions of the report– Access additional content developed by the Initiative– Participate in interactive discussion forums to create, uncover and promote

greentech solutions for an environmentally sustainable China and world

Suggestions for evolving the content in the report are welcome at [email protected]

…

14

Path Forward – The China Greentech Initiative

Path forward

the china greentech report tm 2009 overview of key findings september 2009

Documents

china greentech reporttm

greentech marketshow

greentech opportunities

chinas greentech markets

emerging greentech solutions

united states license

key findings source

chinas complex