Green technology
Over the past two decades, China has become the global leader in manufacturing green technologies. It occupies dominant positions in the supply chains for solar, wind, batteries, and new energy vehicles. As the largest investor in related manufacturing capacity, China accounted for three-quarters of investment in clean technology production in 2023.
In the eyes of Chinese policymakers, green technologies serve the twin purposes of stimulating economic growth and facilitating the country’s decarbonization. Products such as solar panels and batteries drive growth in exports, and China is investing heavily in its own renewable energy capacity.
Estimates suggest China will account for almost 60 percent of new renewable capacity installed globally between 2023-2028.
Robust market competition and state support have bolstered China’s green tech industries. Private firms such as LONGi, Mingyang, CATL and BYD demonstrate the important role of entrepreneurs in the sector’s success. However, the Chinese government has also provided significant financial support and a home market advantage to local players.
Foreign countries benefit from cheap imports of green technologies, but China's dominance also poses strategic risks. Overdependencies increase the likelihood of China exerting economic coercion and the potential for costly supply chain disruptions. Competition from China also undermines Europe’s industrial ambitions in green technologies.
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Chinese venture capital investments in green tech grow, driven by electric vehicle sector
The growth of venture capital activity in green technologies is largely driven by investments in the electric vehicle or battery sectors. Most green technologies are capital-intensive, and therefore have traditionally been less of a focus for venture capitalists.
Electric vehicle (EV) and battery projects are now the main source of Chinese investment in Europe
Investment from China to Europe is now dominated by green tech sectors. While the flow of investments to EU-27 countries and the United Kingdom has declined substantially since 2016, battery and electric vehicle projects account for virtually all new major investments. Hungary is a key beneficiary, capturing 44 percent of all Chinese FDI.
Green technology in China: Timeline of crucial events
Development
Policy/regulation
China Society of Automotive Engineers releases the Energy Saving and NEV Tech Roadmap 2.0, aiming for new energy vehicles (NEVs) to comprise 50 percent of new car sales by 2035.
China implements a nationwide carbon trading market, starting with the power sector. Initially covering 4.5 billion tons of CO2, it is now the biggest carbon market worldwide.
China’s renewable energy capacity exceeds 1,000 gigawatts – an energy transition milestone. Renewables make up 44.8 percent of capacity, with hydropower the largest at 37 percent of all renewables.
The NDRC releases the 14th Five Year Plan for renewable energy. Renewables will make up at least half of electricity generation capacity added in 2021-2025. The plan aims to double solar and wind.
Sinopec completes China's largest green hydrogen plant in Kuqa, Xinjiang, using photovoltaic power. It will reduce CO2 emissions by 485,000 tons annually by replacing hydrogen from natural gas.
China’s largest electric vehicle maker BYD says it will build a car factory in Szeged, Hungary. Its first in Europe, the plant is expected to create thousands of local jobs.
Wind and solar energy capacity surpasses coal for the first time. Non-fossil sources now make up over half of total capacity. But coal still comprised 60 percent of power generated in 2023.
Firms led by state-owned China Energy Investment Corp. Ltd create a CNY 10 billion (EUR 1.3 billion) fund for new energy technologies &projects, encompassing solar, wind &hydrogen-based technologies.
Xi Jinping says China aims to reach peak carbon emissions by 2030 & carbon neutrality by 2060. The 2060 target is ten years later than the G7, EU, South Korea & Brazil and 10 years earlier than India.
The National Development and Reform Commission (NDRC) releases a strategy to develop the hydrogen sector by 2035, focusing on the transport, energy storage, power and industrial sectors.
The government extends its 2014 tax exemption policy to promote EVs. EV sales are exempt from the vehicle purchase tax until the end of 2025, and must only pay half until the end of 2027.
Ningbo Shanshan, the world's largest supplier of electric car battery materials says it will build a new plant in Finland. The plant will serve Western and Central Europe.
People’s Daily reports: In 2023 Chinese shipbuilders received over half of all global orders for low carbon &pollution ships. An official says China will pursue policies to support green shipbuilding.
The Ministry of Industry and Information Technology issues draft rules that raise the capital ratio for solar PV manufacturing projects and need plants to operate at least 50% of annual capacity.
Recent developments
Tech progress
- Trina Green Hydrogen (天合元氫) began constructing a 1 GW electrolyzer production line inside the Yangzhou Comprehensive Bonded Zone. As a major player in solar PV manufacturing, Trina plans to combine its electrolyzer and solar module products to offer energy storage and green hydrogen solutions. (Source CN: 21Jingji)
- Researchers from North China Electric Power University, the Ecole Polytechnique Fédérale de Lausanne (EPFL) and others have successfully improved the thermal stability of perovskite materials, significantly enhancing the lifespan of perovskite solar cells, with their findings published in Science on November 1. (Source CN: S&T Daily)
- China overtook Denmark as the world leader in wind turbine patents in 2023. Chinese firms are looking to expand their 60 percent global market share as the US and Europe move to protect their industries. (Source EN: Nikkei Asia)
Domestic dynamics
- China’s State Council released an energy transition white paper, detailing accomplishments over the past decade and goals for the next five-year period (2026-2030). Completed goals include increasing the share of non-fossil fuels in total energy consumption by about one percent annually over the past decade to reach 26.4 percent by 2023. (Source CN: 21Jingji)
- China has surpassed 10 million total EV charging points, a milestone that signifies its early and continual state-led development of the EV industry. Europe has just under 750k public charging points as of 2024, compared to China’s 3.2 million. (Sources CN: 36 Kr, CN: gridX)
- The city of Hefei is on track to produce over 1.3 million new energy vehicles (NEVs) this year, meaning it would overtake Shanghai and Xi’an to claim second spot among China’s EV production hubs, only behind Shenzhen. Companies such as JAC, BYD, Nio and Volkswagen produce NEVs in Hefei. (Source CN: Sohu)
- Construction began on China's largest offshore photovoltaic power station to date. The 2 GW offshore power station is being built by China National Nuclear Power in Jiangsu Province. (Source CN: S&T Daily)
- China’s Ministry of Industry and Information Technology (MIIT) released draft rules raising, the minimum capital ratio for solar PV manufacturing projects. The measures aim to limit new investments in the government-backed sector, as it faces overcapacity. (Source CN: MIIT)
- In July, both Jinko Solar and Trina Solar terminated plans to raise money for capacity expansion. Heavy investment in the sector has led to a stark reduction in prices for solar modules and eroded profit margins. (Source CN: Xinhua)
Foreign involvement
- The EU's Hydrogen Bank will run its second renewable hydrogen auction on December 3 to provide up to EUR 1.2 billion (USD 1.34 billion) in grants to new projects. In updated rules, projects are limited to no more than 25 percent of production capacity generated from Chinese parts. (Source EN: Reuters)
- The US Commerce Department seeks to ban Chinese software and hardware components for connected vehicles sold to the US, citing national security risks. The first round of restrictions targets data communications and autonomous driving components. (Source EN: Nikkei Asia)
- Swedish battery maker Northvolt is reportedly in talks with China’s CATL about possible partnerships, after filing for bankruptcy in November. The plight of the company poses a major setback for the EU’s hope of developing its own lithium-ion batteries. (Source EN: BNN Bloomberg)
- The Wolong Enapter joint venture released China's first MW scale anion exchange membrane (AEM) electrolyzer, the AEM Nexus 1000. Electrolyzers are needed to create hydrogen from renewable energy. AEM electrolyzers offer an alternative to the more mainstream alkaline and proton-exchange-membrane (PEM) electrolyzers, with advantages in terms of efficiency and cost (Source CN: Beijijxing, DE: Enapter)
- Chinese EV manufacturers are expanding into African and Middle Eastern markets. The emerging "Nezha Automobile (NETA)" entered Kenya, and Xpeng Motors launched new cars in Egypt. (Source CN: 36kr)
- Jinko Power Technology announced plans to sell its Antequera solar farm project in Spain. The firm will sell the 175 MW solar project to a Hong Kong-based subsidiary of Chinese hydropower titan China Huadian, a state-owned company. (Source CN: 36kr)
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