Greentech 'could reach 15 percent of GDP'

By Zhu Chengpei and Zhang Xiaomin (China Daily)
Updated: 2009-09-11 10:58

China's market for green technology solutions could reach $1 trillion annually, about 15 percent of its forecast GDP in 2013, according to a report released yesterday at the Summer Davos forum in Dalian.

"That sounds like a very big number," said Richard Gledhill, global leader on climate change and carbon market services for consultancy PricewaterhouseCoopers, while on the sidelines of the ongoing annual meeting.

"But if you put it into context - in the investment required to transit to a lower carbon economy - I think it's a very credible number," he said.

Special coverage:
Summer Davos 2009

The China Greentech Report 2009 jointly released by the China Greentech Initiative, the American Chamber of Commerce in Shanghai and PricewaterhouseCoopers outlines both potential barriers and solutions in China's market for green technology.

"It will help encourage foreign investors to participate in the green industry in China," said Gledhill.

Gledhill noted a 2-degree C target in temperature reduction proposed by leaders at the G8 summit in July this year.

"That is an ambitious target," he said.

"The International Energy Agency predicts that we will have to spend an additional $9 trillion over the next 20 years to deliver a stabilization scenario of two degrees Celsius," he added.

Gledhill said much of the investment will go into green technology.

"Climate change brings a range of new risks and challenges for business, but it is also creating huge opportunities, particularly in the greentech sectors," he said.

The cost to develop green technology will be high, he said, but economies of scale can drive down the cost.

According to Gledhill, it requires time to expand the market with improved technology and enough production facilities.

"Scale will only come when markets develop," he said.

"One of the things that may help is to have a policy and regulatory framework that will encourage accelerated deployment of technologies. With that acceleration, you'll find the cost will come down," he said.

Yet China's National Development and Reform Commission, the nation's top economic planner, recently warned industry to avoid overcapacity in alternative energy. Gledhill said at the moment there is clearly overcapacity in the wind turbine sector.

"However, if you look at the potential demand for wind power, I think we will need that capacity," he said.

Gledhill said continuing investment will be needed to meet long-term demand for wind power.

It's a short-term oversupply," he said.

He believes concern about overcapacity is partly due to the global recession and uncertainty in climate change policy.

He said expects the UN climate summit in Copenhagen this December will bring out more and more investment in green technology sectors.