While China announces its carbon-neutrality by 2060, Chinese Investment Association tends to activate and encourage long-term value investors to focus on zero-carbon development and invest in zero-carbon assets, projects, and technologies.
China’s claim for carbon-neutrality goal by 2060 can let some investors skeptical, but analysts are taking it very seriously as it would have substantial consequences in the high-emitting industries of steel and aluminum production and for investors in China in general.
“Due to decarbonization measures, China’s aluminum supply growth is expected to be slower than demand growth in the medium term”Analysts Morgan Stanley.
This announcement of decarbonizing the Chinese economy goes together with a report released by the RMI China and the Investment Association of China, entitled “Zero-Carbon Investing: Opportunities from China’s Carbon-Neutrality Goal” encouraging for investments in the country.
Impossible to identify if the release is a pure coincidence but this report aims at identifying seven key investment areas for China’s zero-carbon transition: resource recycling, energy efficiency, demand-side electrification, zero-carbon power generation, energy storage, hydrogen, and digitalization.
According to this report, the market size of these seven areas will reach nearly 15 trillion yuan (¥) (US$2.32 trillion) by 2050.
“Zero-carbon China will be the new direction of long-term value investment, thanks to the global trend of zero-carbon development and transition, as well as the Chinese government’s increasingly clear strategic goal of zero carbon. These seven areas will also contribute 80% of China’s total emissions reductions by 2050. Meanwhile, from 2020 to 2050, there will be about ¥70 trillion (US$10.8 trillion) in infrastructure investment leveraged directly or indirectly, and numerous new job opportunities to be created.”Chen Ji, principal at RMI and one of the key authors of the report
These zero-carbon technologies are currently at different phases in terms of market expectations and industrial maturity. They therefore face different challenges and opportunities, which require different policy and market enablers to become more bankable.
“To achieve China’s carbon-peaking and carbon-neutrality targets, the zero-carbon economy will be a high priority for investment in the next four decades.”Jie Zhang, vice president and secretary general of the Energy Investment Professional Committee of Investment Association of China (IAC)
Considering that zero-carbon China is still at an early stage of development, the market is expecting more related policies and measures in the seven investment areas along with continuous improvement in the investment environment, also proposed in the report.
The RMI report can be downloaded on the RMI website here
Article: Joana Foglia – Source : Morgan Stanley, RIM