Profiting From China’s Green-Tech Movement

Money Morning investigates the green tech opportunities flowing from the problems in China.

Money isn’t the only thing flowing through China right now. Pollution has filled the streets, contaminated the rivers and clouded the skies.

Half of China’s population – 600 people to 700 million people – drinks water contaminated by human and animal waste. In fact, 1 billion tons of untreated sewage is dumped into the Yangtze River each year. And, according to a recent study conducted by the World Bank, air pollution causes more than 400,000 premature deaths every year.

With the health of its population fading and global opposition to carbon emissions rising, China has no choice but to address its pollution epidemic. And thanks to a blistering economy and a stockpile of cash reserves, throngs of investors are eager to help Beijing wash away its troubles.
According to a Cleantech Network report and industry insiders attending the clean energy forum in Beijing, water treatment and energy efficiency projects boast the greatest investment potential.
Both Guo and Liu agree that the greatest obstacle to solving the nation’s water crisis is economics.

Artificially low water prices, as well as lack of preferential policies from the central government, mean that it doesn’t make economic sense for companies to adopt costly technologies to improve water usage efficiency and re-utilize wasted water at the moment,” Guo told InterFax.
The second biggest environmental concern for China is the nation’s suffocating air pollution. So far, China has relied heavily on coal-fired power plants to power its rapid industrial expansion.

Between 2003 and 2006, worldwide coal consumption increased as much as it did in the 23 years prior. China was responsible for 90% of that increase. China used 2.5 billion tons of coal in 2006, more than the next three highest-consuming nations combined. The country is home to more than 2,000 coal-fired power plants, and a new one goes into operation every week.
The nation’s climate-change program has set a target of reducing greenhouse gas emissions by 950 million tons over the next two years. Last week, at the U.N. climate conference in Bali, Xie Zhenhua, vice chairman of the National Development and Reform Commission, said China’s investment in renewable energy would reach $20 billion this year.

“China is already the world’s factory,” Yang Ailun, climate change program manager at Greenpeace China, told Bloomberg News. “It could be and should be the manufacturing hub of clean technology for the world as well.”
China-based manufacturers of alternative energy technologies are already taking off in a big way. Companies specializing in alternative energy have seen their stock prices soar. Suntech Power Holdings Co. (STP) has seen its stock price skyrocket by 137% this year. Solarfun Power Holdings Co. (SOLF) has jumped 125%.

Vcs are already there. Large companies like GE are building desalination plants. Suntech’s technology was developed in Australia. More entrepreneurs are looking to China for growth in this area. For individual investors, ETFs can be a possibility. However, figuring out the right value at this time is tough. And there is always the need for people who can understand China and the green tech sector!


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