Cleantech Investments in China – Multiple perspectives on the trends, drivers and barriers

Abstract: Cleantech—technologies with a reduced environmental impact—has emerged as an important set of solutions for addressing pollution and its impacts in China. The goal of this study is to map out wherein Chinese actors with first-hand knowledge of cleantech investments think the largest domestic investment opportunities are found, understand the underlying reasons, and then evaluate how consistently the investment preferences reflect the country’s environmental problems, public discourse and policy. This is accomplished through a review of the Chinese cleantech discourse and semi-structured interviews with the mentioned actors. The study found pollution—in particular air pollution—to be the dominant area of concern among both the interviewees, throughout the public discourse and in the policy arena. This was largely reflected in the most preferred cleantech sub-sectors: energy efficiency, solar and wind energy, electric mobility, wastewater treatment, and energy storage. IoT (The Internet of Things), big data, IT and AI were found to be particularly important for delivering these solutions. However, some areas of major environmental concern, targeted by policy, indicated a disconnect, as they still evoked little interest for investments. These areas include solutions targeting water scarcity, solid waste, chemical exposure and the industrial sector broadly. Bio- and geothermal energy sources were also largely overlooked. The narrow focus on a few areas of cleantech is largely caused by the important directing role of policy in China, but also—as the mentioned disconnect indicates—by the investment culture, and the acuteness of the air pollution problem. Nonetheless, the study concludes that many opportunities remain largely overlooked, including several niche technologies, heat pumps, industrial symbiosis, and consulting-related services—besides the already mentioned areas of the disconnect, and bio- and geothermal energy sources. Further research is needed to explore not only the potential of these mentioned areas—in particular IoT, IT, big data and IoT—but of the complex matrix surrounding cleantech investments in China as a whole.