Cleantech

Cleantech Investing

China is in the middle of a tech boom and cleantech investors are poised to benefit. By 2020, the region will see the largest reduction in emissions and the greatest increase in renewable energy capacity in the world.

China is already a major region for cleantech investors, but it’s poised to become even bigger. Frost & Sullivan’s report “The Clean Tech Market Reaching Its Stride: 2014 to 2020” projects that China will become the world’s leader in cleantech by 2020.

Booming time for China and tech

In past decades, China was seen as lagging behind the United States in terms of technology. While Silicon Valley was developing Google (NASDAQ:GOOGL) and Apple (NASDAQ:APPL), China was still working to connect its massive population to the internet. However, this has changed, as prosperity in China has nurtured progress and innovation in its tech sector.
According to Wired, higher education in China has increased sevenfold since 2000, with 7 million individuals graduating from college this year. This increase in young educated individuals is creating an entrepreneurial culture that bodes well for the challenges of cleantechnology. Venture capitalists invested record breaking $15.5 billion into Chinese startups in 2014. Although this investment still lags behind the U.S. (which saw $48 billion in venture capital in 2014), it is enough to propel the Chinese tech sector forward.

China leading region for cleantech investors

Over the next five years, China will exhibit the greatest progress in the world in regards to the reduction of greenhouse gas emissions. By 2020, the country will have cut down on 40 to 45 percent emissions per unit GDP from 2005 levels. It will have added 245GW in renewable energy capacity. These statistics represent opportunities for cleantech investors who wish to make an impact on the Chinese market.

EU and USA are other top regions

China represents a much larger increase in renewable energy capacity and emission reductions than other regions across the globe. The EU comes in second, with an 111GW in additional renewable energy capacity. This region will also see 20 percent in emission cuts by 2020, with an 80 to 90 percent reduction in the building sector.
Meanwhile, the USA will see 32 percent emission cuts on 2005 levels by 2030 and an 80 percent emission reduction by 2050. The additional renewable energy capacity by 2020 will be 100GW.

Slowest regions for cleantech investors still offer opportunity

The Asia-Pacific region, South America and Africa will illustrate the least increase in renewable energy capacity in the next five years. Asia-Pacific will see an addition of 72GW, South America will see an increase of 48GW and Africa will come in last with 20GW of additional renewable energy capacity. However, despite these regions exhibiting relatively lower progress in the coming years, there are still positive opportunities for cleantech investors in this market. The iShares Global Clean Energy ETF (BMV:ICLN) may be an appealing option for investors intrigued by multiple cleantech regions. The ETF offers exposure to companies that produce energy from solar, wind and other renewable energy resources across the globe.
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This article was originally published on Technology Investing News on December 31, 2015.
Securities Disclosure: I, Morag McGreevey, hold no direct investment interest in any company mentioned in this article.

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