by Rizel Delano

Keeping it clean

China continues to lead global clean energy technology markets

China is a front runner in clean technology and energy efficiency projects
china flag.jpg

The impact of climate change is evident around the globe, with the main cause being the large-scale burning of fossil fuels and the subsequent release of CO2 into the atmosphere. 

However, a renewable energy future is achievable with energy efficiency and renewable energy minimising emissions drastically. Worldwide, countries and companies continuously invest in the research and development of more efficient renewable and economical solutions that can meet the global energy demand without destroying the planet.

In the last two years alone the global clean technology (cleantech) sector has made major leaps towards a low-carbon future and is seen as a way to drive economic growth. 

Clean technology is creating products and uses with a smaller environmental footprint and includes recycling, renewable energy, information technology, green transportation and green chemistry. Cleantech improves operational performance, productivity and efficiency while reducing costs, inputs, energy consumption, waste and environmental pollution.

To realise its vision of a 100% renewable energy future and to preserve ecosystems and wildlife, the World Wide Fund for Nature (WWF) advocates the rapid deployment of cleantech. In the 2009 report for WWF, Roland Berger Strategy Consultants ranked countries by their economic value for manufacturing cleantech products, and formulated recommendations to advance the sector’s growth. 

A recent follow-up report highlights the increase in cleantech sales worldwide and the progress of countries within the ranking. 

Lessons drawn from the top-performing countries in this new report confirm and underscore the recommendations from the 2009 report. 

Wind, solar PV and solar thermal are global market leaders and China’s main segments. The third edition of Clean Economy, Living Planet ranked 25 countries based on the 2011 sales of the cleantech products they manufacture. It found that in terms of total sales value in these segments, China had the largest market followed by the US and Germany. 

Chinese market shares in wind and solar PV are each at 33% of the global market, and China holds 75% of the global market in solar thermal. Within these segments, China is growing faster than the global market and will gain even more market share in future.

Emerging countries can learn from companies and countries that are performing well. Lessons taken from their successes closely resemble the recommendations from the first report:

Firstly, a country must develop a coherent and integrated industrial policy, setting targets on the future fuel mix, developing a domestic market, investing in supportive infrastructure and research and development in line with the country’s strengths.

“The countries that are capturing global markets have all realised that cleantech is an important part of their energy-, economic- and industrial policies that generate green investments. They incentivised the right areas and now reaping the rewards,” said WWF global climate and energy policy leader Samantha Smith.

Secondly, a country must provide access to capital. Companies need capital to develop new and better products and to set up and expand their businesses. 

In China, South Korea and the US, cleantech companies have easier access to equity funding at lower interest rates. 

Regional governments in China invest in cleantech companies under favourable terms, often granting land use at low costs in an effort to increase regional GDP.

Fortunately, there is no shortage of funding for sustainable initiatives proposed by those able to make the changes in South Africa. According to Ndivhuho Raphulu, Director of the National Cleaner Production Centre South Africa, apart from the R5.4-billion available for manufacturers via the Manufacturing Competitiveness

Enhancement Programme (MECP) incentives scheme, the Industrial Development Corporation, Development Bank of South Africa and the private banking sector dispose of clean development finance to the value of R26-billion, R15.5-billion and over R100-billion respectively.

However, investing institutions should not pick winners among individual companies or technologies but identify the strategic, long-term solutions. Raphulu says it is true that the 12 companies awarded MECP funding so far, already had sustainable strategies in place. “But in all cases, there’s a significant impact on the bottom line.”

Lastly, countries must foster the presence of large companies in cleantech. Large companies are chiefly responsible for the increase in sales and are vital to grow the sector. Large cleantech companies also build strong networks of suppliers, offer smaller companies a key sales opportunity, enable the execution and co-ordination of research projects between companies, and incentivise the industry. 

The potential of South Africa to participate in global cleantech manufacturing growth is clear, based on the success of the country’s renewable energy procurement programme. “Not just in in terms of mobilising private finance, but also in achieving increasing levels of local content and decreasing costs,” says Climate Change Programme Manager Richard Worthington of WWF SA.

According to the Head of the Living Planet Unit at WWF, Saliem Fakir, although making progress in energy innovations, South Africa still faces the challenge of ensuring long-term visibility for wind and other renewables. He said that renewable energy played an important role in converging energy security, growth and development of South Africa’s local economy and climate change obligations, which are key drivers of a green economy.

When all countries implement these lessons learned, the reduction in CO2 emissions becomes an actual, profitable business case, and the growth of the cleantech sector is further reinforced.  

 

 

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