John Kuhns, CEO of China Hydroelectric Corp., is one of the
few successful foreign investors in the Chinese green energy
market. Kuhns started buying hydroelectric power-generating
equipment in China in 1986 and went on to develop several
projects there in the mid-1990s. Today, with 29 stations, China
Hydroelectric is the largest of the nations power
companies using environmentally friendly sub-50-megawatt
generators. "Hydropower is the cheapest way to make juice in
China, and it is also clean, so its future is very bright,"
says Kuhns, who also founded the first wind power company to go
public in the U.S.
With regulatory risks in Europe and the lack of a renewable
energy policy in the U.S., investors may want to follow in
Kuhnss footsteps. Asia and Oceania have seen the biggest
worldwide increase in investments in renewable energy projects
since 2008, largely as a result of activity in China, the World
Economic Forum says in its latest report on green investing.
China has the worlds biggest clean energy asset financing
market, with investments worth $29.8 billion, or 86 percent of
the countrys total clean energy financing. The U.S. is a
distant second with $11.2 billion, according to a recent report
by the Pew Charitable Trusts, a Philadelphia-based think
Besides hydropower, major green energy projects in China
include wind, solar photovoltaic and concentrated solar power.
"Investors are looking at TLC transparency, longevity
and certainty," says Mark Fulton, global head of climate change
investment research at Deutsche Banks DB Climate Change
Advisors. "China has a lot of ambitious goals."
Although breaking into the Chinese green energy market is
far from easy, it helps to take on a knowledgeable Chinese
partner, Kuhns says. The rewards are worth the effort. The
countrys hydropower capacity 200,000 megawatts
is the worlds biggest and could double within ten
years. By comparison, total U.S. hydropower capacity is about
95,000 megawatts, according to the U.S. Department of
Moreover, China accounted for some 80 percent of East
Asias total infrastructure spending between 2006 and
2010, according to Morgan Stanley; this provides enormous
opportunities for smart investment funds.
One of them, the Impact Funds Climate Change unit of
Paris-based Natixis Asset Management, invests in suppliers of
green-oriented railway systems to China and other emerging
markets; they include Ansaldo Energia, Bombardier and Siemens.
The fund was launched a year ago and has grown steadily, now
managing 134 million ($184 million), mainly from European
"Emerging countries are very strongly supporting
energy-efficiency plans," says coportfolio manager
Suzanne Senellart. "China wants to double its high-speed
railway infrastructure" by 2020.
Some investors want a global political consensus before they
risk money. The Danish pension fund ATP earmarked 1
billion for climate-friendly infrastructure projects in Brazil,
China, India, North Africa and Russia, but backed away in
December 2009 after United Nations climate change conferences
in Copenhagen and Cancún failed to lay out a coherent
global investment strategy.
"If institutional investors are expected to deliver 80
percent of the funding, politicians need to create frameworks
that allow us to invest," says Ulrik Dan Weuder, portfolio
manager at ATP. He says politicians at the U.N. climate change
conferences need to deliver binding resolutions that show clear
targets and clear demand for climate-related projects in
emerging markets. "We need transparency and reliable investment
programs, targets and framework," Weuder says.
Despite the hurdles, the worlds fastest-growing
economy is too important a player in green markets to ignore.
"In the future," says Weuder, "you wont blink to invest
in solar power or wind farms in China." .