China's Renewable Energy Sector Attracts €100m Investment as Carbon Output Drops
China's renewable energy sector is gaining significant international attention. Schroders Capital Infrastructure has raised €100m for a China Renewable Energy Strategy, marking a substantial investment in the country's clean energy transition.
China's commitment to reducing its carbon footprint is evident in its recent achievements. The country has reported its first sustained dip in carbon output, unlike previous temporary drops, such as those seen during the Covid pandemic. This dip occurred alongside rising power demand, demonstrating the success of China's rapid expansion of renewable capacity.
President Xi Jinping has set an ambitious target to cut China's carbon footprint by 7-10% over the next decade. This is part of China's updated Nationally Determined Contributions, reflecting the country's serious approach to tackling climate change. The financial community is taking note, with 73% of domestic institutions acknowledging the materiality of climate change.
China's dominance in solar and wind manufacturing has led to significant changes in the global market. Some Western manufacturers have been forced to shut plants due to competitive pricing, highlighting China's influence on the industry.
Institutional investors are not only focusing on generation capacity but also exploring areas like grid modernisation, EV charging infrastructure, and clean heating and efficiency retrofits. This shift in focus reflects the evolving needs of the renewable energy sector and China's commitment to driving its growth.
China's renewable energy sector is poised for significant growth, with international institutions increasingly investing in the country's clean energy transition. The country's first sustained dip in carbon output, coupled with its ambitious targets and dominant manufacturing position, signals a promising future for renewable energy in China. However, the acceleration of renewable capacity may also lead to stranded assets for investors in fossil fuel companies from 2030 onwards.
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