China’s green-tech market could reach $1 trillion by 2013 – report

London, 17 September: China’s ‘green technology’ market has the potential to grow to $1 trillion and make up 15% of GDP by 2013, according to a report by the China Greentech Initiative.

 “The combination of continuing economic growth, China’s technology and manufacturing capability and strong government commitments, driven by growing fears about climate change and other environmental threats, are creating real momentum in the green-tech sectors,” said Richard Gledhill, global leader for climate change services at PricewaterhouseCoopers, a founding member of the China Greentech Initiative, which is a collaboration between more than 80 technology companies, investors, professional services firms and NGOs.

The “total, addressable market size” for green technology is between $500 billion and $1 trillion, the report concludes. This includes cleaner conventional energy, renewable energy, electric power infrastructure, green building, cleaner transportation, cleaner industry and clean water. The Initiative does not provide an estimate for the current size of the green-tech market.

The first signs of such a “green transformation” are already apparent, the report says, citing the fast pace of renewables growth as one example – wind capacity has doubled every year for the last four years to reach 12.2 gigawatts in 2008 and one in 10 households has a solar water heater installed. The government has a target of deriving 20% of energy from renewable sources by 2020.

“China may well become a formidable competitor to those with ambitions to be leaders in the low-carbon economy,” Gledhill said. However, there are short-term opportunities for Western firms “to leverage lower-cost manufacturing, an increasingly skilled workforce and a rapidly growing domestic market”.

Investors should be looking at all seven sectors identified in the report, Gledhill added. “This is not just about renewables.”

Ruth Dobson, a partner at PwC’s China business, added: “This report came together through an active collaboration between 80 companies and other market influencers, and thus went beyond a research process. Businesses need to approach this market in a similar spirit.

“The green-tech market will demand an open mind about collaboration between companies.”

However, there may be bumps in the road: the report notes that green-tech can be more expensive than conventional alternatives and technologies must be adapted to the specific needs of the Chinese market. Lack of financing could also hold back the market, the Initiative warns, noting there are fewer financing options in China than in developed markets.

The report defines green-tech as “technologies, products and services that deliver benefits to users of equal or greater value than those of conventional alternatives, while limiting the impact on the natural environment and maximising the efficient and sustainable use of energy, water and other resources”.

Updated 17 September 2009