How China Is Working to Green the Global Economy

The巴黎气候会议came and went in December. Although there was considerable excitement about the outcome, it was simply the beginning of a multidecade process of decarbonizing the global economy. This transition will require tens of trillions of dollars of public and private investment in low-carbon energy, infrastructure, transportation systems, energy efficiency projects and more. A major question remains, however: Where will this investment come from?

Private investors should take note ofChina’s leading role in tackling climate change. This statement may come as a surprise to many observers. After all, China is the world’s largest carbon dioxide emitter. In 2012 China spewed out 8.5 gigatons of carbon dioxide, approximately 25 percent of global carbon emissions — although, on a per capita basis, that was still less than one half of U.S. per capita carbon emissions. China suffers from severe water scarcity and pollution, with more than 60 percent of groundwater being of poor quality. The environmental challenges in the country are leading to significant health problems and premature deaths for hundreds of thousands of people a year.

中国正在严肃地吸引气候变化，这两种原因很大。第一个是，如上所述，该国气候变化存在的重要挑战。第二，使可持续发展是可持续发展是开发新技术的主要业务和投资机会，创造的新部门以及国家越来越多的电库。这就是为什么最近发布的第13五年计划，2016年 - 20年代，这是该国经济和投资的路线图，将环境正面和中心作为国家优先事项。中国已经是世界上最大的可再生能源投资者，于2014年分配了890亿美元（最近可用的数据）超过美国，u.k.和法国合并。

From an investment perspective, there are three areas of China’s involvement in combating climate change that are particularly noteworthy.

The first is the significant investment in research and development. According to Bloomberg New Energy Finance, the Chinese government invested $1.7 billion in R&D in renewable energy in 2014, compared with $800 million in the U.S. and $1.4 billion for the European Union. Government-driven research is critical for technological transitions, as articulated byeconomist Mariana Mazzucato, among others. Given the improvements needed in key areas of sustainability — from battery storage to wind turbine efficiencies to carbon capture and sequestration — China’s attention to green technologies will be critical for businesses in this sector. Investors should take note.

The second area of note is China’s development of a green financial system. Last year the People’s Bank of China and the United Nations Environment Programme undertook a critical initiative to outline how China will transition its financial system into one that supports a green economy. The resulting road map includes various important policy instruments, from accelerating a green bond market to creating a Green Development Bank for China. As今年20年集团总裁，中国已经向绿色金融体系转型，是一个首要任务。这一过渡将为全球投资者提供许多重要机会，他们希望接触中国以及可持续发展部门。

第三个区域是最近推出的“一个皮带,一个路”倡议, a regional infrastructure and integration framework that encompasses more than 60 countries in Asia, Europe and Africa. It will help close the annual $1 trillion infrastructure gap in Asia by using increased public capital to bring in private capital. The creation of the $100 billionAsian Infrastructure Investment Bank and the $40 billion Silk Road Fundis the initial step in doing so.

China is attempting to undertake three significant transitions at the same time: from investment to consumption, from closed to open capital movement and, finally, from high carbon to low carbon. These changes will not be simple to pull off all at once. But given China’s role as the world’s second-largest economy, second-largest stock market and largest carbon emitter, global investors would be well advised to understand the sustainability transition under way in the country and its global impact.

Aniket Shah has been seconded fromInvestec Asset Managementto theU.N. Sustainable Development Solutions Network.

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