The East is turning green

The world’s largest floating solar power plant came online in Huainan, in eastern China, in May 2017.

Helen Wong, Chief Executive, Greater China, The Hongkong and Shanghai Banking Corporation Limited

The world’s largest floating solar power plant came online in Huainan, in eastern China, in May 2017. Floating on a now flooded former coal mining region, it has a capacity of 40 MW – enough to power a small town.1

The plant is just one of many examples that illustrate the remarkable shift towards lower-carbon technologies in China and India, the world’s two most populous countries. It is part of a “new normal” in the global fight against climate change – and it highlights that the epicentre of that fight is rapidly moving east.

For most of the last few decades, the quest for more sustainable, less polluting transport, energy and other technologies has been happening largely in the West. Wind farms began appearing in California in the 1980s,2 and now supply more than 8 per cent of that state’s electricity.3 Germany is several years into a wholesale “energy transition” towards alternative energy sources. Half of all vehicles now sold in Norway are either electric or hybrid.4

Now Asia, long a laggard on these fronts, is starting to catch up.

China’s current five-year economic plan includes ambitious goals to lower carbon intensity and improve water efficiency.5 Plans to build more than 100 coal-fired power stations have been cancelled.6 A carbon emissions trading scheme is due to be launched later this year.7 Green bond issuance, as a means to financing environmentally-friendly projects, is picking up.

Meanwhile India’s renewable energy programme has accelerated rapidly. The country is planning to install 225 GW of renewables by 2022, putting it on course for green energy to account for as much as 57 per cent of electricity capacity by 2027.8

Both India and China are making big efforts to promote electric or new-energy vehicles. And research released in May showed that both countries are set to exceed the targets they set for themselves under the 2015 Paris Agreement on climate change.9

True, the challenges of these countries’ green transitions should not be underestimated. It will take years to replace or upgrade the often polluting and inefficient economic activity that was built up during the headlong rush for growth over the past decades. Politicians and managers may balk at costs and job losses in traditional industries. Ambitious infrastructure projects may, in places, imperil natural habitats. And polluted rivers can’t be cleaned overnight.

But India’s and China’s green efforts are anchored in both environmental and economic considerations – and they are set to pick up speed.

On the environment front, pollution, more extreme weather conditions, droughts and rising sea levels have become increasingly hard to ignore. And many of these effects are felt particularly acutely in China and India, the world’s biggest and third-biggest emitters of greenhouse gases, respectively.10 Take air pollution: five of the most polluted cities in G20 countries are in China; twelve are in India.11 As these countries’ populations have become more affluent and educated, they have also become less tolerant of environmental pain.

Meanwhile on the business side, technological advances have sharply reduced the cost of low-carbon alternatives. It now makes not just ethical, but also commercial sense to build wind farms, or to deploy electrically-powered buses on public transport routes.

Perhaps most crucially, the adoption of green technologies is not just about the optics of producing bluer skies. It is also about facilitating China’s and India’s ambitions to take their economies up the value chain. The “greening” of their economies, far from being a burdensome must-do, is actually a key prerequisite that will support this shift.

After all, both China and India need to increase the productivity of workers and companies if they want to keep growing and avoid getting stuck in the middle income trap. This requires more efficient public transportation, smarter logistics, less wasteful electricity generation and consumption – all of which dovetails neatly with “greening” their economies.

At the same time, China’s policymakers want to turn the erstwhile low-tech “factory floor of the world” into a global high-tech powerhouse. India has similar ambitions. Promoting the use and development of cutting-edge wind turbines, solar panels, electric vehicles and modern building and waste-management systems goes hand-in-glove with this goal. It also means attractive jobs, and business opportunities for local and foreign companies.

Last but not least, millions of people are moving into cities every year as India, China and other developing Asian nations continue to urbanise. Lower-emissions infrastructure and energy-efficient buildings are key to managing this process in an environmentally smart way, and avoiding urban gridlock.

Not long ago, many Asian nations prioritised the sheer speed of economic expansion over the quality of growth. Now, policymakers have recognised that low-carbon technologies are part-and-parcel of their ambitions to achieve sustainable expansion.

It’s a mind-set change that will take years to fully filter through to all levels of society. But it is producing change at a far faster pace than many observers had dared to hope just a few years ago. Given the threat posed by climate change, that’s worth celebrating.

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Marc Talbot, Head of International Franchise Development at HSBC.


Marc is part of HSBC’s global Client Network Banking team, supporting clients to expand internationally through franchising.