By Li Huayu (chinadaily.com.cn)
Updated: 2008-01-10 11:43

China is the largest clean technology (cleantech) market in the world, with a market value of over $200 billion in environment protection and renewable energy industries alone, said Patrick Tam, general partner of Tsing Capital, yesterday in Beijing.

Speaking at a US-China clean-energy forum, Tam said cleantech in China has "gone from niche to mainstream" since 2006, and is growing at a rate of more than 20 percent annually.

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Since most of the vast cleantech market in China remains untapped, the country's policy incentives, such as the latest environment tax, are attracting a lot of investment.

Statistics from Cleantech China Research cited by Tam show that cleantech venture capital (VC) grew from a bit over $400 million in 2006 to more than $550 million in 2007, and is expected to reach over $720 million in 2008.

Energy generation will become the most popular segment of cleantech VC in the 2007-2008 period, followed by water and then energy efficiency segments, according to Cleantech China Research.

Meanwhile, government spending on cleantech is snowballing. According to Tam, China has tripled its government investments on cleantech to 1.35 trillion yuan in the past decade, and boosted the share of cleantech spending in gross domestic product (GDP) from 1.3 percent to 1.5 percent.

As for the areas of cleantech investment, $172 billion has gone to environmental protection - 37 billion for desulphurization, 25 billion each for industrial waste water treatment and vehicle exhaust gas, and 22 for municipal waste water treatment, said Tam.

In the renewable energy sector, $2.8 billion has been invested in wind, $8.1 billion on solar thermal energy, $1.7 billion on solar PV, $3.1 billion on ethanol, and 1.3 billion on biodiesel, Tam added.

For its Five-Year Plan (2006-2010) period and in the long term, China has set two targets. The first is achieving at least 10 percent of total energy consumption from renewable energies by 2010, and the second is boosting the proportion of renewable energy consumption against primary energy consumption from 10 percent to 16 percent by 2020.

Meanwhile, the government wants to reduce energy consumption per 10,000 yuan of GDP by 20 percent. It also seeks to reduce the water consumption per industrial output ratio by 30 percent by 2020.

Specifically, development goals of environmental protection for the 11th Five-Year Plan period are to treat 70 percent of municipal sewage and 60 percent of municipal garbage, discharge 10 percent less primary pollutants, and reach a 20 percent forest coverage, according to Guo Dongjun, another expert from Tsing Capital.

In view of the current situation, China, however, faces tough challenges ahead, such as high energy consumption and high raw materials consumption, Tam said.

According to Tam, China's energy consumption per 10,000 yuan of GDP was four times the world average and 14 times that of Japan.

Raw material consumption is going up rapidly, said Tam. In 2005, China consumed 310 million tons of rolled steel, up 15.1 percent year on year; 12.84 million tons of aluminum oxide, up 9.7 percent; and 960 million tons of cement, up 12.4 percent.

According to Guo, high environmental costs are offsetting about 4 to 6 percent of China's GDP growth, only 43.6 percent of polluted water is treated, and 58.6 percent of Chinese cities have unhealthy air conditions.

Cleantech generically covers products, services and techniques. Compared with conventional technologies, it has the advantage of lowering the consumption of energy and resources, protecting the environment and increasing living quality.

The Beijing-based Tsing Capital, formerly known as Tsinghua Venture Capital, is one of China's first venture capitalists investing in cleantech.