20004965 The China Greentech Report 2009

THE CHINA GREENTECH REPORT 2009 ™

Shanghai Water Resources Foundation

The China Greentech Initiative created by: ELLEN G. CARBERRY

and RANDALL S. HANCOCK

Managing Directors Lead Report Writers: CONSTANTIN CRACHILOV RANDALL S. HANCOCK GARY SHARKEY

Research Team Leader: HERMES CHAOCHING SUN

Partner Outreach Leader: CRAIG H. ADAMS

Initiative Project Manager: ANNABELL CHARTRES

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The China Greentech Initiative™ and The China Greentech Report™ are trademarks of MangoStrategy, LLC. While significant input was received in the creation of this report, with the large number of participating organizations, by necessity this is not a consensus deliverable. All opinions expressed herein are based on the judgment of the China Greentech Initiative at the time of distribution, and are subject to change without notice due to economic, political, industry and firm-specific factors. MangoStrategy, LLC, the China Greentech Initiative, and its partners and strategic advisors make no representation or warranty, express or implied, concerning the fairness, accuracy or completeness of the information and opinions contained herein. While every effort has been made to ensure the accuracy of the information supplied, MangoStrategy, LLC, the China Greentech Initiative and its partners and strategic advisors cannot be held responsible for any errors or omissions, and are not liable for any loss arising from any use of this report or its contents. This report may include case studies of partners, strategic advisors and other organizations which the research team believes adds value to the analysis. The report does not provide and should not be construed as making any specific public policy recommendations. Comments and suggestions about this report are welcome at feedback@ china-greentech.com. This work by MangoStrategy, LLC is licensed under the Creative Commons Attribution-Noncommercial-Share Alike 3.0 United States License, except as noted and where specific content has been licensed and used by permission. To view a copy of this license, visit http:// creativecommons.org/licenses/by-nc-sa/3.0/us/. This license allows for the copying, distributing, transmitting and adapting of the work for non-commercial purposes, provided that new content is distributed using a comparable license, and this work is attributed as: China Greentech Initiative, “The China Greentech Report™ 2009,” September 2009, www.china-greentech.com. Permissions beyond the scope of this license may be available at www.china-greentech.com.

Editors: Katie Howe and Siobhan Das Bachran Report Design: Marianne Kaulima Photography: All rights reserved © Julius Mak (www.juliusmak.net) Printed by: Snap Printing, Shanghai, China

This publication is printed on paper sourced from sustainable forestry (FSC and PEFC chain of custody certification), and produced with the highest environmental standards in EMAS (Eco-Management and Auditing Scheme) facilities.

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CO-CREATED BY:

Ellen G. Carberry and Randall S. Hancock RESEARCHED AND PRODUCED BY:

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NAVIGATION GUIDE REPORT STRUCTURE The China Greentech Report 2009 is published in multiple editions in order for YLHKLYZ[VHJJLZZHUK\ZL[OLÄUKPUNZLHZPS`

EXECUTIVE OVERVIEW :\TTHYPaLKÄUKPUNZ^OPJOKLÄULNYLLU[LJOTHYRL[ZPU *OPUHPKLU[PM`*OPUH»ZNYLLU[LJOTHYRL[JVU[L_[KLZJYPIL[OL NV]LYUTLU[»ZYLN\SH[VY`YLZWVUZLL]HS\H[LNYLLU[LJOZVS\[PVUZ PKLU[PM`JOHSSLUNLZOPUKLYPUN*OPUH»ZNYLLU[LJOTHYRL[Z\NNLZ[ Z[HRLOVSKLYVWWVY[\UP[PLZ[VHJJLSLYH[LNYLLU[LJOKL]LSVWTLU[ HUKWYV]PKLIYPLMZUHWZOV[ZVMZL]LUNYLLU[LJOZLJ[VYZ,UNSPZO and Chinese editions).

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RECOMMENDED READING PRIORITIZATION .P]LU[OLSHYNLHTV\U[VMJVU[LU[P[TH`IL\ZLM\SMVYYLHKLYZ[VWYPVYP[PaL[OLPY YLHKPUNIHZLK\WVU[OLPYPU[LYLZ[Z;VOLSW^P[O[OPZWYPVYP[PaH[PVU[OL0UP[PH[P]L Z\NNLZ[Z[OLMVSSV^PUNZ[HY[PUNWVPU[Z!

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GENERAL READERS

Knowledgeable: 0U[YVK\J[PVU4HYRL[*VU[L_[*OHSSLUNLZ and Opportunities chapters in Executive Overview Limited Knowledge: Entire Executive O]LY]PL^

GREENTECH PROVIDERS AND ADOPTERS

Knowledgeable: 0U[YVK\J[PVU*OHSSLUNLZHUK6WWVY[\UP[PLZ chapters in Executive OverviewMVSSV^LKI`YLSL]HU[ZLJ[VY chapters in Full Version Limited Knowledge: 0U[YVK\J[PVU4HYRL[*VU[L_[9LN\SH[VY` Response, *OHSSLUNLZHUK6WWVY[\UP[LZJOHW[LYZPUExecutive Overview,MVSSV^LKI`YLSL]HU[ZLJ[VYJOHW[LYZPUFull Version

FINANCIAL INVESTORS

Knowledgeable: 0U[YVK\J[PVU4HYRL[*VU[L_[:VS\[PVUZHUK 6WWVY[\UP[PLZJOHW[LYZPU,_LJ\[P]L6]LY]PL^ MVSSV^LKI`YLSL]HU[ZLJ[VYJOHW[LYZPUFull Version Limited Knowledge: Entire Executive Overview

REGULATORS AND OTHER STAKEHOLDERS

Knowledgeable: 0U[YVK\J[PVU*OHSSLUNLZHUK6WWVY[\UP[PLZ chapters in Executive OverviewMVSSV^LKI`YLSL]HU[ZLJ[VY chapters in Full Version Limited Knowledge: Entire Executive OverviewMVSSV^LKI` YLSL]HU[ZLJ[VYJOHW[LYZPUFull Version

THE CHINA GREENTECH REPORT 2009

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CONTENTS

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INTRODUCTION

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THE CHINA GREENTECH REPORT 2009



INTRODUCTION

8

China’s market requirements for greentech solutions are tremendous. Chinese government policies are positive drivers for greentech market development and a wide range of businesses are beginning to deploy greentech solutions to address a broad spectrum of environmental issues. While significant challenges remain, stakeholders have clear opportunities to accelerate market development and create a more environmentally sustainable China. THE CHINA GREENTECH REPORT 2009 IS THE CULMINATION of an open source, JVTTLYJPHSJVSSHIVYH[PVUVMV]LYVM[OL^VYSK»ZSLHKPUN[LJOUVSVN`JVTWHUPLZ LU[YLWYLUL\YZ PU]LZ[VYZ 5.6Z HUK WVSPJ` HK]PZVYZ ;OLZL VYNHUPaH[PVUZ QVPULK [OL*OPUH.YLLU[LJO0UP[PH[P]L[VHKKYLZZTHU`VM[OLPTWVY[HU[X\LZ[PVUZMHJPUN [OVZLPU[LYLZ[LKPUWHY[PJPWH[PUNPU[OPZJVTWSL_YHWPKS`JOHUNPUNTHYRL[! „ /V^ZOV\SKVULMYHTL[OLNYLLU[LJOVWWVY[\UP[PLZ[OH[L_PZ[PU*OPUH& „>OH[HYL[OLTVZ[PTWVY[HU[LU]PYVUTLU[HSPZZ\LZPTWHJ[PUN*OPUHHUK^OH[ HYL[OLMVYJLZKYP]PUN[OLT& „/V^OHZ*OPUH»ZNV]LYUTLU[HUK[OLPU[LYUH[PVUHSYLN\SH[VY`JVTT\UP[` YLZWVUKLK[V[OLZLPZZ\LZ& „>OPJOL_PZ[PUNHUKLTLYNPUNNYLLU[LJOZVS\[PVUZHYLTVZ[H[[YHJ[P]LMVY *OPUHPU[OLZOVY[TLKP\THUKSVUN[LYTZ& „>OH[HYL[OLIPNNLZ[JOHSSLUNLZMHJPUN*OPUH»ZNYLLU[LJOTHYRL[Z& „/V^ TPNO[ Z[HRLOVSKLYZ V]LYJVTL [OLZL JOHSSLUNLZ PU VYKLY [V HJJLSLYH[L *OPUH»ZNYLLU[LJOTHYRL[KL]LSVWTLU[& ;OPZYLWVY[HPTZ[VHUZ^LY[OLZLX\LZ[PVUZIHZLKVU[OLYLZLHYJOWYVJLZZ[OH[ [OL*OPUH.YLLU[LJO0UP[PH[P]LOHZ\UKLY[HRLUHUK[OLPUMVYTH[PVUH]HPSHISL H[[OPZWVPU[PU[PTL;OLZ[VY`[OH[OHZLTLYNLKPZSHYNLS`HUVW[PTPZ[PJVUL [LTWLYLKI`[OLJVTWSL_P[`VM*OPUH»ZTHYRL[ZHUK[OLZPNUPÄJHU[JOHSSLUNLZ[OH[T\Z[ ILV]LYJVTL

China’s greentech markets include a broad range of sectors, segments and solutions DEFINITIONS ;OL [LYT NYLLU[LJO YLMLYZ [V [LJOUVSVNPLZ WYVK\J[Z HUK ZLY]PJLZ [OH[ KLSP]LY ILULÄ[Z[V\ZLYZVMLX\HSVYNYLH[LY]HS\L[OHU[OVZLVMJVU]LU[PVUHSHS[LYUH[P]LZ ^OPSLSPTP[PUN[OLPTWHJ[VU[OLUH[\YHSLU]PYVUTLU[HUKTH_PTPaPUN[OLLMÄJPLU[HUK Z\Z[HPUHISL\ZLVMLULYN`^H[LYHUKV[OLYYLZV\YJLZ;OL0UP[PH[P]LPKLU[PÄLKUPUL NYLLU[LJOTHYRL[ZLJ[VYZMVJ\ZPUNVUZL]LUPU[OPZYLWVY[¶*SLHULY*VU]LU[PVUHS ,ULYN`9LUL^HISL,ULYN`,SLJ[YPJ7V^LY0UMYHZ[Y\J[\YL.YLLU)\PSKPUN*SLHULY Transportation, Cleaner Industry and Clean Water.

Three decades of formidable economic growth have transformed China into a colossal and resilient economy, resulting in radical improvements in living standards for many of its citizens FORMIDABLE ECONOMIC GROWTH *OPUH»ZLJVUVTPJ[YHUZMVYTH[PVUV]LY[OLSHZ[[OPY[``LHYZPZ\USPRLHU`[OPUN[OL ^VYSKOHZL]LYZLLU>P[OHUH]LYHNL HUU\HSNYV^[OYH[L*OPUHPZUV^[OL [OPYKSHYNLZ[LJVUVT`HUKZLJVUKSHYNLZ[JVUZ\TLYVMLULYN`PU[OL^VYSK

RADICAL IMPROVEMENTS IN LIVING STANDARDS ,JVUVTPJ NYV^[O HJJVTWHUPLK I` THZZP]L \YIHUPaH[PVU OHZ KYP]LU YHKPJHS PTWYV]LTLU[Z PU *OPUH»Z SP]PUN Z[HUKHYKZ KLJYLHZPUN [OL WLYJLU[HNL VM WLVWSL SP]PUN PU WV]LY[` ]HZ[S` PTWYV]PUN SPML L_WLJ[HUJPLZ HUK MVZ[LYPUN HU LTLYNPUN consumer market. www.china-greentech.com

THE CHINA GREENTECH REPORT 2009

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THE CHINA GREENTECH REPORT

RESILIENT ECONOMY *OPUH»Z LJVUVT` OHZ ILLU TVYL YLZPSPLU[ [V [OL NSVIHS LJVUVTPJ JYPZPZ [OHU HU`V[OLYSHYNLJV\U[Y`>P[O[OL^VYSK»ZSHYNLZ[MVYLPNUL_JOHUNLYLZLY]LZ[OL NV]LYUTLU[»ZMV\Y[YPSSPVU`\HU<:IPSSPVULJVUVTPJZ[PT\S\ZWHJRHNL^HZ [OLZLJVUKSHYNLZ[PU[OL^VYSK*OPUH»ZLJVUVT`NYL^ PU[OLÄYZ[OHSMVM  HUKPZWYVQLJ[LK[VNYV^H[ PU

COLOSSAL SCALE >P[O V]LY  IPSSPVU WLVWSL *OPUH PZ OVTL [V ULHYS` VULÄM[O VM [OL ^VYSK»Z WVW\SH[PVU VY ULHYS` [^PJL [OH[ VM [OL <: HUK >LZ[LYU ,\YVWL JVTIPULK ,PNO[LLUTPSSPVUWLVWSLTPNYH[LMYVTY\YHS[V\YIHUHYLHZPU*OPUHHUU\HSS`*OPUH OHZTVYL[OHU[^PJL[OLI\PSKPUNÅVVYZWHJLHZ[OL<:HUKPUZ[HSSZTVYLLSLJ[YPJP[` NLULYH[PVUJHWHJP[`LHJO`LHY[OHU[OL[V[HSJHWHJP[`VM[OL<2

Yet China’s economic development has come at significant environmental cost POLLUTED AIR *OPUHPZUV^[OL^VYSK»ZSHYNLZ[LTP[[LYVMNYLLUOV\ZLNHZLZ./.ZYLZWVUZPISL MVYV]LY VMHUU\HS*62LTPZZPVUZMYVT[OLI\YUPUNVMMVZZPSM\LSZHS[OV\NO LTPZZPVUZ WLY JHWP[H HYL Z[PSS SV^ YLSH[P]L [V TVZ[ KL]LSVWLK JV\U[YPLZ ,PNO[` WLYJLU[VM[OLZLLTPZZPVUZJVTLMYVTI\YUPUNJVHS*OPUH»ZWYLKVTPUHU[LULYN` ZV\YJL*OPUH»ZHPYX\HSP[`HSZVZ\MMLYZMYVTV[OLYWVSS\[HU[ZZ\JOHZWHY[PJ\SH[L TH[[LY^OPJOJSV\K[OLHPYHUKOH]LULNH[P]LOLHS[OLMMLJ[Z

STRAINED WATER RESOURCES *OPUHMHJLZ[OLK\HSWYVISLTZVM^H[LYZJHYJP[`HUKWVSS\[PVU>P[O VM[OL ^VYSK»ZWVW\SH[PVU*OPUHOHZSLZZ[OHU VM[OL^VYSK»ZMYLZO^H[LYYLZV\YJLZ ;OLJV\U[Y`»Z^H[LYYLZV\YJLZOH]LKLJSPULKK\L[VOPNOKLTHUKPULMÄJPLU[\ZL HUKKLJYLHZPUNUH[\YHSZ\WWSPLZ4VYLV]LY^H[LYWVSS\[PVUOHZZLYPV\ZS`PTWHJ[LK ^H[LYX\HSP[`[OYV\NOV\[[OLJV\U[Y`

LAND DEGRADATION -VYJLZ KLNYHKPUN *OPUH»Z SHUK PUJS\KL KLZLY[PÄJH[PVU SHUK JVU[HTPUH[PVU MYVT ^HZ[LSHUKÄSSZHUKOHaHYKV\Z^HZ[L-VYL_HTWSLHSTVZ[OHSMVMVMÄJPHSSHUKÄSSZ PUHYLJLU[Z[\K`^LYLMV\UK[VUV[JVTWS`^P[O*OPUH»ZLU]PYVUTLU[HSZ[HUKHYKZ HUK L^HZ[L MYVT [OL YLJ`JSPUN HUK K\TWPUN VM \ZLK LSLJ[YVUPJ WYVK\J[Z PZ H THQVYPZZ\L

A NEW ERA >OPSL *OPUH»Z LU]PYVUTLU[HS PZZ\LZ HYL UV[ KPZZPTPSHY [V [OL PUK\Z[YPHSPaH[PVU L_WLYPLUJLZVMV[OLYJV\U[YPLZ[OYV\NOV\[OPZ[VY`*OPUH»ZPTTLUZLZJHSLZWLLK VMLJVUVTPJKL]LSVWTLU[HUK[OLZ[H[LVM[OL^VYSK»ZJSPTH[LHUKYLZV\YJLZTHRL [OLLU]PYVUTLU[HSPTWHJ[VM*OPUH»ZKL]LSVWTLU[HUPZZ\LVMNSVIHSJVUJLYU

China’s economic development will become environmentally sustainable out of necessity ECONOMIC DEVELOPMENT OF EPIC PROPORTIONS *OPUHPZL_WLJ[LK[VILJVTL[OL^VYSK»ZSHYNLZ[LJVUVT`^P[OPU[OLUL_[[V `LHYZKYP]LUI`HNYV^[OYH[L[OH[^PSSJVU[PU\L[VV\[WHJL[OL^VYSKH]LYHNL 4HZZP]L\YIHUPaH[PVU^PSSJVU[PU\LV]LY[OLUL_[`LHYZJH\ZPUN[OLJV\U[Y` [VKV\ISLP[ZI\PSKPUNZWHJLOH]LTVYL[OHUJP[PLZ^P[OHWVW\SH[PVUV]LYVUL TPSSPVUWLVWSLHUKJVU[PU\L^P[O[OLSHYNLZJHSLKLWSV`TLU[VMPUMYHZ[Y\J[\YL

RESULTING SURGE IN RESOURCE DEMAND *VU[PU\LK NYV^[O ^PSS KLTHUK O\NL PUJYLHZLZ PU LULYN` ^H[LY HUK TH[LYPHS YLZV\YJLZ0M*OPUH^LYL[VTHPU[HPUP[ZOPZ[VYPJWYHJ[PJLZ[OLHKKP[PVUHSZ[YHPUVU [OL LU]PYVUTLU[ ^V\SK IL \UZ\Z[HPUHISL -VY L_HTWSL H[ J\YYLU[ NYV^[O YH[LZ China’s CO2LTPZZPVUZJV\SKYLWYLZLU[ULHYS` VM[OL^VYSK»Z[V[HSI` ^P[O JVHS J\YYLU[S` L_WLJ[LK [V JVU[PU\L [V HJJV\U[ MVY [OL THQVYP[` VM *OPUH»Z LULYN`Z\WWS`MVYKLJHKLZ[VJVTL

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THE CHINA GREENTECH REPORT 2009

www.china-greentech.com

INTRODUCTION

VISION FOR ENVIRONMENTAL SUSTAINABILITY ;OL*OPUH.YLLU[LJO0UP[PH[P]LILSPL]LZ[OH[*OPUH^PSSV\[VMULJLZZP[`LTIYHJL LU]PYVUTLU[HSS` Z\Z[HPUHISL NYV^[O PU ^OPJO NYLLU [LJOUVSVNPLZ OH]L ILLU KL]LSVWLK HUK KLWSV`LK UL^ I\ZPULZZ TVKLSZ LZ[HISPZOLK HUK JVTWSPHUJL ^P[O NV]LYUTLU[ YLN\SH[PVUZ IYV\NO[ \W [V H OPNO SL]LS ;OPZ ]PZPVU MVY HU LU]PYVUTLU[HSS` Z\Z[HPUHISL *OPUH PUJS\KLZ ^PKLZWYLHK HKVW[PVU VM HS[LYUH[P]L HUK JSLHULY JVU]LU[PVUHS LULYN` ZV\YJLZ J\Y[HPSLK NYV^[O PU ./. LTPZZPVUZ YLK\J[PVUPUHPYHUK^H[LYWVSS\[PVUPTWYV]LK^H[LY\ZLLMÄJPLUJ`HUKTP[PNH[LKZVSPK ^HZ[LWYVISLTZ

China has laid the foundation for greentech market growth, with the first signs of a green transformation already appearing LAYING THE FOUNDATION *OPUH OHZ THKL PTWYLZZP]L WYVNYLZZ PU SH`PUN [OL MV\UKH[PVU MVY M\[\YL NYV^[O PUNYLLU[LJOUVSVNPLZHUKPZLTLYNPUNHZHSLHKLYPUTHU`LU]PYVUTLU[HSHYLHZ PUJS\KPUN ^PUK WV^LY HKVW[PVU :VSHY 7OV[V]VS[HPJ HUK /V[ >H[LY /LH[LY THU\MHJ[\YPUN]LOPJSLM\LSLJVUVT`HUKLTPZZPVUZHUKLULYN`LMÄJPLUJ`*OPUH»Z ^PUKWV^LYJHWHJP[`MVYPUZ[HUJLOHZKV\ISLKMVYMV\YJVUZLJ\[P]L`LHYZZPUJL ^P[O*OPUHUV^YHURPUNMV\Y[OPU[OL^VYSKHUKYLWYLZLU[PUN VM[V[HS installed capacity.

UNTAPPED POTENTIAL ;OLYLPZVWWVY[\UP[`[VKVTVYL*OPUHOHZZL[H[HYNL[VMKLYP]PUN VMLULYN` MYVTYLUL^HISLZV\YJLZI`,]LUPMP[HJOPL]LZ[OPZHNNYLZZP]LNVHS VM P[Z LULYN` ^V\SK Z[PSS IL KLYP]LK WYLKVTPUHU[S` MYVT JVHS >OPSL *OPUH»Z LULYN` PU[LUZP[`VM.+7OHZKLJSPULKZPNUPÄJHU[S`P[PZZ[PSSHSTVZ[[OYLL[PTLZ[OH[VM[OL <:HUKTVYL[OHUMV\Y[PTLZ[OH[VM1HWHU(UKLZ[PTH[LZZ\NNLZ[[OH[SLZZ[OHU  VMHSSÅVVYZWHJLL_WLJ[LK[VILI\PS[PU ^PSSILJLY[PÄLKI`HU`NYLLU JLY[PÄJH[PVUZ[HUKHYK

UNIQUE MOMENT IN TIME +LZWP[L[OLTHNUP[\KLVM*OPUH»ZLU]PYVUTLU[HSPZZ\LZ[OLÄYZ[ZPNUZVMHUL^ [YHUZMVYTH[PVU HYL WYVTPZPUN ^P[O NV]LYUTLU[ I\ZPULZZLZ UVUNV]LYUTLU[HS VYNHUPaH[PVUZ HUK V[OLY Z[HRLOVSKLYZ HSPNUPUN HYV\UK [OL ]PZPVU VM H TVYL LU]PYVUTLU[HSS`Z\Z[HPUHISL*OPUH

Guided by policy principles, China’s government has already established plans and programs, laws and standards, fiscal incentives and subsidies, industrial promotion and price management policies that positively impact the environment and enable greentech markets CHINA’S POLICY ENVIRONMENT *OPUH»Z WVSPJ` LU]PYVUTLU[ PZ JVTWSL_ ^P[O H SHYNL U\TILY VM LU[P[PLZ L_LY[PUN JVU[YVSH[ IV[O[OLUH[PVUHSHUKSVJHSSL]LSZ;OL0UP[PH[P]LPKLU[PÄLK KPMMLYLU[ UH[PVUHSNV]LYUTLU[HNLUJPLZ^P[OYLZWVUZPIPSP[PLZYLSH[LK[VNYLLU[LJOTHYRL[Z 4VZ[ VM [OLZL OH]L JVYYLZWVUKPUN IVKPLZ H[ SVJHS SL]LSZ [OH[ HYL PUÅ\LUJLK I` IV[O[OLUH[PVUHSHUKSVJHSNV]LYUTLU[Z

GUIDING POLICY PRINCIPLES *OPUH»ZNV]LYUTLU[\ZLZH]HYPL[`VMWVSPJ`WYPUJPWSLZ[VN\PKL[OLKL]LSVWTLU[VM P[ZNYLLU[LJOWVSPJPLZ:WLJPÄJWVSPJ`WYPUJPWSLZPKLU[PÄLKI`[OL*OPUH.YLLU[LJO 0UP[PH[P]LHZPUÅ\LUJPUN*OPUH»Z NYLLU[LJO WVSPJPLZ PUJS\KL! :JPLU[PÄJ (WWYVHJO [V +L]LSVWTLU[/HYTVUPV\Z:VJPL[`,X\HS,TWOHZPZVU4P[PNH[PVUHUK(KHW[H[PVU ,MÄJPLUJ` 0TWYV]LTLU[ HUK *VUZLY]H[PVU ,ULYN` :[Y\J[\YL 6W[PTPaH[PVU ,JVSVNPJHS7YLZLY]H[PVUHUK*VUZ[Y\J[PVU(NYPJ\S[\YHS7YVK\J[P]P[`,UOHUJLTLU[ HUK0UKPNLUV\Z0UUV]H[PVU www.china-greentech.com

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THE CHINA GREENTECH REPORT

POLICYMAKING PRACTICES *OPUH»Z NV]LYUTLU[ OHZ THKL ZPNUPÄJHU[ WYVNYLZZ PU [OL KL]LSVWTLU[ VM NYLLU[LJOYLSL]HU[ WVSPJPLZ 7VSPJ` THRPUN WYVJLZZLZ VM[LU [HRL PU[V HJJV\U[ SLNHSWYHJ[PJLZVMSLNHSZ`Z[LTZV\[ZPKLVM*OPUHHUKTH`PUJS\KLKLSPILYH[PVUZ PUZWLJPHSJVTTP[[LLZ\UKLY[OL5H[PVUHS7LVWSL»Z*VUNYLZZL_WLY[YV\UK[HISLZ VYW\ISPJOLHYPUNZ

PLANS AND PROGRAMS 5H[PVUHSWSHUUPUNHJ[P]P[PLZHUKWYVNYHTZWYV]PKLMYHTL^VYRZMVY*OPUH»ZYLZWVUZL [VLU]PYVUTLU[HSPZZ\LZHUKKL[LYTPULKL]LSVWTLU[[HYNL[Z;OLZLWSHUZPUJS\KL UV[ VUS` [OL -P]L @LHY .\PKLSPULZ I\[ KL[HPSLK WSHUZ YLSLHZLK I` TPUPZ[YPLZ [V N\PKL [OL KL]LSVWTLU[ VM ZWLJPÄJ WHY[Z VM [OL LJVUVT` 5H[PVUHS WYVNYHTZ JVTWSLTLU[WSHUZI`WYV]PKPUNWVSPJ`KPYLJ[PVUZVYZWLJPÄJYLN\SH[PVUZHJYVZZH YHUNLVMPTWSLTLU[PUNHNLUJPLZ*OPUH»Z[YPSSPVU`\HU<:IPSSPVULJVUVTPJ Z[PT\S\ZWSHUHUUV\UJLKPU5V]LTILYPUYLZWVUZL[V[OLNSVIHSLJVUVTPJ KV^U[\YUHSSVJH[LZHWWYV_PTH[LS` [VNYLLU[LJOYLSH[LKHYLHZ

LAWS AND STANDARDS *OPUH»ZNV]LYUTLU[OHZW\[PUWSHJLTHU`SH^ZHUKZ[HUKHYKZYLSL]HU[[VNYLLU[LJO THYRL[Z0TWVY[HU[NYLLU[LJOYLSH[LKSH^ZPU*OPUHPUJS\KL[OL9LUL^HISL,ULYN` 3H^HUK[OL*PYJ\SHY,JVUVT`3H^*OPUH»Z(KTPUPZ[YH[PVUVM8\HSP[` :\WLY]PZPVU0UZWLJ[PVUHUK8\HYHU[PUL(8:08PZYLZWVUZPISLMVYHKTPUPZ[LYPUN Z[HUKHYKZPU[LJOUPJHSWYVK\J[X\HSP[`LU]PYVUTLU[HUKWYVK\J[ZHML[`

FISCAL INCENTIVES AND SUBSIDIES *OPUHHSZV\ZLZÄZJHSHUKWVSPJ`HWWYVHJOLZ[VWYVTV[LNYLLU[LJOTHYRL[Z;H_ L_LTW[PVUZJVUZ\TW[PVUYLSH[LK[H_LZUH[\YHSYLZV\YJLYLSH[LK[H_LZHUKV[OLY [H_ ILULÄ[Z WYVTV[L LU]PYVUTLU[HS HUK NYLLU[LJO HJ[P]P[PLZ ;OL NV]LYUTLU[ HSZV KPYLJ[S` Z\IZPKPaLZ NYLLU[LJO WYV]PKLYZ HUK HKVW[LYZ PU HYLHZ SPRL 5L^ ,ULYN`=LOPJSLZ)\PSKPUN0U[LNYH[LK:VSHY7OV[V]VS[HPJ:`Z[LTZ>PUK;\YIPULZ HUK)PVTHZZ7V^LY.LULYH[PVU7YV]PUJPHSHUKYLNPVUHSNV]LYUTLU[ZHSZVOH]L WVSPJ`SL]LYZ[OL`JHU\ZL[VZ\WWVY[NYLLU[LJOKL]LSVWTLU[PU[OLPYQ\YPZKPJ[PVUZ PUJS\KPUN [H_ OVSPKH`Z KPZJV\U[LK VMÄJL YH[LZ KPYLJ[ ÄUHUJPUN HZZPZ[HUJL ^P[O JHWP[HSTHYRL[ZÄUHUJPUNHUKYLPTI\YZLTLU[ZMVYLTWSV`LL[YHPUPUN

INDUSTRIAL PROMOTION POLICIES *OPUH»ZWVSPJ`THRLYZHSZVZ\WWVY[NYLLU[LJO[OYV\NOPUK\Z[YPHSWYVTV[PVUWVSPJPLZ [OH[SL]LYHNLÄUHUJPHSPU[LYTLKPHYPLZ;OPZTH`PUJS\KLKPYLJ[PUNMH]VYHISLÄUHUJPUN [V NYLLU[LJO ZLJ[VYZ YLX\PYPUN JVTTLYJPHS IHURZ [V PUJVYWVYH[L LU]PYVUTLU[HS WLYMVYTHUJL JYP[LYPH PU[V SLUKPUN KLJPZPVUZ YLX\PYPUN LU]PYVUTLU[HS HUK LULYN` KPZJSVZ\YLZ MYVT JVTWHUPLZ SPZ[PUN VU KVTLZ[PJ Z[VJR THYRL[Z HUK WYV]PKPUN support for infrastructure construction.

PRICING MANAGEMENT 7YPJL JVU[YVSZ HSZV PUÅ\LUJL [OL KL]LSVWTLU[ VM *OPUH»Z NYLLU[LJO THYRL[Z (S[OV\NO*OPUH»Z[YLUKPZ[V^HYKZHSSV^PUNWYPJLZ[VÅ\J[\H[L^P[OTHYRL[WYLZZ\YLZ [OLNV]LYUTLU[JVU[PU\LZ[VL_LY[JVU[YVSV]LY[OLWYPJLZVMLSLJ[YPJP[`NHZKPZ[YPJ[ OLH[HUK^H[LY\[PSP[PLZ[VLUHISL[OLHMMVYKHIPSP[`VM[OLZLNVVKZMVY*OPUH»ZSV^ PUJVTLOV\ZLOVSKZ0UHWVZP[P]LKL]LSVWTLU[MVY9LUL^HISL,ULYN`[OL5H[PVUHS +L]LSVWTLU[ HUK 9LMVYT *VTTPZZPVU PU 1\S`   YLSLHZLK H UH[PVUHS MLLKPU [HYPMMMVY^PUKWV^LYNP]PUNP[HZPNUPÄJHU[WYLTP\TV]LYJVHSNLULYH[LKWV^LY

International policy organizations, principles, agreements and relationships also impact China’s greentech markets INTERNATIONAL POLICY ORGANIZATIONS 4HU` PU[LYUH[PVUHS VYNHUPaH[PVUZ HUK YLN\SH[VY` IVKPLZ HSZV PTWHJ[ [OL KL]LSVWTLU[ VM *OPUH»Z NYLLU[LJO THYRL[Z PUJS\KPUN [OL VYSK;YHKL6YNHUPaH[PVU>;6[OL0U[LYUH[PVUHS4VUL[HY`-\UK04-[OL>VYSK )HURHUK[OL(ZPHU+L]LSVWTLU[)HUR(+);OL<5[OYV\NOP[ZZWLJPHSPaLKHNLUJPLZ Z\JOHZ[OL
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www.china-greentech.com

INTRODUCTION

INTERNATIONAL POLICY PRINCIPLES 0U[LYUH[PVUHSWVSPJ`WYPUJPWSLZHSZVL_LY[PUÅ\LUJLVU[OLKL]LSVWTLU[VM*OPUH»Z NYLLU[LJOTHYRL[Z7LYOHWZ[OLTVZ[PTWVY[HU[VM[OLZLHYL[OLJVUJLW[ZVM sustainable development and Common but Differentiated Responsibilities and Respective Capabilities*I+99*

INTERNATIONAL AGREEMENTS *LY[HPUPU[LYUH[PVUHSHNYLLTLU[ZJVTTP[*OPUH[VZWLJPÄJWVSPJ`HJ[PVUZYLSH[LK [V [OL LU]PYVUTLU[ ;OL TVZ[ ^LSSRUV^U VM [OLZL PZ [OL   2`V[V 7YV[VJVS 5LHYS`OHSMVMHSSJLY[PÄLKLTPZZPVUYLK\J[PVUJLY[PÄJH[LZ*,9ZYLNPZ[LYLK\UKLY [OL 2`V[V 7YV[VJVS OH]L ILLU NLULYH[LK I` WYVQLJ[Z PU *OPUH )LJH\ZL [OL PU[LYUH[PVUHSLTPZZPVUZYLK\J[PVUZ[HYNL[Z\UKLY[OL2`V[V7YV[VJVSL_WPYLPU WHY[PLZ[V[OLHNYLLTLU[OVWL[VZ\JJLZZM\SS`ULNV[PH[LHZ\JJLZZVYHNYLLTLU[[V ILZPNULKH[[OLth United Nations Climate Conference, scheduled for December  PU*VWLUOHNLU+LUTHYR

BILATERAL RELATIONSHIPS +PYLJ[YLSH[PVUZOPWZ^P[OV[OLYJV\U[YPLZHUKLJVUVTPJISVJZHSZVPTWHJ[*OPUH»Z NYLLU[LJO THYRL[Z ,_HTWSL WYVNYHTZ PUJS\KL [OL *OPUH<: :[YH[LNPJ HUK ,JVUVTPJ+PHSVN\L: ,+[OL*OPUH<::JPLUJLHUK;LJOUVSVN`(NYLLTLU[ HUK[OL,<*OPUH,ULYN`HUK,U]PYVUTLU[7YVNYHTTL

A wide range of businesses are beginning to deploy existing and emerging greentech solutions to address a broad spectrum of environmental issues HUNDREDS OF EXISTING AND EMERGING GREENTECH SOLUTIONS ;OL0UP[PH[P]LPKLU[PÄLKV]LYKPZ[PUJ[NYLLU[LJOZVS\[PVUZHWWSPJHISL[V*OPUH HJYVZZZL]LUZLJ[VYZ^OPJO^LYL[OLUWYPVYP[PaLKKV^U[VZVS\[PVUZMVYM\Y[OLY L]HS\H[PVUVYHWWYV_PTH[LS`ZVS\[PVUZWLYZLJ[VY

SOLUTIONS EVALUATION APPROACH (:VS\[PVUZ,]HS\H[PVU-YHTL^VYR^HZKL]LSVWLK[VHZZLZZZVS\[PVUZI`unit environmental impact potential, solution attractiveness, addressable market size and market accessibilityHJJVYKPUN[VZOVY[\UKLYVUL`LHYTLKP\T`LHYZHUKSVUN `LHYZ[PTLWLYPVKZ;OPZYLWVY[MVJ\ZLZVU[OLTLKP\T[LYTL]HS\H[PVUZ

CONSIDERABLE ENVIRONMENTAL IMPACT .YLLU[LJOZVS\[PVUZOVSK[OLWV[LU[PHS[VNYLH[S`TP[PNH[L[OLPTWHJ[VMLJVUVTPJ HJ[P]P[PLZVU[OLLU]PYVUTLU[:VS\[PVUZHUHS`aLKI`[OL0UP[PH[P]LPU[OL9LUL^HISL ,ULYN`,SLJ[YPJ7V^LY0UMYHZ[Y\J[\YLHUK*SLHULY;YHUZWVY[H[PVUZLJ[VYZWYPTHYPS` PTWHJ[[OLLU]PYVUTLU[I`YLK\JPUNH[TVZWOLYPJLTPZZPVUZPUJS\KPUN*62, and PTWYV]PUNLULYN`LMÄJPLUJ`*SLHU>H[LYZVS\[PVUZHKKYLZZ^H[LYZOVY[HNLZHUK WVSS\[PVU*SLHULY*VU]LU[PVUHS,ULYN`ZVS\[PVUZHIH[LLU]PYVUTLU[HSPTWHJ[VU IV[O HPY HUK ^H[LY .YLLU )\PSKPUN HUK *SLHULY 0UK\Z[Y` ZVS\[PVUZ HKKYLZZ HPY LTPZZPVUZHUKLULYN`^H[LYHUKTH[LYPHSZ\ZL6UH]LYHNL9LUL^HISL,ULYN` HUK *SLHULY ;YHUZWVY[H[PVU ZVS\[PVUZ OH]L YLSH[P]LS` OPNOLY \UP[ LU]PYVUTLU[HS impact potential compared to other sectors, because many of these solutions, Z\JOHZ:VSHY7OV[V]VS[HPJ>PUK;\YIPULZHUK5L^,ULYN`=LOPJSLZHIH[L\W[V  VM[OLLTPZZPVUZHZZVJPH[LK^P[OMVZZPSM\LSI\YUPUN

ALREADY ATTRACTIVE GREENTECH SOLUTIONS 4HU` NYLLU[LJO ZVS\[PVUZ HYL HSYLHK` H[[YHJ[P]L [V HKVW[LYZ *SLHULY 0UK\Z[Y` HUK .YLLU )\PSKPUN OH]L YLSH[P]LS` OPNOLY H]LYHNL ZVS\[PVU H[[YHJ[P]LULZZ JVTWHYLK [V V[OLY ZLJ[VYZ ^P[O THU` ZVS\[PVUZ PU [OLZL ZLJ[VYZ MVJ\ZPUN VU LULYN` LMÄJPLUJPLZ HUK HSYLHK` LJVUVTPJHSS` MLHZPISL VU H SPML J`JSL IHZPZ *SLHULY*VU]LU[PVUHS,ULYN`*SLHU>H[LYHUK9LUL^HISL,ULYN`ZVS\[PVUZYHUR PU [OL TPKKSL [PLY KYP]LU I` H SHYNL U\TILY VM ZVS\[PVUZ [OH[ [LJOUVSVNPJHSS` HYL YLSH[P]LS`TH[\YLVYYHWPKS`LTLYNPUNI\[UV[`L[LJVUVTPJHSS`JVTWL[P[P]LPU*OPUH ,SLJ[YPJHS7V^LY0UMYHZ[Y\J[\YLHUK*SLHULY;YHUZWVY[H[PVUZVS\[PVUZHYLYHURLKVU H]LYHNLHZYLSH[P]LS`SV^LYPUH[[YHJ[P]LULZZK\L[VTHU`ZVS\[PVUZPULHYS`Z[HNLZVM [LJOUVSVNPJHSTH[\YP[`

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THE CHINA GREENTECH REPORT 2009

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THE CHINA GREENTECH REPORT

SIGNIFICANT MARKET SIZES ;OL *OPUH .YLLU[LJO 0UP[PH[P]L LZ[PTH[LZ [OL [V[HS HKKYLZZHISL THYRL[ ZPaL MVY [OL ZVS\[PVUZ OPNOSPNO[LK PU [OL YLWVY[ JV\SK IL HZ T\JO HZ <: IPSSPVU [V <: [YPSSPVU HUU\HSS` VY HZ T\JO HZ   VM *OPUH»Z MVYLJHZ[LK .+7 PU  (KKYLZZHISLTHYRL[ZPaLLZ[PTH[LZ[OL[V[HSYL]LU\LZNYLLU[LJOZVS\[PVUZJV\SK WV[LU[PHSS` HJOPL]L PM [OL` ^LYL H[[YHJ[P]L [V HKVW[LYZ ]PZn]PZ JVU]LU[PVUHS HS[LYUH[P]LZ;OPZPZUV[TLHU[[VILHUHUU\HSMVYLJHZ[MVYZVS\[PVUZI\[YH[OLY HU LZ[PTH[L VM ^OH[ [OL THYRL[ JV\SK IL \UKLY ZWLJPÄJ JVUKP[PVUZ :VS\[PVUZ PU *SLHULY ;YHUZWVY[H[PVU HUK 9LUL^HISL ,ULYN` OH]L YLSH[P]LS` SHYNLY H]LYHNL HKKYLZZHISLTHYRL[ZHZ[OL`PUJS\KLZVS\[PVUZ^P[OSHYNLWV[LU[PHSTHYRL[ZSPRL 5L^,ULYN`=LOPJSLZHUK(K]HUJLK(PYJYHM[PU*SLHULY;YHUZWVY[H[PVUHUK:VSHY 7OV[V]VS[HPJ*VUJLU[YH[PUN:VSHYHUK)PVTHZZ*VTI\Z[PVUPU9LUL^HISL,ULYN` :VS\[PVUZPU*SLHU>H[LY*SLHULY0UK\Z[Y`HUK,SLJ[YPJ7V^LY0UMYHZ[Y\J[\YL^LYL MV\UK [V OH]L VU H]LYHNL YLSH[P]LS` ZTHSSLY THYRL[Z TVZ[S` ILJH\ZL THU` VM [OLZLZVS\[PVUZHYLPUKP]PK\HSJVTWVULU[ZVMSHYNLYZ`Z[LTZ

MIXED MARKET ACCESSIBILITY 4HU`VM*OPUH»ZNYLLU[LJOTHYRL[ZHYLVWLU[VMVYLPNUHUKWYP]H[LWSH`LYZ^OPSL some remain limited or restricted. Market accessibility for solutions in Cleaner 0UK\Z[Y`HUK.YLLU)\PSKPUNZLJ[VYZPZVUH]LYHNLYLSH[P]LS`OPNOLYJVTWHYLK[V V[OLY NYLLU[LJO ZLJ[VYZ *SLHULY *VU]LU[PVUHS ,ULYN` 9LUL^HISL ,ULYN` HUK *SLHU>H[LYZLJ[VYZWSHJLPU[OLTPKKSL-VYZVS\[PVUZPU*SLHULY;YHUZWVY[H[PVU HUK ,SLJ[YPJHS 7V^LY 0UMYHZ[Y\J[\YL VU H]LYHNL THYRL[Z OH]L YLSH[P]LS` SV^LY HJJLZZPIPSP[`-VYL_HTWSL*SLHULY;YHUZWVY[H[PVUPUJS\KLZYHPS^H`HUKHPY[YHUZWVY[ ZLNTLU[Z ^OLYL HJJLZZ [V THU` ]HS\L JOHPU LSLTLU[Z PZ YLZ[YPJ[LK ^OPSL [OL ,SLJ[YPJHS7V^LY0UMYHZ[Y\J[\YLPZJVU[YVSSLKI`[OLNV]LYUTLU[HUKWYVJ\YLTLU[ VM[LUMH]VYZSVJHSZ[H[LV^ULKLU[LYWYPZLZ[OV\NOL_JLW[PVUZL_PZ[

While China’s greentech market opportunities are generally attractive, market, technology, financing and regulatory challenges remain to be overcome MARKET CHALLENGES *OPUH»ZNYLLU[LJOYLSH[LKTHYRL[JOHSSLUNLZJVUZ[YHPU[OLHIPSP[`VMZVS\[PVUWYV]PKLYZ [VKLSP]LYZ\JJLZZM\S[LJOUVSVNPLZWYVK\J[ZHUKZLY]PJLZHUKSPTP[THYRL[KLTHUK MVYZ\JOZVS\[PVUZ3PTP[LKH^HYLULZZVM[OLH]HPSHIPSP[`HUKILULÄ[ZVMNYLLU[LJO ZVS\[PVUZJH\ZLZHKVW[LYZHUKLUK\ZLYZ[VJVU[PU\L^P[OJVU]LU[PVUHSWYHJ[PJLZ
TECHNOLOGY CHALLENGES ;LJOUVSVN`JOHSSLUNLZZSV^[OLKL]LSVWTLU[HUKHWWSPJH[PVUVMNYLLU[LJOZVS\[PVUZ PU *OPUH OPUKLYPUN ZVS\[PVUZ MYVT TLL[PUN [OL JVZ[ HUK MLH[\YL YLX\PYLTLU[Z VM WV[LU[PHS HKVW[LYZ .YLLU[LJO ZVS\[PVUZ HYL Z[PSS VM[LU TVYL L_WLUZP]L [OHU JVU]LU[PVUHSHS[LYUH[P]LZ:\IZPKPaLKYLZV\YJLHUK\[PSP[`JVZ[ZTH`HSZVSPTP[[OL HWWLHSVMNYLLU[LJOZVS\[PVUZHZTH`[OLJ\YYLU[SV^PU[LYUH[PVUHSTHYRL[WYPJLZ VM UH[\YHS YLZV\YJLZ HUK JVTTVKP[PLZ 4HU` NYLLU[LJO ZVS\[PVUZ HYL UV[ `L[ J\Z[VTPaLK[VTLL[*OPUH»ZLU]PYVUTLU[HSHUKTHYRL[YLX\PYLTLU[Z0U[LSSLJ[\HS WYVWLY[`HUK[LJOUVSVN`[YHUZMLYYLTHPUZPNUPÄJHU[PZZ\LZ

FINANCING CHALLENGES +LZWP[L Z[YVUN WVSPJ` Z\WWVY[ HUK NV]LYUTLU[ M\UKPUN NYLLU[LJO ÄUHUJPUN PU *OPUHPZSPTP[LKI`[OLYLSH[P]LS`LHYS`Z[HNLVMKL]LSVWTLU[VM[OLJV\U[Y`»ZÄUHUJPHS THYRL[Z*VTWHYLK[VKL]LSVWLKTHYRL[Z[OLYLHYLNLULYHSS`ML^LYVW[PVUZPU *OPUHMVYYHPZPUNKLI[VYLX\P[`JHWP[HSHJYVZZ[OLSPMLJ`JSLVMNYLLU[LJOZVS\[PVUZ .YLLU[LJO PU]LZ[TLU[Z HSZV VM[LU OH]L \UPX\L JOHYHJ[LYPZ[PJZ [OH[ JVTWSPJH[L ÄUHUJPUNZ\JOHZOPNOMYVU[LUKJHWP[HSULLKZHUKSVUNWH`IHJRWLYPVKZ

REGULATORY CHALLENGES >OPSL*OPUH»ZYLN\SH[VY`LU]PYVUTLU[PZHJSLHYWVZP[P]LKYP]LYMVYJOHUNLYLN\SH[VY` JOHSSLUNLZYLTHPU;OLJVTWSL_WVSPJ`LU]PYVUTLU[PZVM[LUKPMÄJ\S[[V\UKLYZ[HUK,]LU [OV\NO[OLV]LYHSSKPYLJ[PVUVMNYLLU[LJOPUJLU[P]LZPZWVZP[P]LWV[LU[PHSPZZ\LZYLSH[LK [V[OLZPaLVMWH`V\[Z[PTPUNHUKLSPNPIPSP[`L_PZ[4VUP[VYPUNHUKLUMVYJPUNJVTWSPHUJL VML_PZ[PUNLU]PYVUTLU[HSWVSPJPLZPZHSZVHUPZZ\LLZWLJPHSS`NP]LU*OPUH»ZZPaLYLNPVUHS ]HYPH[PVUZHUKK`UHTPJHSS`JOHUNPUNLJVUVT`-PUHSS`THYRL[WHY[PJPWHU[ZVM[LUOH]L 14

THE CHINA GREENTECH REPORT 2009

www.china-greentech.com

INTRODUCTION

SPTP[LK]PZPIPSP[`PU[VWVSPJ`ZWLJPÄJZHUK[PTPUNJVTWSPJH[PUN[OLPYI\ZPULZZKLJPZPVUZ

Clear opportunities exist for stakeholders to accelerate greentech markets in China FIVE KEY STAKEHOLDER GROUPS

:VS\[PVUHKVW[LYZZVS\[PVUWYV]PKLYZÄUHUJPHSPU]LZ[VYZNV]LYUTLU[YLN\SH[VYZ HUK V[OLY Z[HRLOVSKLYZ OH]L ZPNUPÄJHU[ YVSLZ [V WSH` PU [OL HJJLSLYH[PVU VM NYLLU[LJOTHYRL[ZPU*OPUH

OVERALL OPPORTUNITIES ;OL0UP[PH[P]LPKLU[PÄLKÄ]LV]LYHYJOPUNVWWVY[\UP[PLZYLSL]HU[[VHSSZLJ[VYZHUK PU]VS]PUNL]LY`Z[HRLOVSKLYNYV\W;OLZLHYL[VYHPZLKLJPZPVUTHRLYH^HYLULZZ HIV\[ NYLLU[LJO ILULÄ[Z KYP]L [OL TH[\YP[` VM Z[HUKHYKZIHZLK ZVS\[PVUZ [OH[ LUHISL^PKLZWYLHKHKVW[PVUZ\WWVY[MHPYTHYRL[WSH`PUNÄLSKZ^OPJOPUJVYWVYH[L LU]PYVUTLU[HSJVZ[ZPU[VJVU]LU[PVUHSZVS\[PVUWYPJPUNLUOHUJLNYLLU[LJOZRPSSZ HUKJHWHIPSP[PLZHUKLUJV\YHNLJVSSHIVYH[PVUIL[^LLUJVTTLYJPHSNV]LYUTLU[HS HUKUVUNV]LYUTLU[HSZ[HRLOVSKLYZ

SOLUTION ADOPTERS 6YNHUPaH[PVUZHUKV[OLYHKVW[LYZJHUHJJLSLYH[L*OPUH»ZNYLLU[LJOTHYRL[ZI` WYVTV[PUNLU]PYVUTLU[HSZ\Z[HPUHIPSP[`I\`PUNNYLLU[LJOWYVK\J[ZHUKZLY]PJLZ ^OLUL]LYMLHZPISLHUKJVTWS`PUN^P[OL_PZ[PUN*OPULZLLU]PYVUTLU[HSWVSPJPLZ

SOLUTION PROVIDERS *VTWHUPLZWYV]PKPUNNYLLU[LJOUVSVNPLZWYVK\J[ZHUKZLY]PJLZOH]LVWWVY[\UP[PLZ [VIL[[LYTH[JOZVS\[PVUZ^P[O*OPUH»ZSVJHSTHYRL[YLX\PYLTLU[ZLK\JH[LHKVW[LYZ VU NYLLU[LJO ILULÄ[Z TPUPTPaL SPML J`JSL JVZ[Z VM LUK WYVK\J[Z HUK SL]LYHNL WHY[ULYZOPWZ[VOLSWZ[YLUN[OLUHUKPU[LNYH[L*OPUH»ZNYLLU[LJO]HS\LJOHPUZ

FINANCIAL INVESTORS 0U]LZ[VYZOH]LVWWVY[\UP[PLZ[VLUOHUJLL_PZ[PUNHUKI\PSKUL^JHWHIPSP[PLZ[HYNL[LK [VNYLLU[LJOPU]LZ[TLU[ZHUK\[PSPaLUL^ÄUHUJPUNTLJOHUPZTZHJYVZZNYLLU[LJO WYVK\J[ J`JSLZ MYVT LHYS`Z[HNL 9 + [OYV\NO KLTVUZ[YH[PVU KLWSV`TLU[ HUK KPMM\ZPVUVMNYLLU[LJOZVS\[PVUZ

GOVERNMENT REGULATORS *OPUH»Z WVSPJ`THRLYZ OH]L HSYLHK` THKL Z\IZ[HU[PHS WYVNYLZZ PU WYV[LJ[PUN [OL LU]PYVUTLU[HUKLUHISPUN[OLNYLLU[LJOTHYRL[Z7VSPJ`THRLYZOH]LVWWVY[\UP[PLZ [VJVU[PU\L[VYLÄULWVSPJPLZHUKVW[PTPaLZ[HUKHYKZIL[[LYLUMVYJLJVTWSPHUJL ^P[OL_PZ[PUNWVSPJPLZMHJPSP[H[LÄUHUJPUNVMNYLLU[LJOZVS\[PVUZSPILYHSPaL[HYNL[ THYRL[Z[VWYVTV[LLMÄJPLUJPLZHUKPUUV]H[PVUHUKZ\WWVY[[OLKL]LSVWTLU[VM UH[PVUHSHUKPU[LYUH[PVUHSLU]PYVUTLU[HSL_JOHUNLZ

OTHER STAKEHOLDERS (JHKLTPJPUZ[P[\[PVUZ5.6ZPU[LYUH[PVUHSVYNHUPaH[PVUZHUKV[OLYZ[HRLOVSKLYZ HSZV OH]L HU HIPSP[` [V HJJLSLYH[L *OPUH»Z NYLLU[LJO THYRL[Z 2L` VWWVY[\UP[PLZ PUJS\KLKYP]PUNNYLLU[LJOLK\JH[PVUHUK[YHPUPUNPUP[PH[P]LZPU*OPUHI\PSKPUNSPURZ HUK JVTT\UPJH[PVUZ ^P[OPU HUK HJYVZZ V[OLY Z[HRLOVSKLY NYV\WZ Z\WWVY[PUN YLZLHYJOPUIHZPJZJPLUJLHUKZVS\[PVUZHUKJYLH[PUNHUKZ\WWVY[PUNTLJOHUPZTZ MVY[YHJRPUNJVTWSPHUJL^P[OL_PZ[PUNWVSPJPLZ -YVT [OPZ LMMVY[ P[ PZ JSLHY [OH[ *OPUH ^PSS ILJVTL VUL VM [OL ^VYSK»Z SHYNLZ[ THYRL[ZMVYNYLLU[LJO[LJOUVSVNPLZWYVK\J[ZHUKZLY]PJLZ.P]LUP[ZSHYNLTHYRL[ ZPaLJVTIPULK^P[O[OLOPNOSL]LSVMHJ[P]P[PLZHJYVZZHSSNYLLU[LJOZLJ[VYZP[PZ HSZV JLY[HPU [OH[ *OPUH»Z SVJHS PUK\Z[YPLZ ^PSS ILJVTL THQVY WYVK\JLYZ VM THU` NYLLU[LJOZVS\[PVUZIV[OMVYSVJHSJVUZ\TW[PVUHZ^LSSHZMVYL_WVY[[V[OLYLZ[ VM [OL ^VYSK @L[ [OLYL HYL HSZV ZPNUPÄJHU[ VWWVY[\UP[PLZ MVY MVYLPNU JVTWHUPLZ WHY[PJ\SHYS`[OVZL^P[OHK]HUJLK[LJOUVSVNPLZHUKV[OLYJHWHIPSP[PLZ[OH[JHUIL HKHW[LKHWWYVWYPH[LS`[V*OPUH»Z\UPX\LTHYRL[YLX\PYLTLU[Z >OH[ PZ SLZZ JLY[HPU PZ [OL KLNYLL [V ^OPJO *OPUH ^PSS ILJVTL [OL JLU[LY VM NYLLU[LJO PUUV]H[PVU ;OPZ WV[LU[PHS JLY[HPUS` L_PZ[Z KYP]LU I` MHJ[VYZ ^OPJO PU JS\KLZ[YVUNSVJHSKLTHUKJVVYKPUH[LKNV]LYUTLU[Z\WWVY[LU[YLWYLUL\YPHSJ\S [\YLH]HPSHIPSP[`VMO\THUJHWP[HSHUK[OLJV\U[Y`»ZZ[YVUNPUK\Z[YPHSIHZL6U[OL V[OLY OHUK *OPUH»Z JVTWHUPLZ OH]L OPZ[VYPJHSS` ILLU Z\JJLZZM\S TVYL MVY [OLPY SV^JVZ[THU\MHJ[\YPUNVML_PZ[PUN[LJOUVSVNPLZ[OHUMVY[OLPYPUUV]H[PVUVMSLHK PUN[LJOUVSVNPLZ;OL0UP[PH[P]LILSPL]LZ[OH[[OLQ\Y`PZZ[PSSV\[PU[OPZJHZLI\[ ^V\SKUV[KPZJV\U[[OLYLHSWVZZPIPSP[`[OH[*OPUHLTLYNLZHZHUPUUV]H[VYPUTHU` NYLLU[LJOTHYRL[Z^P[OPU[OLUL_[ZL]LYHS`LHYZ www.china-greentech.com

THE CHINA GREENTECH REPORT 2009

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DEFINING

CHINA’S GREENTECH MARKETS

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THE CHINA GREENTECH REPORT 2009

www.china-greentech.com

DEFINING CHINA’S GREENTECH MARKETS

This report refines the term ‘greentech,’ provides a map of China’s greentech markets, and defines a set of greentech market sectors and segments AS GREENTECH MARKETS ARE BOTH EMBRYONIC AND RAPIDLY CHANGING, there are few standardized terms in use today. For example, the term greentech is commonly described with alternatives such as cleantech, alternative energy and sustainable practices. In order to ensure a common language throughout this report, the Initiative YL]PL^LK L_PZ[PUN KLÄUP[PVUZ VM NYLLU[LJOYLSH[LK JVUJLW[Z NH[OLYLK [OL ]PL^Z of industry experts and solicited feedback from its partners and advisors. The YLZ\S[PUN KLÄUP[PVUZ WYLZLU[LK PU [OPZ JOHW[LY HYL [OVZL \ZLK I` [OL *OPUH .YLLU[LJO0UP[PH[P]L(KKP[PVUHSKLÄUP[PVUZJHUILMV\UKPU[OL.SVZZHY`

DEFINITION OF GREENTECH

Greentech refers to 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 maximizing the efficient and sustainable use of energy, water and other resources

China Greentech Market Map A CRITICAL ELEMENT OF DEFINING CHINA’S GREENTECH MARKETS for the purposes of the 0UP[PH[P]L^HZ[OLKL]LSVWTLU[VM;OL*OPUH.YLLU[LJO4HYRL[4HWWYLZLU[LKPU -PN\YL;OLTHWPZJVTWYPZLKVMUPULIYVHKS`KLÄULKTHYRL[ZLJ[VYZHUK focused segments across three broad categories – energy supply, resource use and other markets. This map provides a common language to describe greentech THYRL[ZPU*OPUHHUKHZ[Y\J[\YL[OH[OHZN\PKLK[OLYLZLHYJOWYVJLZZHUK[OL organization of this report.

Fig. 1: THE CHINA GREENTECH MARKET MAP

SEGMENTS

SECTORS

ENERGY SUPPLY

Cleaner Conventional Energy

Renewable Energy

Electric Power Infrastructure

Cleaner Coal

Solar Energy

Transmission

Cleaner Oil

Wind Power

Cleaner Gas Nuclear Power

RESOURCE USE

OTHER MARKETS

Cleaner Transportation

Cleaner Industry

Clean Water

Waste Management

Sustainable Forestry and Agriculture

Optimized Design

Cleaner Road

Optimized Design

Water Extraction

Waste Collection

Sustainable Forest Management

Distribution

Sustainable Materials

Cleaner Rail

Sustainable Materials

Water Treatment

Waste Recycling

Bioenergy

Energy Storage

Energy Efficiency

Cleaner Air

Efficient Processing

Water Distribution

Hydropower

Energy from Waste Recovery

Demand Management

Water Efficiency

Cleaner Waterway

Wave Power

Green Building

Water Use Wastewater Treatment

Supply Flexibility

Geothermal Energy

Waste Treatment Sustainable Waste Disposal

Sustainable Land Management Sustainable Farming Communities Optimized Crops

LEGEND

„Sectors covered in the report „Segments covered in the report „Sectors and segments not covered in the report www.china-greentech.com

THE CHINA GREENTECH REPORT 2009

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DEFINITIONS

THIS REPORT FOCUSES ON SEVEN CHINA GREENTECH MARKET SECTORS: „ Cleaner Conventional Energy „ Renewable Energy „ Electric Power Infrastructure „ Green Building „ Cleaner Transportation „ Cleaner Industry „ Clean Water >P[OPU [OL 9LUL^HISL ,ULYN` HUK *SLHULY 0UK\Z[Y` ZLJ[VYZ H YLWYLZLU[H[P]L range of segments are covered. This choice of focus was made based on input from partners and advisors, an understanding of the market opportunities, and consideration of the Initiative’s available time and resources. Sectors and segments not covered in this report should by no means imply a judgment on their environmental or commercial potential.

Greentech Sectors and Segments DEFINITIONS FOR EACH SECTOR COVERED IN THE CHINA GREENTECH REPORT are presented ILSV^+\L[V[OLWHY[PJ\SHYS`IYVHKZJVWLVM[OL*SLHULY*VU]LU[PVUHS,ULYN` 9LUL^HISL,ULYN`HUK*SLHULY;YHUZWVY[H[PVUZLJ[VYZKLÄUP[PVUZMVYZLNTLU[Z within these three sectors are also included. The report has subsequently been VYNHUPaLKHSVUN[OLZLZWLJPÄJZLNTLU[SPULZ

CLEANER CONVENTIONAL ENERGY

*SLHULY *VU]LU[PVUHS ,ULYN` PZ KLÄULK HZ LULYN` KLYP]LK MYVT UVUYLUL^HISL fossil fuel sources (e.g. coal, oil and natural gas) in ways which minimize the nega tive impact on the natural environment. This sector also includes nuclear power. „ *SLHULYJVHSPUJS\KLZZVS\[PVUZZ\JOHZ*VHS:JYLLUPUNHUK:JY\IIPUN0U[LNYH[LK .HZPÄJH[PVU *VTIPULK *`JSL 0.** HUK *HYIVU *HW[\YL HUK :LX\LZ[YH[PVU **: „ *SLHULY NHZ JVUZPZ[Z VM ZVS\[PVUZ Z\JO HZ *HW[\YL HUK H[LY 9LPUQLJ[PVUHUK6W[PTPaLK9LZLY]VPY4HUHNLTLU[[OH[HSSV^ZVPS[VILL_[YHJ[LK in ways which minimize negative impact on the natural environment „ 5\JSLHY WV^LY PZ LULYN` KLYP]LK ]PH JVU[YVSSLK U\JSLHY ÄZZPVU VM YHKPVHJ[P]L materials at nuclear power plants

RENEWABLE ENERGY

Renewable Energy is produced from sources that are naturally replenishing, Z\JOHZ:VSHY3PNO[>PUK>H]LZH[LY-SV^ZHUK Biomass. „ >PUK WV^LY PZ KLÄULK HZ LSLJ[YPJ LULYN` NLULYH[LK MYVT ^PUK \ZPUN 7V^LY Generation Turbines „ Solar energy consists of thermal or electric energy derived from solar light using 7OV[V]VS[HPJ*LSSZ*VUJLU[YH[PUN:VSHY0UZ[HSSH[PVUZVY:VSHY>H[LY/LH[LYZ „ Bioenergy is thermal or electric energy produced from biomass, and includes ZVS\[PVUZZ\JOHZ)PVL[OHUVS)PVKPLZLS)PVNHZHUK)PVTHZZ*VTI\Z[PVU

18

THE CHINA GREENTECH REPORT 2009

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DEFINING CHINA’S GREENTECH MARKETS

ELECTRIC POWER INFRASTRUCTURE

,SLJ[YPJ 7V^LY 0UMYHZ[Y\J[\YL YLMLYZ [V ¸ZTHY[¹ LSLJ[YPJ NYPKZ HUK UL[^VYRZ supported by IT applications, which deliver power to users on demand in an LMÄJPLU[HUKYLSPHISL^H`MYVTHIYVHKYHUNLVMNLULYH[PUNZV\YJLZ

GREEN BUILDING

Green Building covers planning, building and operating solutions that are more Z\Z[HPUHISL LMÄJPLU[ HUK OLHS[O` [OHU JVU]LU[PVUHS ZVS\[PVUZ MVY HU LX\P]HSLU[ level of comfort and service. Solutions include Integrated Design, Sustainable 4H[LYPHSZ,ULYN`,MÄJPLU[(WWSPHUJLZHUK)\PSKPUN(\[VTH[PVU

CLEANER TRANSPORTATION

*SLHULY ;YHUZWVY[H[PVU PZ KLÄULK HZ ZVS\[PVUZ [OH[ PUJYLHZL LULYN` LMÄJPLUJ` reduce emissions and improve resource utilization to minimize the negative impact of transportation on the environment. „ *SLHULY YVHK [YHUZWVY[H[PVU PUJS\KLZ 4VYL ,MÄJPLU[ ,UNPULZ *SLHULY -\LSZ Alternative Vehicle Energy Systems, as well as comprehensive road network planning and development „ *SLHULY YHPS [YHUZWVY[H[PVU YLMLYZ [V ,ULYN` ,MÄJPLU[ ;YHPUZ ,SLJ[YPÄJH[PVU VM 9HPS^H`ZHUK6W[PTPaLK9HPS^H`6WLYH[PVUZ4HUHNLTLU[ „ *SLHULY HPY [YHUZWVY[H[PVU PUJS\KLZ -\LS ,MÄJPLU[ (PYJYHM[ ^LSS WSHUULK HUK JVUZ[Y\J[LKHPYWVY[PUMYHZ[Y\J[\YLHUK6W[PTPaLK(PY;YHMÄJ4HUHNLTLU[ „ *SLHULY^H[LY^H`[YHUZWVY[H[PVUJV]LYZ-\LS,MÄJPLU[:OPWZ^LSSWSHUULKHUK JVUZ[Y\J[LK^H[LY^H`PUMYHZ[Y\J[\YLHUK6W[PTPaLK>H[LY;YHMÄJ4HUHNLTLU[

CLEANER INDUSTRY

*SLHULY0UK\Z[Y`LUJVTWHZZLZWYHJ[PJLZ[OH[PUJYLHZLLULYN`LMÄJPLUJ`YLK\JLHPY and water pollution and decrease the amount of solid waste produced by industrial HJ[P]P[PLZ :VS\[PVUZ PUJS\KL VUZP[L *VTIPULK /LH[ HUK 7V^LY */7 ,ULYN` ,MÄJPLU[4V[VYZ-S\L.HZ+LZ\SM\YPaH[PVU-.+Z`Z[LTZHUK7YVJLZZ9LKLZPNU

CLEAN WATER

*SLHU >H[LY PZ KLÄULK HZ [OL JVSSLJ[P]L Z\T VM HJ[P]P[PLZ ^P[OPU [OL LJVUVTPJ water cycle – water extraction, water treatment, water distribution, water use and wastewater treatment. Solutions include Water Treatment Technologies, Water 8\HSP[`4LHZ\YLTLU[HUK4VUP[VYPUN

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THE CHINA GREENTECH REPORT 2009

19

CHINA’S

MARKET CONTEXT

20

THE CHINA GREENTECH REPORT 2009

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MARKET CONTEXT

China’s three decades of dynamic economic growth have created a colossal and resilient economy at significant cost to the environment. However, as the country increasingly adopts greentech solutions, the signs of a green transformation are beginning to emerge. THE UNPRECEDENTED SCALE OF CHINA’S ECONOMIC DEVELOPMENT over the past three decades has resulted in both positive and negative consequences. While the living standards of hundreds of millions of people have improved, China’s ecosystems OH]LZ\MMLYLKMYVTZPNUPÄJHU[LU]PYVUTLU[HSKHTHNL-VY*OPUH[VJVU[PU\LVU this path of rapid economic growth, it will need to take deliberate steps towards improving the sustainability of its economic activities. There is ample evidence that both national and international stakeholders are rallying to support opportunities for this new transformation to an environmentally sustainable China.

China’s Three Decades of Transformation IN JUST A LITTLE OVER 30 YEARS, since the Deng Xiaoping-led government adopted “Reform and Opening Up” policies in December 1978, China has undergone an economic transformation unlike anything the world has seen before. Economic HUKWVSP[PJHSKL]LSVWTLU[ZK\YPUN[OPZWLYPVKOH]LZVSPKPÄLK*OPUH»ZZ[H[\ZHZH major world power, particularly in trade and international affairs.

„ FORMIDABLE ECONOMIC GROWTH China’s economic output (real GDP) has grown on average 10% annually since the late 1970s. This led China to double the size of its economy every seven to eight years and resulted in its current GDP being sixteen times the size it was in 1978. China’s economy is currently the world’s third largest, behind the U.S. and Japan. Most analysts predict that China will replace Japan as the world’s second largest LJVUVT`ZLL-PN\YLPU[OLULHY[LYTM\[\YL

Section 1. CHINA’S THREE DECADES OF TRANSFORMATION

Fig .1: CHINA’S GROSS DOMESTIC PRODUCT (GDP)

Nominal GDP by Leading Countries, 2008 Trillion US$, Official Exchange Rates

China Real GDP, 1978-2008 2005 Trillion US$, Official Exchange Rate 3.5

60.7

World Total

3.0 2.5

x2

14.3

United States

2.0

4.9

Japan

1.5

China

x2

1.0

x2 x2

0.5 0.0 1980 1985 1990 1995 2000 2005 2010

Source: US Department of Agriculture,"International Macroeconomic Data Set"

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THE CHINA GREENTECH REPORT 2009

Germany

4.4 3.7

France

2.9

United Kingdom

2.7

Italy

2.3

Source: International Monetary Fund, "World Economic Outlook Database April 2009 Edition"

21

CHINA’S THREE DECADES OF TRANSFORMATION

The country’s rapid economic growth has been led by fast-paced industrialization, starting with light industry (e.g., textiles, clothing and footwear) in the 1980s, and propelled by heavy industry (e.g., metallurgy, chemicals and machinery) V]LY[OLSHZ[KLJHKL;OLV\[W\[VM*OPUH»ZOLH]`PUK\Z[Y`HZPNUPÄJHU[WHY[VM which is exported, has grown particularly fast since 2001, the year China joined the World Trade Organization. This growth has resulted in China becoming the world’s leading producer and consumer of a wide range of basic materials and [YHKHISL JVTTVKP[PLZ -VY L_HTWSL *OPUH WYVK\JLZ V]LY OHSM VM [OL ^VYSK»Z JLTLU[HUKVUL[OPYKVM[OL^VYSK»ZZ[LLSHUKHS\TPU\TZLL-PN\YL1 In terms of consumption, China is the world’s largest consumer of rice, cotton, steel, aluminum, copper, nickel and tin.

Section 1. CHINA’S THREE DECADES OF TRANSFORMATION

Fig .2: SELECTED INDUSTRIAL PRODUCTION BY CHINA AND LEADING COUNTRIES, 1980-2007, Megatons Crude Steel Production

Primary Aluminum Production

China

500

15

China

400 10

300 200

Japan U.S. FSU/Russia India

100 0 1980

1985

1990

1995

2000

2005

5

FSU/Russia U.S. India Japan

0 1980

1985

Cement Production

1995

2000

2005

Ammonia Production

1,500 China

1,000

60 50

China

40 30

500 0

1990

1980

1985

1990

1995

2000

2005

India U.S. Japan FSU/Russia

FSU/Russia India U.S. Japan

20 10 0

1980

1985

1990

1995

2000

2005

Source:Lawrence Berkeley National Laboratory, "China Energy Databook Version 7.0"

Not surprisingly, China’s economic growth has fueled its demand for energy. Between 1978 and 2006, China’s primary energy consumption grew an average of 6% per year, compared to the world average of 2%. This growth accelerated after 2000, increasing to over 10% per year and doubling China’s primary energy consumption between 2000 and 2006 alone.2,3 China is now the second largest consumer of energy in the world, behind the U.S. In 2006, it was responsible for  VMNSVIHSLULYN`JVUZ\TW[PVUHÄN\YL[OH[JVU[PU\LZ[VNYV^ZLL-PN\YL0[ is the largest consumer of coal and the second largest consumer of crude oil.

„ RADICAL IMPROVEMENTS TO LIVING STANDARDS This tremendous economic growth has led to radical improvements in the living standards of Chinese citizens. Given that China’s population grew by only 35% in the last three decades while its economy experienced a sixteen-fold increase in overall GDP, per capita income increased ten-fold. :PUJL[OL ZWV]LY[`PU*OPUHOHZILLUYLK\JLKZPNUPÄJHU[S`(JJVYKPUN[V the World Bank, while 84% of China’s population lived on less than US$1.25 per KH`PU [OPZU\TILYOHKMHSSLU[V I`ZLL-PN\YL4 Hundreds of millions of people have been lifted out of poverty by China’s economic development in half a generation.

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Fig .3: PRIMARY ENERGY CONSUMPTION BY LEADING COUNTRIES, 2006 Quadrillion BTU World Total

472

United States

100

China

74

Russia Japan India

30 23 18

Germany

15

Canada

14

Source: The World Bank, Poverty Data: A Supplement to World Development Indicators 2008 (Washington DC, U.S.: World Bank, 2008)

In addition to poverty reduction, overall living standards have improved markedly. China’s United Nations Human Development Index (HDI), which is a measure of health, education and income, increased from 0.53 to 0.78 between 1975 and 2005, Fig 3. PRIMARY ENERGY CONSUMPTION BY LESDING HUPTWYV]LTLU[VMV]LY ZLL-PN\YL0U [OPZZJVYLULHYS`X\HSPÄLK COUNTRIES,2006,MILLION TONS OIL EQUIVALENT *OPUH MVY [OL <5 KLÄUP[PVU VM ¸SV^ O\THU KL]LSVWTLU[¹ HZZPNULK [V YV\NOS` one-third of the world’s countries with the lowest scores. In 2005, however, China OHKJVTLJSVZL[V[OL<5»ZKLÄUP[PVUVM¸OPNOO\THUKL]LSVWTLU[¹HZZPNULK[V roughly one-third of the world’s countries with the highest scores. Between 1975 and 2005, China’s life expectancy at birth increased from 66 to 76 years and from 64 to 72 years, for females and males respectively.5 Public spending on healthcare increased nearly fourteen-fold (constant dollars) between 1978 and 2006, and access to education (i.e. literacy rates and number of years in school) has improved dramatically.6(Z[OL
Section 1. CHINA’S THREE DECADES OF TRANSFORMATION Fig .4: IMPROVEMENT OF LIVING STANDARDS IN CHINA

Share of Population Living on Less than US$1.25 per Day (PPP 2005), 1981-2005, %

United Nations Human Development Index, 1975-2005 Index

84% 69% 54%

60% 54%

- 68%

0.53 0.56

0.60

0.63

0.69

0.73

0.78 + 47%

36% 36% 28% 16%

1981 1984 1987 1990 1993 1996 1999 2002 2005 Source: The World Bank, Poverty Data: A Supplement to World Development Indicators 2008 (Washington DC, U.S.: World Bank, 2008)

1975 1980 1985 1990 1995 2000 2005 Source: United Nations Development Programme, Human Development Report 2007/2008 (New York, NY, USA: Palgrave Macmillan), 235

Lawrence Berkley National Laboratory, “China Energy Databook Version 7.0” Tables 9B.13-15 Energy Information Administration, "International Energy Annual 2006" Table E.1 At the time of writing this report, energy data as reported by the Energy Information Administration for 2006 was the latest available, published in 2008; the update was scheduled to be released later in 2009 4 Measured on Purchasing Power Parity basis in 2005 US$ 5 Watkins, Kevin, China Human Development Report 2007/08 (Beijing, China: United Nations Development Program and China Translation and Publishing Group Corporation, 2008), 6 1 2 3

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THE CHINA GREENTECH REPORT 2009

Fig .5: PROPORTION OF POPULATION IN URBAN AND RURAL AREAS IN CHINA, 1975-2005, %

23

CHINA’S THREE DECADES OF TRANSFORMATION

Fig .5: PROPORTION OF POPULATION IN URBAN AND RURAL AREAS IN CHINA, 1975-2005, % 100%

64% 60% 73% 69% Rural 83% 80% 77%

36% 40% 27% 31% Urban 17% 20% 23% 1975 1980 1985 1990 1995 2000 2005 Source: United Nations, "World Urbanization Prospects: The 2007 Revision Population Database"

One key factor driving the improvement of living standards in China has been massive urbanization – the migration of people from rural to urban areas. Between 1975 and 2005, the percentage of the population that live in urban areas rose from  [V ZLL-PN\YLL_WHUKPUN[OL\YIHUWVW\SH[PVUI`ULHYS`TPSSPVU Cumulative household consumption has also grown dramatically across the country, at a pace just under that of GDP growth – over 8% per year on average for 30 years.8 China is quickly emerging as a major market for home appliances, consumer electronics, mobile telecommunications, internet service, real estate, air travel and private vehicles sales.

„ RESILIENT ECONOMY ,_WVY[SLKNYV^[OHUK[LTWLYLKÄZJHSWVSPJPLZOH]LHSSV^LK*OPUH[VHJJ\T\SH[L [OLSHYNLZ[MVYLPNUL_JOHUNLYLZLY]LZPU[OL^VYSK(ZVM4H` *OPUHOHKV]LY US$2,000 billion in reserves, representing nearly 30% of total foreign exchange YLZLY]LZOLSK^VYSK^PKLZLL-PN\YL;OLZWLLKH[^OPJO*OPUHHJJ\T\SH[LK these reserves is equally astounding, as the total amount stood at less than US$200 billion in 2000, merely one-tenth the present level.9 (Z [OL NSVIHS LJVUVTPJ JYPZPZ ILJHTL HWWHYLU[ PU [OL MHSS VM  *OPUH»Z government acted quickly, announcing a four trillion yuan (US$586 billion) economic stimulus package in November to be spent over two years. This became the second largest stimulus package in the world, following the US$787 IPSSPVU(TLYPJHU9LJV]LY`HUK9LPU]LZ[TLU[(J[(ZHWLYJLU[HNLVM.+7[OV\NO China’s stimulus package was the largest in the world. Fig .6: FOREIGN EXCHANGE RESERVES BY LEADING COUNTRIES, MAY 2009, Billion US$ World Total

7,471

China

2,132 1,057

Japan European Union

685

Russia

401

Saudi Arabia

395

Taiwan

313

India

265

Source: Wikipedia, “List of Countries by Foreign Exchange Reserves,” http://www.wikipedia.com/ (accessed on August 10, 2009)

Ibid., 15 Ibid., 1 National Bureau of Statistics of China, "China Statistical Yearbook 2008," The China Greentech Initiative analysis 9 The People’s Bank of China, “Gold and Foreign Exchange Reserves, 2000,” http://www.pbc.gov.cn/ (accessed on August 18, 2009) 6 7 8

24

THE CHINA GREENTECH REPORT 2009

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MARKET CONTEXT

( JVTIPUH[PVU VM WVSPJPLZ HPTLK H[ Z[PT\SH[PUN [OL LJVUVT` HWWLHYZ [V have helped China maintain fast economic growth this year, outperforming the expectations of many analysts. China announced that the economy grew at 7.1%, `LHYV]LY`LHYPU[OLÄYZ[OHSM 10([[OL[PTL[OL0U[LYUH[PVUHS4VUL[HY`-\UK 04-OHKMVYLJHZ[*OPUH»ZLJVUVT`[VNYV^ PU[V[HSMVY ^OPSLHU[PJPWH[PUN a worldwide contraction of 1%. China’s growth is projected to reach 9% in 2010 ZLL-PN\YL Fig .7: REAL GDP GROWTH FORECASTS BY THE INTERNATIONAL MONETARY FUND FOR SELECTED COUNTRIES, 2009-10, % 2009 World China India Brazil United States United Kingdom Italy Japan Germany Russia

2010

-1%

3% 8% 5%

-1% -3% -4% -5% -6% -6% -7%

9% 7%

3% 1% 0% -0% 2% -1% 2%

Source: International Monetary Fund, "World Economic Outlook Update, July 2009"

Environmental Cost of China’s Economic Growth

CHINA’S RAPID ECONOMIC DEVELOPMENTOHZZPNUPÄJHU[S`PTWHJ[LK[OLLU]PYVUTLU[ While this is not dissimilar to what has happened in other countries that have undergone industrialization, the scale and pace at which it has happened in China 8: CHINA’S COLOSSAL SCALE has caused the rest of the world to take notice. China has the unenviable task of ons China Generating Capacity Increase 2008 Compared balancing improvements in the welfare and living standards of its people with the to Total Capacity of Selected Countries, 2006, GW need to protect and nurture the natural environment. Key natural resources (e.g. air, water and land) are compromised by pollution and overuse, thereby impacting China capacity human health 90.5 and jeopardizing renewal of resources. These results reveal the 18.0 increase, 2008 unsustainability of former practices and dramatically reinforce the urgent need for rapid change.

FORMATION

United Kingdom

ographical 2008) sion

Total capacity, 2006

.3

Italy Spain South Korea Ukraine Mexico Australia Iran Taiwan

78.7

„ POLLUTED AIR 78.2

(Z JVUJLYUZ V]LY NSVIHS JSPTH[L JOHUNL OH]L PUJYLHZLK *OPUH OHZ ILJVTL H 71.2 MVJHSWVPU[MVYSLHKLYZPU[OLÄLSKVMLU]PYVUTLU[HSWYV[LJ[PVU0UMHYHOLHKVM international forecasts, China emerged as the world’s largest emitter of greenhouse 64.2 gases (GHGs), overtaking the U.S. (S[OV\NO*OPUH»ZWLYJHWP[H./.LTPZZPVUZHYL 53.5 still low relative to most developed countries, in aggregate, China is responsible 51.1 MVYV]LY VM[OL[V[HS./.ZYLSLHZLKPU[V[OLH[TVZWOLYLHUU\HSS`ZLL-PN\YL 9).11(ZPU[LYUH[PVUHSLMMVY[Z[VZSV^KV^UHUKL]LU[\HSS`YL]LYZL./.LTPZZPVUZ 49.5 increases continue, China is expected to play a central role.

44.4

41.8 On the surface, the magnitude of China’s GHG emissions may seem surprising,

particularly given the size of its economy, which is only one-third that of the United

States. However, key differences between China and the U.S., such as the role Sources: 1. Energy Information Administration, “InternationalPUK\Z[YPHS Energy Statistics” WYVK\J[PVU WSH`Z PU [OL LJVUVT` HUK LULYN` LMÄJPLUJ` SL]LSZ L_WSHPU Table 6.4 why. Industrial production, which is inherently more GHG intensive than services or 2. Xinhua, "China's Installed Power Capacity Increase 10%," 12 January 11, 2009, http://english.people.com.cn/ agriculture, accounts for over 50% of China’s GDP compared to just 25% in the U.S. This is due in part to China’s role as the world’s leading producer of manufactured goods, a large proportion of which is exported and consumed overseas. China also OHZSV^LYLULYN`LMÄJPLUJ`[OHU[OL<:HJYVZZTVZ[PUK\Z[YPHSZLJ[VYZ

National Bureau of Statistics of China, “China's Economy Stabilized with a Better Performance Trend While Its Upturn Yet to Consolidate,” July 17, 2009, http://www.stats.gov.cn/ Xinhua, "China's Installed Power Capacity Increases 10%," January 11, 2009, http://english.people.com.cn/ 12 Energy Information Administration, "International Energy Annual 2006" Table 6.4 10

11

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25

Fig .7: REAL GDP GROWTH FOREC SELECT

ENVIRONMENTAL COST OF CHINA'S ECONOMIC GROWTH

World

CHINA’S COLOSSAL SCALE It is essential to understand the scale at which China operates Representing 7% of the world’s land mass by HYLH*OPUHPZOVTL[VULHYS`VULÄM[OVM[OL^VYSK»Z WVW\SH[PVU([Q\Z[V]LYIPSSPVUWLVWSLP[ZWVW\SH[PVU is nearly twice that of the United States and Western Europe combined. Six of China’s provinces are home to more than 65 million people each, making them comparable in population to large European countries Z\JOHZ[OL<2-YHUJLHUK0[HS` Each year, more than 18 million people migrate from rural to urban areas in China, which is more than the national population of Greece, Belgium or Portugal ZLL-PN\YL China maintains over 40 billion square meters of YLZPKLU[PHS JVTTLYJPHS HUK PUK\Z[YPHS ÅVVY ZWHJL

China India representing the largest building stock in the world. Brazil ;OPZ PZ TVYL [OHU [^PJL [OL ÅVVY ZWHJL MV\UK PU [OL United States U.S. United Kingdom Economically, the output of just one of China’s Italy provinces, Guangdong, is greater than that of Norway, Japan :H\KP(YHIPHVY0UKVULZPH Germany Each year, China installs electricity generation Russia

capacity beyond the total capacity of countries such HZ[OL<20[HS`VY:V\[O2VYLHZLL-PN\YL0UMHJ[ Source: International Monetary Fund, "W at the present pace of installation, it would take China just three years to build new capacity equivalent to that which currently exists in Japan or Russia, two VM [OL Ä]L SHYNLZ[ WV^LY NLULYH[PUN JV\U[YPLZ PU [OL world.13,14

Section 1. CHINA’S THREE DECADES OF TRANSFORMATION Fig .8: CHINA’S COLOSSAL SCALE

China Yearly Migration Ccompared to Populations of Selected Countries, 2005, Millions China migration, 2005

China capacity increase, 2008

Greece

11.1

Belgium

10.4

Portugal

10.5

Sweden

9.0 7.4

Switzerland

6.7

Israel

78.7

Italy

78.2

Spain

71.2

South Korea Ukraine Mexico Australia

Singapore

4.3

Iran

New Zealand

4.1

Taiwan

Sources: 1. Chan, Kam Wing, Internal Labor Migration in China: Trends, Geographical Distribution and Policies (Seattle, U.S.: University of Washington, 2008) 2. United Nations, "World Urbanization Prospects: The 2007 Revision Population Database"

90.5

United Kingdom

16.3 Total capacity, 2006

Total populations, 2005

China Generating Capacity Increase 2008 Compared to Total Capacity of Selected Countries, 2006, GW

18.0

Netherlands

64.2 53.5 51.1 49.5 44.4 41.8

Sources: 1. Energy Information Administration, “International Energy Statistics” Table 6.4 2. Xinhua, "China's Installed Power Capacity Increase 10%," January 11, 2009, http://english.people.com.cn/

-PUHSS`*OPUHYLSPLZOLH]PS`VUJVHSHZP[ZWYPTHY`LULYN`ZV\YJL*VHSHJJV\U[ZMVY over 70% of China’s primary energy supply, compared to the world average of less [OHU   HUK L]LU SLZZ MVY [OL <: ZLL -PN\YL  *OPUH JVU[PU\LZ [V PUJYLHZL P[ZJVHSÄYLKWV^LYNLULYH[PVUJHWHJP[`I`HULX\P]HSLU[VM[^V4>WSHU[ZWLY week.15 Coal is a highly GHG intensive fuel source, emitting nearly twice the CO2 of natural gas and about one-third more than oil in delivering one unit of energy.16 In fact, over 80% of China’s CO2 emissions from energy use come from burning coal.17 (WHY[MYVTNYLLUOV\ZLNHZLZ*OPUH»ZHPYX\HSP[`Z\MMLYZMYVTV[OLYWVSS\[HU[Z [OH[OH]LTVYLPTTLKPH[LLMMLJ[ZVUO\THUOLHS[O(JJVYKPUN[V[OL>VYSK)HUR»Z

The statistics presented in the Figure accounts for CO2 emission from consumption of coal, oil and natural gas only and do not include other GHG emissions, such as those from deforestation and industrial processes. This data is often used as proxy to analyze trends and relative emissions between countries due to greater reliability and consistency. 14 Zhou, Nan, Energy Use in China: Sectoral Trends and Future Outlook (Oakland, CA, U.S.: Lawrence Berkeley National Laboratory, 2008), 10, 28 15 Energy Information Administration, "International Energy Annual 2006" Table 6.4t 16 BP, "BP Statistical Review of World Energy June 2009" 17 Ibid; The China Greentech Initiative analysis 13

26

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THE CHINA GREENTECH REPORT 2009

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MARKET CONTEXT

latest ranking of over 100 large cities by particulate matter pollution worldwide, 17 of the 25 most polluted cities in 2004 were located in China. Particulate matter are small particles or liquid droplets suspended in the air, some of which are small enough to pass through the human nose and throat into the lungs, and in large quantities cause serious damage to the heart and lungs. Data in the same study, sourced between 1995 and 2001, revealed that six of the world’s seven cities with the highest sulfur dioxide air concentration were located in China. Sulfur dioxide exacerbates human respiratory and heart illnesses and contributes to the formation of acid rain, which can damage crops, buildings, soil and water.18,19

Section 2. ENVIRONMENTAL COST OF CHINA’S ECONOMIC GROWTH Fig .9: CO EMISSIONS FROM COMSUMPTION OF COAL, OIL AND NATURAL GAS 2

China and the U.S., 1980-2008, Megatons per Year 8,000

Leading Countries, 2008, Megatons per Year

World Total

31,578

7,000

United States

6,000 5,000 4,000

China

China

6,897

United States

6,371

Russia

3,000 2,000 1,000

1980

India

1,419

Japan

1,391

Germany

0 1985

1990

1995

2000

2005

2010

1,690

South Korea

858 664

Note: This statistics does not include CO2 emitted from sources other than coal, oil or natural gas and non-CO2 greenhouse gases Source: BP, "BP Statistical Review of World Energy June 2009"

„ STRAINED WATER RESOURCES

In addition to air pollution, China faces the dual problem of water scarcity and water pollution. China, with 20% of the world’s population, has less than 7% of the .11b: INDUSTRIAL WATER PRO world’s fresh water resources, which come from surface rivers and Fig groundwater 20 BillionitUS Dollars per Cub are now in decline. Driven Billion m3 / year predominantly by a large population, Fig .11: TOTAL WATER WITHDRAWAL BYsources LEADING that COUNTRIES, 2000, PZ[OLZLJVUKSHYNLZ[^H[LYJVUZ\TLYPU[OL^VYSKILOPUK0UKPHZLL-PN\YL (JJVYKPUN [V *OPUH»Z 5H[PVUHS )\YLH\ VM :[H[PZ[PJZ *OPUH»Z ^H[LY YLZV\YJLZ MLSS World Total 3,810 I`HZT\JOHZ IL[^LLUHUKHSVULZLL-PN\YL;OPZPZK\LPU India 3.4 part to the increased frequency of severe droughts, which some have attributed China 3.7 to changing climate conditions. During the winter of 2004-2005, Southern China 9.7 United States 646 India suffered from what local authorities called the worst drought in 50 years.21 Later, Francein 14.5 China 617 the winter of 2008-2009, Beijing experienced its longest drought since 1971.22 United States

477

Pakistan Iran

93

Japan

88

Thailand

Brazil

22.5

Germany

23.4

169One of the main reasons China experiences such a high water demand is that United Kingdom [OL JV\U[Y` [LUKZ [V \ZL ^H[LY YLZV\YJLZ PULMÄJPLU[S` 5LHYS` [^V[OPYKZ VM HSS

47.3

Japan water drawn in China is used in the agricultural sector, which is highly fragmented.

Denmark 0UTVZ[JHZLZPYYPNH[PVUZ`Z[LTZHYL]LY`PULMÄJPLU[^P[OVUS` VM[OL^H[LY 87 drawn actually reaching the crops.23 Industry accounts for one-quarter of China’s

water withdrawal. Similarly, water productivity in China – which is a measure of the

Source: 2. United Nations World Water Assessment Programm Source: Food and Agriculture Organization of the United Nations, Aquastat Database, ]HS\LVMV\[W\[JYLH[LKWLYVUL\UP[VM^H[LY\ZLK¶^HZPUÄ]L[PTLZSV^LY - The United National Water Development Report 2, 2006, 3 http://www.fao.org (accessed August 2009)

than that of Germany, and remarkably, nearly 30 times lower than that of Japan or +LUTHYRZLL-PN\YL;OPZPZK\LUV[VUS`[V*OPUH»ZSV^LY^H[LYYLJ`JSPUNYH[L HUKV]LYHSSSV^LY^H[LY\ZLLMÄJPLUJ`I\[HSZV[OLKVTPUHU[YVSLVMOLH]`PUK\Z[Y`

-\Y[OLYTVYL*OPUHMHJLZ[OLKPMÄJ\S[`VMNLVNYHWOPJKPZWHYP[`HZULHYS` VM P[ZZ\YMHJL^H[LYYLZV\YJLZHYLJVUJLU[YH[LKPU[OL:V\[O(ZHYLZ\S[5VY[OLYU China is faced with the issue of overexploited groundwater resources. World Bank, World Development Indicators 2007 (Washington DC, U.S.: World Bank, 2008), 174-175 Environmental Protection Agency, "Six Common Air Pollutants" (accessed on August 18, 2009) China Internet Information Center, "Efforts to Protect and Save Water Resources," March 23, 2009, http://www.china.org.cn/ 21 United States Department of Agriculture, "Recent Rain Eases Drought in Southern China," March 10, 2005, http://www.fas.usda.gov/ 22 China Economic Net, "No Rain in Beijing for 100 Days," February 4, 2009, http://en.ce.cn/ 23 Xie, Jian, Addressing China's Water Scarcity: Recommendations for Selected Water Resource Management Issues (Washington DC: U.S.: The World Bank, 2009) 18 19 20

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ENVIRONMENTAL COST OF CHINA'S ECONOMIC GROWTH

Fig .10 CHINA’S PRIMARY ENERGY MIX COMPARED TO THE U.S. AND WORLD TOTAL, 2007, % of Total Energy Consumption

70.4%

24.0% 28.5%

Coal

Hydro

World

China U.S.

19.5% 39.4% 35.1%

Oil

Fig .11: TOTAL W

World United

5.9% 2.4% 6.2%

Pa

3.4%

Nuclear

Other

Th

24.9% 23.6%

Gas

Source: Food and Agricul

0.8% 8.0% 5.5% 0.1% 1.3% 1.1%

Note: “Other” includes electric power generated from geothermal, solar, wind, and wood and waste sources Sources: 1. BP, “BP Statistical Review of World Energy June 2009” 2. Energy Information Administration, “International Energy Annual 2006” Table F.8 3. The China Greentech Initiative analysis

Fig .11: TOTAL WATER WITHDRAWAL BY LEADING COUNTRIES, 2000 Billion Cubic Meters per Year World Total

3,810 646

India China

617

United States

479 169

Pakistan Iran

93

Japan

88

Thailand

87

Source: Food and Agriculture Organization of the United Nations, "AQUASTAT"

28

THE CHINA GREENTECH REPORT 2009

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Section 2. ENVIRONMENTAL COST OF CHINA’S ECONOMIC GROWTH Fig .12: CHINA WATER RESOURCES, 2000-07, Billion Cubic Meters Surface Water Resources 2,724 2,656

850

2,625

2,593

839

830

-9%

-10%

809

2,436 2,424 764

762

744

2,313 2000 2001 2002 2003 2004 2005 2006 2007

2000 2001 2002 2003 2004 2005 2006 2007

Note: Duplicated measurement between surface water and groundwater was not accounted for in this analysis Source: National Bureau of Statistics of China, "China Statistical Yearbook 2008" Table 11-17

5% 19%

3% 14%

55% 38% 45%

%

%

870

2,698

N IN CHINA’S RIVER BASINS BY GRADE, 2005, %

%

Groundwater Resources

16%

18% 6%

19%

22% 8%

54%

12% 6% 0%

14%

5%

13%

21% 18%

17%

32%

40%

ow Pearl Songhua Huai Hai Liao er River River River River River

des by Standard Application:

odies and national nature reserves r centralized drinking supply (Class A) or centralized drinking supply (Class B) r general industrial water supply aggricultural water supply d for any purpose

Challenges (Nottingham, U.K.: The University of

ity Management-Policy and Institutional Considerations , 2006), 8

>H[LYWVSS\[PVUPZHULX\HSS`SHYNLJVUJLYU(JJVYKPUN[V.YLLUWLHJL VM China’s rivers, lakes and reservoirs are seriously impacted by water pollution and 24 Fig .13: INDUSTRIAL WATER PRODUCTIVITY, 2001, Billion Cubic Kilometer are “not safe for humans to use.” Pollutants originate from US$ pointper sources, such as industrial and municipal discharges, as well as non-point sources, such as fertilizers that seep into water reservoirs via the soil. Industrial and domestic water 3.4 users discharge over 50 billionIndia tons of wastewater annually into China’s rivers, lakes and reservoirs.25 Pollution is a particularly acute problem in China’s major 3.7 China rivers in the North, such as the Hai, Huai and Liao rivers, where over one third of 9.7 United States the water is so polluted it cannot be used for any purpose, including industrial or 14.5 HNYPJ\S[\YHS\ZLZZLL-PN\YL:[\KPLZOH]LZOV^UJSLHYSPURZIL[^LLU*OPUH»Z France level of water quality and the incidence of human 22.5illness, such as diarrhea, typhoid, Brazil and cancer of the stomach, liver and bladder.26 23.4 Germany

„ LAND DEGRADATION United Kingdom

27.3 Land degradation and contamination is another environmental issue facing China. 119.6 Japan Between 1957 and 1990, the area of arable land in China was reduced by 35 138.6 Denmark TPSSPVUOLJ[HYLZ;OPZPZLX\P]HSLU[[V[OLH]HPSHISLJYVWHYLHZVM+LUTHYR-YHUJL Germany and The Netherlands combined.27 +LZLY[PÄJH[PVU PZ H THQVY MVYJL [OH[ continues to threaten arable land in China, particularly in the North, with deserts Source: United Nations Industrial Development Organization, Water: A Shared Responsibility (New York, already accounting for 18% of the country’s land area.28 NY, U.S.: United Nations Industrial Development Organization, 2006) (S[OV\NO*OPUHOHZ[HRLUZ^LLWPUNTLHZ\YLZ[VYH[PVUHSPaLHUKJVU[YVSZVSPK ^HZ[LTHUHNLTLU[P[YLTHPUZHRL`PZZ\L>HZ[LSHUKÄSSZHYLNYV^PUNH[HSHYTPUN rates, resulting in land contamination and posing risks to human health. It is LZ[PTH[LK[OH[ VMZVSPK^HZ[LPU*OPUHPZSHUKÄSSLK296MULHYS`VMÄJPHS SHUKÄSSZ[OH[HYLJ\YYLU[S`PU\ZLVYHSYLHK`JSVZLKPU*OPUHHSTVZ[OHSM^LYLMV\UK [VUV[JVTWS`^P[O*OPUH»ZV^U,U]PYVUTLU[HS0TWHJ[(ZZLZZTLU[Z[HUKHYKZ30 In YLZLHYJOLYZH[[OL<:,U]PYVUTLU[HS7YV[LJ[PVU(NLUJ`,7(LZ[PTH[LK [OH[ VUS`   VM *OPUH»Z SHUKÄSSZ ^LYL Z\MÄJPLU[S` ZHUP[HY` [V JVUMVYT [V <: standards, nearly 40% did not conform to such standards and over 50% were open dumps.31 0TWYVWLYS`THUHNLKSHUKÄSSZSLHK[VHYHUNLVMLU]PYVUTLU[HSWYVISLTZ;OL` create groundwater pollution as dissolved solids, nitrate nitrogen, ammonia Greenpeace, “China’s Water Crisis,” http://www.greenpeace.org/ (accessed on August 20, 2009) National Bureau of Statistics of China, "Statistical Yearbook 2008;" The China Greentech Initiative analysis Xie, Jian, Addressing China's Water Scarcity: Recommendations for Selected Water Resource Management Issues (Washington DC, U.S.: The World Bank, 2009), 19 27 Global Environment Facility and International Fund for Agricultural Development, Tackling Land Degradation and Desertification (U.S. and Italy: Global Environment Facility and International Fund for Agricultural Development, 2002), 2 28 The Walrus, “The Chinese Dust Bowl,” http://www.walrusmagazine.com/ (accessed on August 15, 2009) 29 Robinson, A. et al., Landfill Data from China: Addressing Information Needs for Methane Recovery (Washington DC, U.S.: Environmental Protection Agency, 2003), 1 30 中国低碳网, “全国仅57%垃圾填埋通过环评,” [China Low Emissions Website, “Only 57% of the National Landfill Passed Through Environmental Impact Assessment”], July 3, 2009 31 Robinson, A. et al., Landfill Data from China: Addressing Information Needs for Methane Recovery (Washington DC, U.S.: Environmental Protection Agency, 2003), 1 24 25 26

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een surface water and groundwater was not accounted for in this analysis of China, "China Statistical Yearbook 2008" Table 11-17

ENVIRONMENTAL COST OF CHINA’S ECONOMIC GROWTH

Fig .13: INDUSTRIAL WATER PRODUCTIVITY, 2001, Billion US$ per Cubic Kilometer

%

s

India

3.4

China

3.7 9.7

United States

14.5

France Brazil

22.5 23.4

Germany United Kingdom Japan Denmark

27.3

Section 2. ENVIRONMENTAL COST OF CHINA’S ECONOMIC GROWTH 119.6

Fig .12: CHINA WATER RESOURCES, 2000-07, Billion Cubic Me

138.6

Surface Water Resources Source: United Nations Industrial Development Organization, Water: A Shared Responsibility (New York, NY, U.S.: United Nations Industrial Development Organization, 2006) 2,724

Groundwa 870

2,698

850

2,656

2,625 2,593Methane is released as nitrogen and other pollutants seep through into aquifers.

839

830

organic matter decays, which is a potent greenhouse gas that contributes to global -9% warming in addition to endangering inhabitants in the area due to its explosive UH[\YL3HUKÄSSZHSZVJHUILJVTLIYLLKPUNNYV\UKZMVYKPZLHZL]LJ[VYZZ\JOHZ 2,436 2,424 YH[ZHUKÅPLZ 2,313

:PTPSHYS`OHaHYKV\Z^HZ[LTHUHNLTLU[PZHJVUJLYU(S[OV\NOVUS` VMHSS solid waste generated in China is hazardous,32 China’s government has invested 2000 2001 2002 2003 2001 2003 [OYLH[Z 2004 2005 OLH]PS` PU YLN\SH[PVU HUK THUHNLTLU[ Z`Z[LTZ2000 K\L [V [OL2002 ZPNUPÄJHU[ [V 2006 2007 human and environmental health. While reports vary on the level of compliance and treatment, a number of challenges are consistently recognized. Given thatwater and groundwater was not accounted for in this analysis Note: Duplicated measurement between surface Source: National Bureau of Statistics of China, "China Statistical Yearbook 2008" Table 11-17 ^HZ[LNLULYH[VYZHYLYLX\PYLK[VÄUHUJL[OL[YLH[TLU[VM[OL^HZ[L[OLTZLS]LZ and that the disclosure of the nature of their activities may lead to closer scrutiny in the future, small to medium-sized enterprises tend to avoid using the formal channels of managing hazardous waste. Fig .14: WATER POLLUTION IN CHINA’S RIVER BASINS BY GRADE, 2005, % 100%

Grade I, II 56%

5%

7% 27%

19%

3% 14%

55% 38% 45%

34%

Grade III 20% 7% Grade IV Grade V 11% 2% 25% Grade V+ 11%

5%

16%

6%

19%

22%

3.4

China

3.7

France Brazil

8%

32%

India United States

18%

54%

12% 6% 0%

14%

13%

21% 18%

17%

Fig .13: INDUSTRIAL WATER PRODUCTIVITY,

Germany United Kingdom Japan Denmark

40%

Yangtze Yellow Pearl Songhua Huai Hai Liao River River River River River River River

9.7 14.5

22.5

23.4

Definition of Pollution Grades by Standard Application:

Source: United Nations Industrial Development Organi NY, U.S.: United Nations Industrial Development Organ

Grade I : Source of water bodies and national nature reserves Grade II : Protected area for centralized drinking supply (Class A) Grade III : Protected area for centralized drinking supply (Class B) Grade IV : Water bodies for general industrial water supply Grade V : Water bodies for aggricultural water supply Grade V+ : Cannot be used for any purpose

Sources: 1. Lee, Seungho, China’s Water Policy Challenges (Nottingham, U.K.: The University of Nottingham, 2006), 7 2. Boerset, Erik et al., China Water Quality Management-Policy and Institutional Considerations (Washington, DC, U.S.: The World Bank, 2006), 8

王琪, “工业固体废物处理及回收利用,” [Qi Wang, “Industrial Solid Waste Processing and Recycling”], (Beijing, China: Environmental Science Publishing House, 2006), 24

32

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Electronic waste (e-waste) is a case in point. China harbors a booming e-waste recycling industry which is under-regulated and almost entirely outside the control VM [OL JLU[YHS NV]LYUTLU[ (U LZ[PTH[LK   VM [OL ^VYSK»Z OPNO[LJO ^HZ[L ÄUKZ P[Z ^H` [V *OPUH [OYV\NO MVYTHS HUK PUMVYTHS JOHUULSZ33 The majority of it is processed in backyards and small workshops using manual disassembly, ^P[OHSTVZ[UVYLSPHUJLVUHK]HUJLK[LJOUVSVN`(M[LY]HS\LKJVTWVULU[ZOH]L ILLUL_[YHJ[LK[OLYLTHPUZHYLLP[OLYKPZWVZLKVMPUVWLUÄYLZVYK\TWLK;OPZ L_WVZLZO\THUZÅVYHHUKMH\UH[VOLH]`TL[HSZHUKV[OLY[V_PUZ0[PZVMNYLH[ concern that China’s own sum of discarded electronics and appliances is expected [VPUJYLHZLZPNUPÄJHU[S`V]LY[OLJVTPUNKLJHKLZ34

Industrialization in China Compared to Other Countries The environmental issues currently facing China are in many ways similar to those encountered by today’s developed nations, on their own paths toward industrialization. Commencing with the U.K., European countries in the 18th and 19th centuries found themselves having to cope ^P[OHT`YPHKVMLU]PYVUTLU[HSKPMÄJ\S[PLZPUJS\KPUNHPYWVSS\[PVU^H[LYZOVY[HNLZZHUP[H[PVUPZZ\LZHUKYLZV\YJL L_OH\Z[PVU(PYWVSS\[PVUILJHTLHWLYZPZ[LU[WYVISLTPU[OL<2WHY[PJ\SHYS`PU3VUKVU^OLYLP[JVTIPULK^P[O fog to become persistent smog. In Paris, sewage was deposited directly into rivers, causing sanitation issues and having a devastating effect on river ecosystems and water stocks. The build up of sulfur dioxide in the atmosphere, as a result of coal burning, resulted in acid rain, which led to the salinization of soil and underground water sources. Deforestation was a major issue across most of Europe. The U.S. experienced similar challenges on its path to industrialization. *OPUH»ZZP[\H[PVUPZ\UPX\LPU[OYLLPTWVY[HU[^H`Z-PYZ[S`*OPUH»ZWHJLVMPUK\Z[YPHSPaH[PVUPZZPNUPÄJHU[S`MHZ[LY [OHU [OH[ L_WLYPLUJLK I` V[OLY JV\U[YPLZ [OYV\NOV\[ OPZ[VY` (Z UV[LK PU H 7\SP[aLY 7YPaL^PUUPUN >HSS :[YLL[ Journal series, China has “condensed an entire Industrial Revolution into the span of a single lifetime.”35 Secondly, the scale of China’s industrialization is unprecedented, with a greater proportion of China’s 1.3 billion people LUNHNLK`LHYHM[LY`LHY-PUHSS`WYL]PV\ZUH[PVUHSL_WLYPLUJLZPUPUK\Z[YPHSPaH[PVUOH]LVJJ\YYLKK\YPUNHULYH when the world’s natural environment was less stressed. There were fewer people, greater per capita resources available, and climate change had not yet become a pressing issue. While these differences create unique circumstances for China, they also encourage the country to address its LU]PYVUTLU[HSKPMÄJ\S[PLZPUHTVYLLMÄJPLU[HUKYHWPKTHUULY[OHUV[OLYJV\U[YPLZ[OYV\NOV\[OPZ[VY`

China’s Future Development and the Need for Sustainability CHINA’S UNTAPPED POTENTIAL, ACCUMULATED MOMENTUM and the determination of its people will ensure that the country continues to develop economically over the JVTPUNKLJHKLZ>P[OLU]PYVUTLU[HSKPMÄJ\S[PLZHSYLHK`H[OHUK*OPUH^PSSULLK [VZPNUPÄJHU[S`PTWYV]L[OLZ\Z[HPUHIPSP[`VMP[ZLJVUVTPJHJ[P]P[PLZ[VTHPU[HPUP[Z economic growth.

„ ECONOMIC DEVELOPMENT OF EPIC PROPORTIONS The fundamentals are in place for China to continue its path of rapid economic development, accompanied by large-scale urbanization and the deployment of infrastructure. China’s 2008 nominal GDP per capita was just over US$3,000, compared to U.S. GDP per capita of nearly US$47,000 and Japan’s of above US$38,000. This difference indicates China’s potential to boost the productivity of its labor force through capital investments and education. Indeed, many analysts expect China’s economy to continue to grow on average at 8% annually for at least another decade. Economists at Goldman Sachs have forecast that China will overtake the U.S. to become the largest economy in the world sometime before

World Watch Institute, “China’s E-Waste Problem: Facing Up to the Challenge,” May 4, 2006, http://www.worldwatch.org/ 34 Shen, Xiaoyue et al, “Regional Economic Integration and E-Waste Management in China,” Policy Research Center for Environment and Economy (presentation given at the Institute of Global Environmental Strategies, Yokohama Japan, March 26-28, 2008) 35 Steiger, Paul, “China’s Naked Capitalism: Raucous Industrial Revolution Echoes Era of America’s Robber Barons a Century Ago,” Wall Street Journal, 2007 33

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CHINA'S FUTURE DEVELOPMENT AND THE NEED FOR SUSTAINABILITY

Fig .16: CHINA’S URBAN POPUL

Fig .15: GDP PROJECTIONS FOR SELECTED COUNTRIES, 2006 Trillion US$ China becomes world’s largest economy

U.S. Japan China

71

880 756 531

45

607

39 26

23 18

15

13 4 3 2006

30

2005

13 5 5

2010

5

6

6

7

2020

2030

2040

2050

2010

2020

Source: United Nations, "World Urbanization Prospects: Th

Source: Goldman Sachs Economic Research Group, BRICs and Beyond (New York, NY, U.S.: Goldman Sachs, 2007), 149

ZLL-PN\YL>OPSLV[OLYHUHS`Z[ZWYVQLJ[SV^LYNYV^[OYH[LZMVY*OPUH»Z economy, it is widely acknowledged that China has the potential to become the world’s largest economy prior to 2050. China’s urbanization, while on a large scale, is low compared to other countries. In 2005, it reached 40%, while the 2007 world average for urbanization was 50%. China’s future urbanization is expected to involve hundreds of millions of people moving from villages to the cities. The United Nations forecasts that by 2050, it will reach the level of today’s developed countries, which is approximately 75%.36 In absolute terms, this implies the expansion of China’s urban population by nearly TPSSPVUWLVWSLV]LY[OLUL_[`LHYZZLL-PN\YL The McKinsey Global Institute estimates that this urban migration will require *OPUH[VI\PSKHZT\JOHZIPSSPVUZX\HYLTL[LYZVMÅVVYZWHJLIL[^LLU and 2025,37ULHYS`KV\ISPUN[OLJ\YYLU[ÅVVYZWHJL0U[OLZHTLZ[\K`4J2PUZL` estimates that in 2025 China will have over 200 cities with a population over one million. By comparison, Europe has only 35 such cities today. This massive urbanization will be accompanied by large scale deployment of infrastructure, such as power generation, water provision, sewage, telecommunications and transportation systems (e.g., road, rail, air and waterway). China is already planning the largest railway expansion in history, which will extend the railway network from 78,000 kilometers to 120,000 kilometers by 2020 at a cost of over one trillion US$.38 (ZPUKP]PK\HSPUJVTLZYPZLZV^PSSJVUZ\TW[PVU([[OLLUKVM*OPUH»ZJP]PS ]LOPJSLÅLL[Z[VVKH[V]LYTPSSPVUJHYZYLWYLZLU[PUNQ\Z[MV\Y]LOPJSLZWLY people.39 Compared to the U.S., where there are over 80 passenger cars for every 100 people, or Japan with 45 cars per 100 people,40*OPUH»ZÅLL[VUHWLYJHWP[H basis is small. The current growth in private car ownership, which has averaged nearly 20% since 2005,41 will continue through the next several decades, albeit at a slower pace. McKinsey estimates that China could become the nation with the greatest number of vehicles, reaching over 300 million by 2030.42

United Nations, "World Urbanization Prospects: The 2007 Revision Population Database" Woetzel, Jonathan et al., Preparing for China's Urban Billion (New York, NY, U.S.: McKinsey & Company, March 2008), 7 Wong, Julian and Andrew Light, China Begins Its Transition to a Clean-Energy Economy (Washington DC, U.S.: Center for American Progress, June 2009), 6 39 National Bureau of Statistics of China, "Statistical Communique of the People's Republic of China on the 2008 National Economic and Social Development," February 26, 2009, http://www.stats.gov.cn/; The China Greentech Initiative analysis 40 United States Bureau of Transportation "Statistics: Table 1-11," http://www.bts.gov/ (accessed on August 23, 2009); The Japan Times, "Households Owning Fewer Cars," August 21, 2007, http://www.japantimes.co.jp/ (accessed on August 23, 2009); United Nations, "World Urbanization Prospects: The 2007 Revision Population Database;" The China Greentech Initiative analysis 41 National Bureau of Statistics of China, "China Statistical Yearbook 2008" Table 15-26 36 37 38

32

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Fig .16: CHINA’S URBAN POPULATION, 2005-50, Millions

SELECTED COUNTRIES, 2006 Trillion US$

China becomes world’s largest conomy

71

880

969

1,027

756 531

45

+94%

607

39 26

23

30

2005

13

2020

2030

2040

2050

7

6

6

2010

Source: United Nations, "World Urbanization Prospects: The 2007 Revision Population Database"

2030

2040

2050

„ RESULTING SURGE IN RESOURCE DEMAND

Group, BRICs and Beyond 149

This anticipated economic growth will demand increased energy, water and material resources. If China maintains its previous practices, even with ongoing PTWYV]LTLU[Z PU YLZV\YJL \ZL LMÄJPLUJ` [OL HKKP[PVUHS Z[YHPU VU [OL UH[\YHS environment will be colossal and in the long-term unsustainable, given the scale of expected economic development. (JJVYKPUN[V[OL0U[LYUH[PVUHS,ULYN`(NLUJ`0,(PU[OLYLMLYLUJLJHZLZJLUHYPV ¶^OPJOLZZLU[PHSS`HZZ\TLZUVZPNUPÄJHU[WVSPJ`HUK[LJOUVSVN`JOHUNLZIL`VUK what’s already anticipated, and moderate GDP growth – China’s energy demand JV\SK NYV^ HIV\[   WLY `LHY VU H]LYHNL IL[^LLU UV^ HUK  ZLL -PN\YL ([[OPZYH[L*OPUH^V\SKV]LY[HRL[OL<:HZ[OLSHYNLZ[JVUZ\TLYVMLULYN` by 2015, and by 2030 would account for close to 25% of the world’s total energy demand.43 While forecasts for China’s future energy mix vary greatly, some trends are clear. China’s reliance on coal will persist for the foreseeable future, given the JV\U[Y`»ZSHYNLPUZ[HSSLKJVHSÄYLKLSLJ[YPJP[`NLULYH[PVUJHWHJP[`HI\UKHU[JVHS reserves and relatively stable and low coal prices. Oil demand is expected to grow rapidly, driven by the increase in motor vehicles on the road and greater proliferation of air, rail and domestic waterway transport. China’s reliance on oil

Fig .17: HISTORIC AND REFERENCE CASE PROJECTIONS FOR ENERGY CONSUMPTION BY EIA, 1990-2006 ACTUAL, 2007-2030 PROJECTIONS, Quadrillion BTU

China

160 140

United States

120 100

China

12 10 8

United States

6

80 60

Russia

40

India Japan Brazil

20 0 1990

Fig .18: HISTORIC AND REFERENCE CASE PROJECTIONS BY EIA FOR CO2 EMISSIONS FROM FOSSIL FUELS, 1990-2006 ACTUAL, 2007-2030 PROJECTIONS, Gigatons

1995

2000

2005

2010

2015

2020

2025

2030

Sources: 1. Energy Information Administration, “International Energy Annual 2006” Table E1 2. Energy Information Administration, “Intenrational Energy Outlook 2009” Table A1 3.The China Greentech Initiative analysis

42 43

www.china-greentech.com

India

4

Russia

2 0 1990

Japan Brazil 1995

2000

2005

2010

2015

2020

2025

2030

Sources: 1. Energy Information Administration, “International Energy Annual 2006” Table H.1CO2 2. Energy Information Administration, “International Energy Outlook 2009” Table A10 3. The China Greentech Initiative analysis

Joerss, Martin et al., China's Green Opportunity (Beijing, China: McKinsey & Company, May 2009), 5 Energy Information Administration, "International Energy Outlook 2009" Table A1

THE CHINA GREENTECH REPORT 2009

33

Fig .17: CHINA BASELINE ENERGY DEMAND PROJECTIONS, 1990-2030, mtoe 3500 CHINA’S FUTURE DEVELOPMENT AND THE NEED FOR SUSTAINABILITY

Fig .18: CHINA BASELINE CO2 EMISSIONS 12,000

3000

10,000

imports, which 2500 is currently close to half of its roughly seven million barrels of daily JY\KLVPSJVUZ\TW[PVUPZL_WLJ[LK[VPUJYLHZL-VYLJHZ[ZMVYJVU[YPI\[PVUZMYVT CHINA US hydroelectric 2000 power, natural gas, nuclear power and renewable energy sources, such as wind andEUROPE* solar, vary greatly, and depend on the view of individual forecasters. 1500One certainty is that contributions from renewable energy sources, other than hydroelectricity, will remain low as a percent of total energy consumed IEA FORECAST 2002 unless China 1000actively drives the adoption and use of these technologies.

6,000 EUROPE*

2,000 JAPAN

South Total North Total 32,524 -17% 27,082 8,059

1997

7,013

2010

5,800

-17%

2050

Source: The World Bank, China: Water Quality Management – Policy and Institutional Considerations (Washington, DC, U.S.: The World Bank, 2006)

China Greentech Initiative actually expects China to do more to reduce its GHG emissions than is projected in the reference case scenario, and explores this throughout the rest of the report. In addition to energy, water is a major resource that China will require to sustain P[ZNYV^[O(ZKPZJ\ZZLKLHYSPLY*OPUH»Z^H[LYYLZV\YJLZHYLUV[VUS`ZJHYJLHUK \UL]LUS` KPZ[YPI\[LK HJYVZZ [OL JV\U[Y` I\[ H SHYNL WYVWVY[PVU PZ ZPNUPÄJHU[S` polluted. The World Bank forecasts that water resources per capita across China’s both southern and northern river basins will decline by as much as 17% between HUK-PN\YL .P]LU[OH[[OLWVW\SH[PVUPZL_WLJ[LK[VNYV^I`VUS` 4% over the same period,45 this forecasted decline is due mostly to the decline in actual water resources. Economic growth also will demand increased material resources, such as metals (e.g. steel and aluminum), cement, wood, textiles (e.g. cotton) and food (e.g. sugar and rice). If unmediated, China’s soaring demand for these commodities may put undue pressure on available supplies and further heighten international competition for these resources.

44 45

Ibid, Table A10 United Nations, "World Urbanization Prospects: The 2007 Revision Population Database"

34

1998

Source: IEA data and forecasts from the IEA Wo *Europe refers to OECD Europe. Source: Daniel Rosen and Trevor Houser, China

Fig .19: RIVER BASINS WATER AVAILABILITY PER CAPITA PROJECTIONS, 1997-2050, m3

34,001

1994

1990

1986

1982

1978

0

1974

Source: BP Statistical Yearbook 2006 , IEA WEO 2002 , IEA WEO 2006, Excludes biomass If China indeed were to develop in line with the reference case scenario, and waste. *Europe refers to OECD Europe. international concerns over warming be directed Source: Daniel Rosen and Trevorglobal Houser, China Energy: would A Guide forincreasingly the Perplexed, 2007 towards China. The pace and scale of the rise of GHG emissions in this scenario could reduce the incentives for other countries to curtail their emissions. The

US

4,000

2030

2027

2024

2021

2018

2015

2011

2008

2005

2002

1999

1996

1993

1990

Given the500 uncertaintyJAPAN associated with China’s long-term energy mix, it is equally KPMÄJ\S[[VMVYLJHZ[*OPUH»Z./.LTPZZPVUZ5L]LY[OLSLZZHJJVYKPUN[V[OL0,(»Z INDIA reference case 0 scenario, China’s CO2 emissions from fossil fuel burning could grow on average at 3% annually until 2030, reaching 12 gigatons, which by that [PTL^V\SKYLWYLZLU[ULHYS` VM[OL^VYSK»Z[V[HS./.LTPZZPVUZZLL-PN\YL44

8,000

THE CHINA GREENTECH REPORT 2009

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„ A VISION FOR SUSTAINABILITY The China Greentech Initiative believes that for China to continue its rapid economic development, it cannot afford to maintain the status quo or proceed along the reference scenario presented above. In fact, for China, embracing new approaches to clean energy generation, stepping up its pollution mitigation efforts HUKWYVTV[PUNYLZV\YJL\ZLLMÄJPLUJ`HYLVW[PTHS^H`Z[VWYLZLY]L[OLOLHS[OVM its citizens, conserve the natural environment for future generations, solidify its international status as a leading player and continue its stellar economic growth. China’s future vision, therefore, must be one in which new technologies focused on environmental sustainability must be developed and deployed, new business models and modes of cooperation between consumers, businesses and the government established, and compliance with government regulations brought up to a high level. This will enable China to succeed on a broad range of interconnected objectives: „ Develop and deploy a wide range of alternative forms of energy, as well as cleaner ways to use conventional energy sources, in order to meet its voracious energy appetite sustainably „ Curtail the growth in GHG emissions to slow global climate change, helping   [V TPUPTPaL [OL YPZRZ VM ZPNUPÄJHU[ HK]LYZL PTWHJ[ VU *OPUH HUK [OL YLZ[ VM [OL^VYSKZ\JOHZYPZPUNZLHSL]LSZKLZLY[PÄJH[PVUL_[YLTL^LH[OLYHUKKPZY\W tions in water supply „ Reduce air and water pollution to improve health, quality of life and attractiveness of the country as a business and tourist destination „ 0TWYV]L^H[LY\ZLLMÄJPLUJ`Z[LW\WJVUZLY]H[PVULMMVY[ZHUKM\Y[OLYYH[PVUHSPaL the administration of water resources to mitigate water shortages „ (KKYLZZZVSPK^HZ[LPZZ\LZPUJS\KPUNOHaHYKV\Z^HZ[LHUKTHUHNL[OL^HZ[L to increase recycling and reuse and to decrease the adverse impact of waste treatment on the environment >OPSL*OPUHMHJLZZPNUPÄJHU[LU]PYVUTLU[HSZ\Z[HPUHIPSP[`O\YKSLZHZP[JVU[PU\LZ to develop economically, the China Greentech Initiative believes that China has the potential to innovate and lead the transformations required. The country’s stable macroeconomic environment, systematic government planning, growing pool of engineering and managerial talent, increasing investment in research, and dynamic business environment are positioning China for cleaner and more Z\Z[HPUHISL NYV^[O -VY[\UH[LS` [OL PUP[PHS ZPNUZ VM H NYLLU *OPUH OH]L HSYLHK` emerged, indicating what the future may hold and how quickly it may arrive.

Promising Signs of China’s Greentech Future REALIZING BOTH THE BENEFITS OF EMBRACING A CLEANER AND MORE SUSTAINABLE FUTURE and the dangers of failing to do so, China is addressing a range of key areas simultaneously. The nation has already achieved impressive growth across a U\TILYVMYLUL^HISLLULYN`HUKYLZV\YJLLMÄJPLUJ`HYLHZ\ZPUNHUHWWYVHJO[OH[ combines government policy, private entrepreneurship and best practice transfer that incorporates indigenous technological and commercial innovation. While these efforts are still dwarfed by the magnitude of the issues faced, it is important to remember that China is experiencing a situation unique to the modern era – it must balance economic development with the need to protect and sustain natural resources at an unprecedented scale. Today’s developed countries did not have global environmental sustainability issues to contend with PU[OL0UK\Z[YPHS(NL;OPZZP[\H[PVUWYLZLU[ZH\UPX\LZL[VMJOHSSLUNLZI\[HSZV opportunities for collaboration and action by businesses, regulators, consumers and other stakeholders.

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„ LAYING THE FOUNDATION China has made impressive progress in laying a foundation for the future growth of green technologies and has rapidly emerged as one of the world’s leading providers and consumers of renewable energy and cleaner modes of transportation. It is HSZV[HRPUNZPNUPÄJHU[Z[LWZ[V\ZLLULYN`YLZV\YJLZTVYLLMÄJPLU[S` China’s wind power market has been growing particularly fast, doubling the PUZ[HSSLKJHWHJP[`MVYMV\YJVUZLJ\[P]L`LHYZYLHJOPUN.>PUZLL-PN\YL 20). In fact, China reached the original 2010 target of 5 GW, established in 2005, three years ahead of schedule. This allowed the National Development and Reform Commission (NDRC) to upgrade the target to 10 GW, which has also been achieved ahead of schedule. Today, China ranks fourth in the world, behind the U.S., Germany and Spain, in terms of total installed wind capacity, accounting for 10% of the world’s total.46 Recently, China has begun to OF explore the country’s Section 4. PROMISING SIGNS CHINA’S GREENTECH FUTURE offshore wind resource potential, which is estimated to be three times greater than CUMULATIVE INSTALLED WIND AND SOLAR CAPACITIES IN CHINA, 2000-2008 Fig .20: FUTURE 47 Sectionresources. 4. PROMISING SIGNS OF CHINA’S GREENTECH onshore

Solar Photovoltaic Capacity, Megaw Wind Capacity, Gigawatts WIND AND SOLAR CAPACITIES IN CHINA, 2000-2008 Fig .20: CUMULATIVE INSTALLED Solar Photovoltaic Capacity, Megawatts 12.2

Wind Capacity, Gigawatts 12.2

150

5.9 5.9

2.6 1.3

0.4

0.5

0.6

0.8

2001 2002 2003 2004

0.8 0.6 0.4 2.60.5 45 1.3 19 2001 2002 2003 2004 2005 2006 2007 2008

65

70

80 19 2000

1

10 0 45

65

70

2002

2004

2005

Source: Pullen, Angelika et al., Global Wind 2008 Report 2005 2006 2007 2008 200025 (Brussels, Belgium: Global Wind Energy Council, 2009),

Fig .21: CHINA RENEWABLE ENERGY CAPACITY TARGETS

Energy from renewable sources

2010 TARGET

2020 TARGET

7%

10%

20%(15%)

Hydropower

117 GW

190 GW

300 GW

Wind power

1.3 GW

10 GW (5 GW)

100 GW (30 GW)

Solar PV

0.07 GW

0.3 GW

20 GW (1.8 GW)

80 million m2

150 million m2

300 million m2

2 GW

5.5 GW

30 GW

1 million tons

3 million tons

10 million tons

0.05 million tons

0.2 million tons

2 million tons

Solar water heating capacity Biomass power (agriculture/forestry) Bioethanol Biodiesel

Sources: 1. National Development and Reform Commission, Medium and Long Term Development Plan for Renewable Energy in China (Beijing, China: NDRC, September 2007) 2. The China Greentech Initiative analysis Development and Reform Commission, Medium and Long Term Development Plan for e Energy in China (Beijing, China: NDRC, September 2007) na Greentech Initiative analysis 46 47

Pullen, Angelika et al., Global Wind 2008 Report (Brussels, Belgium: Global Wind Energy Council, 2009), 9 China Internet Information Center, “Nation Eyes Offshore Wind Power,” December 10, 2007, http://www.china.org.cn/

36

2006

20

Sources: 1. Li, Junfeng al., China Wind Power Report (Beijing, 2002 2004 2005 2006 et2007 2008 Environmental Science Press, 2007) Sources: 2. Renewable Energy World, “China’s New Focus on So 1. Li, Junfeng et al., China Wind Power Report (Beijing, China: China May 22, 2009, http://www.renewableenergyworld.com/ Environmental Science Press, 2007) 2. Renewable Energy World, “China’s New Focus on Solar,” May 22, 2009, http://www.renewableenergyworld.com/

Source: Pullen, Angelika et al., Global Wind 2008 Report (Brussels, Belgium: Global Wind Energy Council, 2009), 25

Fig .21: CHINA RENEWABLE ENERGY CAPACITY TARGETS TYPE 2005 ACTUAL

80

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Solar photovoltaic (PV) capacity has also been growing steadily, although at a ZPNUPÄJHU[S`SV^LYWHJLYLHJOPUN4>PUZLL-PN\YL;OPZPZ^PKLS` expected to change with recently introduced government subsidies for buildingintegrated photovoltaic and utility-scale solar power projects.48 In contrast to the currently low photovoltaic capacity, which represents only 1% of the world’s total, China is a leader in the manufacturing of photovoltaic cells. In 2007, China accounted for nearly 30% of all PV cells manufactured in the world, led by large local companies such as Suntech Power Holdings, Yingli Green Energy Holdings and Trina Solar. Over 95% of the manufactured cells produced in 2008 were exported. Figin .23:the ACTUAL ENERGY INTENSITIES OF GDP, 2008, Recent success development of the renewable energy industry and Tons of Oil Equivalent per US$1 million heightened concerns about the reliance on fossil fuel have prompted China’s regulators to upgrade the country’s 2020 targets for renewable energy. In the most recent announcement, China plans to generate 20% of its electricity from renewable energy sources South Africa by 2020, including large scale 477 hydropower. The most recent targets include 100 GW for wind generating capacity, and 20 GW for solar China 455 WOV[V]VS[HPJJHWHJP[`IV[OVM^OPJOYLWYLZLU[ZPNUPÄJHU[PUJYLHZLZMYVT[OLLHYSPLY 30 GW and 1.8 GW targets place at the beginning of 2009 Russia respectively that were in 408 ZLL-PN\YL

ty, 2001, meter

India

Japan

119.6 138.6

Shared Responsibility - The SCO, 2006), 300

103

One area of renewable United Kingdomenergy in 79which China has emerged as an unchallenged leader is solar water heating. Currently, China boasts the world’s largest installed base of solar water heaters, over 125 millions square meters, with one in ten Sources: having adopted the technology.49,50 (UHS`Z[Z LZ[PTH[L [OH[ V]LY   VM families 1. BP, “BP Statistical Review of World Energy June 2009” JVYLZVSHY^H[LYOLH[PUN[LJOUVSVN`PZOLSKI`*OPULZLÄYTZZ\JOHZ/PTPU:VSHY 2. International Monetary Fund, “World Economic Outlook Database April 2009” 3. The China Greentech Initiative analysisproduction of solar water heaters in 2007 reached Energy Group. China’s annual 40 million square meters, accounting for two thirds of global output.51

Fig .22: STANDARDIZED COMPARISON OF INTERNATIONAL FUEL ECONOMY STANDARDS, Miles per Gallon U.S.

50

ISTORIC TRENDS 6, Index 1980=1

0

358

x4.5 hydroelectric In addition, China power generating Southplans Korea to double its existing 253 capacity from about 150 GW to 300 GW by 2020 and to develop power-generating United States 161 JHWHJP[`MYVTIPVTHZZJVTI\Z[PVU[V.>-\Y[OLYTVYLP[OHZKLÄULK[HYNL[Z for bioethanol and biodiesel production Brazil 145 that will help offset China’s reliance on imported crude oil.

CALIFORNIA CANADA

EU

EU AUSTRALIA

45

JAPAN

JAPAN

CHINA

CHINA (Phase III)

40 Japan AUSTRALIA

35

United States

CANADA

30

CALIFORNIA

UNITED STATES (Obama Plan)

China 25 20 2005

2010

2002

2004

2006

2008

2010

2012

2014

2016

Note: Values are for CAFE test cycle; dotted lines represent proposed standards Source: Feng An, Revised Charts for World Standards, 2009

Annual 2006” Table E.1g

Reuters, “China Offers Big Solar Subsidy,” July 21, 2009, http://www.reuters.com/ People’s Daily, “China Promotes New Energy,” April 15, 2009, http://english.peopledaily.com.cn/ Li, Junfeng et al., China: Prospect for Renewable Energy Development (London, U.K.: The Treasury of United Kingdom, 2006), 6 51 People's Daily, "New Energy Vehicle Pilot Programs Promoted in 13 Chinese Cities," February 2, 2009, http://english.peopledaily.com.cn/ 48 49 50

www.china-greentech.com 45.

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Industry analysts expect that China will continue to support clean energy development, as the government continues to roll out subsidies and incentive packages to accelerate the adoption of new technologies. Recent announcements indicate that China is planning an unprecedented package worth three trillion yuan (US$444 billion) over multiple years focused on renewable energy alone, in addition to the four trillion yuan (US$586 billion) stimulus package announced in 2008.52 In the road transportation segment, China has been progressively adopting stricter fuel economy and pollution emission standards, and is emerging as a leader in new energy vehicles. China has increased its fuel economy standards on several occasions since 2000, bringing the overall average up to 32 miles per gallon in 2008 and has announced plans to upgrade it further to nearly 40 miles per NHSSVUI`;OPZTHRLZ*OPUH»ZM\LSLMÄJPLUJ`Z[HUKHYKZZPNUPÄJHU[S`Z[YPJ[LY [OHU[OVZL\ZLKPU[OL<:*HUHKHVY(\Z[YHSPHZLL-PN\YL 0U  *OPUH HKVW[LK P[Z ÄYZ[ ]LOPJSL LTPZZPVU JVU[YVS Z[HUKHYK LX\P]HSLU[ to the Euro 1 standard used in the European Union, and since then has been upgrading it one level roughly every three years. Currently, China is implementing [OL,\YVLX\P]HSLU[Z[HUKHYKUH[PVU^PKL-VSSV^PUNPTWSLTLU[H[PVUPU)LPQPUNPU 2008, regulators are targeting to roll out Euro 4 equivalent standard nationwide in 2010.53,54 -\Y[OLYTVYL *OPUH OHZ Z[YVUNS` Z\WWVY[LK [OL LSLJ[YPJ ]LOPJSL ,= JVUJLW[ 9LJVNUPaPUN[OLILULÄ[Z[OH[,=ZVMMLY¶Z\JOHZHSSL]PH[PUNSVJHSWVSS\[PVUTP[PNH[PUN the demand for oil, and the potential to reduce CO2 and other emissions associated with fossil fuel burning – China’s government has announced pilot programs in a number of major cities and plans to subsidize the adoption of electric vehicles.55 Many analysts have observed that China is establishing itself as a potential world leader in the production and adoption of new energy vehicles. In December 2008, )@+(\[VH*OPULZLTHU\MHJ[\YLYIHZLKPU:OLUaOLUSH\UJOLK[OL^VYSK»ZÄYZ[ THZZWYVK\JLKWS\NPUO`IYPK[OL-+4ZLKHU56 Other local manufacturers, such HZ*OLY`.LLS`HUK-V[VUHYLKL]LSVWPUN[OLPYV^UTVKLSZHUKOH]LHUUV\UJLK plans to enter the market. China aims to increase its annual production of hybrid and electric vehicles to half a million by 2011, roughly 5% of total new vehicle sales.57 The China State Grid has also announced plans to deploy networks of charging stations for electric vehicles in major cities like Beijing and Shanghai.58 One early success in the adoption of battery technology for transportation is the abundance of electric scooters and bicycles in China, currently estimated at 65 million – greater than the number of passenger vehicles on the road. China’s yearly production has soared to over 22 million units from fewer than 200,000 eight years ago.59 These electric two wheelers are usually powered by a 250-watt motor HUK\ZLH3LHK(JPKIH[[LY`[OH[WYV]PKLZHKYP]PUNYHUNLVMRPSVTL[LYZ between charges at speeds of up to 30 kilometers per hour.60 China accounts for over 90% of worldwide electric scooter and bicycle sales and the average selling WYPJLPZZPNUPÄJHU[S`SV^LY[OHUPUKL]LSVWLKJV\U[YPLZ On the industrial front, China has been consistently increasing its energy productivity. Since 1980, China’s energy intensity of GDP – the amount of energy required to produce one unit of GDP – has fallen sharply, by roughly 70% (see -PN\YL  5V V[OLY THQVY UH[PVU OHZ HJOPL]LK Z\JO H Z[LLW KLJSPUL PU Z\JO H short timeframe. On average, energy intensity declined at nearly 5% per year between 1980 and 2000, and apart from a notable increase in 2002 and 2003

52 Sina English, “China Plans 440 Billion Dollars Stimulus for Green Energy,” May 24, 2009, http://english.sina.com/ 53 “Euro” in this context refers to mandatory non-CO2 fuel emission standards used in the European Union for new passenger vehicles. The standard was introduced in 1997 and since then has been updated three times (Euro 1 through Euro 4), with two more updates (Euro 5 and Euro 6) planned – one in fall of 2009 and one in fall 2010 54 Clean Air Initiative, “Emissions Standard for New Light-Duty Vehicles, 2009," http://www.cleanairnet.org/ (accessed on August 20, 2009) 55 People's Daily, "New Energy Vehicle Pilot Programs Promoted in 13 Chinese Cities," February 2, 2009, http://english.peopledaily.com. cn/ 56 Bloomberg, “BYD Adds Plug-In as China Gets Edge on Toyota, GM,” December 15, 2008, http://www.bloomberg.com/ 57 Xinhua, "China Aims to be World Pacemaker of New Energy Auto Production," September 17, 2008, http://news.xinhuanet.com/ 58 China Daily, "Electric Vehicles Drive Closer to Reality," September 17,2009, http://www.chinadaily.com.cn/ 59 MSNBC, "China Drives Electric Bike, Scooter Boom," July 27, 2009, http://www.msnbc.msn.com/ 60 Parkash, Manmohan, Promoting Environmentally Sustainable Transport (Manila, Philippines: Asia Development Bank, 2008), 27

38

THE CHINA GREENTECH REPORT 2009

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(due to the rapid growth of heavy industry output in those years), has been on a downward trajectory over the last three decades. 0U [OL [O -P]L@LHY .\PKLSPULZ61 China established a target of reducing the LULYN`PU[LUZP[`VM.+7I`HUHKKP[PVUHS IL[^LLUHUK(JJVYKPUN to a recent statement made by Sun Qin, the Deputy Director of the National Fig .13:.+7 Industrial Water Productivity, 2001, ,ULYN` (KTPUPZ[YH[PVU LULYN` PU[LUZP[` WVZ[LK H KLJSPUL VM   PU [OL 62 Billion US Dollars per Cubic Kilometer PTWSLTLU[H[PVUVM[OLÄYZ[[OYLL`LHYWSHUIL[^LLUHUK China managed to achieve these reductions in part through centrally administered India 3.4 WYVNYHTZ ;OL THQVY PUP[PH[P]L PU [OL J\YYLU[ -P]L@LHY .\PKLSPULZ OHZ ILLU [OL China 3.7 Top-1000 Energy-Consuming Enterprises Program, which was launched by Wen 1PHIHV 7YLTPLY VM *OPUH United States PU 1\S` 9.7  0[ MVJ\ZLK VU YHPZPUN LULYN` LMÄJPLUJ` across the 1000 largest industrial energy consumers which cumulatively account France consumption 14.5 for 33% of China’s energy and 43% of China’s CO2 emissions.63 This program is modeled on voluntary 22.5 agreements used in some European countries Brazil HUK 1HWHU HUK LZ[HISPZOLZ LULYN` LMÄJPLUJ` ILUJOTHYRZ MVY LU[LYWYPZLZ [V Germany 23.4 HJOPL]L;OLZ\JJLZZVM[OPZWYVNYHT^PSSILPUÅ\LUJLKI`HUPUJLU[P]LZJOLTL Unitedpolitical Kingdompromotion for enterprise 47.3 which connects and local government leaders to 64 the achievement of these Japabenchmarks. 119.6 Denmark

138.6

(KKP[PVUHSS` *OPUH»Z NV]LYUTLU[ OHZ W\YZ\LK H Z[YH[LN` VM ZO\[[PUN KV^U ZTHSSLY ¶ SLZZ LMÄJPLU[ HUK TVYL WVSS\[PUN ¶ WV^LY NLULYH[PVU WSHU[Z +LW\[` Source: 2. United Nations World Water Assessment Program, Water: A Shared Responsibility - The +PYLJ[VY:\U8PUOHZJVUÄYTLK[OH[HZVM1\UL *OPUHOHKHSYLHK`JSVZLK United National Water Development Report 2 (New York, NY, U.S.: UNESCO, 2006), 300 7,467 small scale generating units with total capacity of over 54 GW. *OPUHOHZHSZVILLUKL]LSVWPUNUL^LULYN`LMÄJPLUJ`Z[HUKHYKZMVYI\PSKPUNZ and major appliances, in addition to revising those already existing. Building codes have been updated and the government is stepping up promulgation and enforcement. China recently launced its own building rating system titled the ¸.YLLU)\PSKPUN3HILS¹HUKHÄYZ[IH[JOVMWYVQLJ[ZOH]LHSYLHK`ILLUHWWYV]LK65 Fig .24: ENERGY INTENSITY OF GDP HISTORIC TRENDS FOR SELECTED COUNTRIES, 1980-2006, Index 1980=1 1.0 0.8

Japan

0.6

United States

0.4

China

0.2 0.0 1980

1985

1990

1995

2000

2005

2010

Source: Energy Information Administration, “International Energy Annual 2006” Table E.1g

( UL^ TPUPT\T LULYN` WLYMVYTHUJL Z[HUKHYK 4,7: OHZ ILLU KL]LSVWLK MVY over 40 different appliances, predominantly for residential and commercial use. Initial analysis has shown that these measures are helping China reduce the growth of consumer energy demand.66

Five-Year Guidelines are China’s development blueprints that set targets for a range of economic and other parameters for a five-year period and are approved by the National People’s Congress. 11th Five-Year Guidelines cover the time period of 2005-2010. A more detailed discussion of Five-Year Guidelines can be found in the “China’s Regulatory Response” chapter of this report. 62 北青网, "国家能源局副局长孙勤:'我国将在年内出台新兴能源发展规划'," 2009年8月10日［YNet, SunQin, Deputy Director of National Energy Administration, “New Energy Development Plan Will Be Launched this Year,” Aug 10, 2009], http://dycj.ynet.com/ 63 Price, Lynn et al., China's Top-1000 Energy-Consuming Enterprises Program: Reducing Energy Consumption of the 1000 Largest Industrial Enterprises in China (Berkeley, CA, U.S.: Berkeley National Laboratory, 2008), 18 64 The Top-1000 Energy-Consuming Enterprises Program is discussed further in the China's Regulatory Response chapter 65 中国住房和城乡建设部,"关于公布2008年度第一批'绿色建筑设计评价标识'项目名单的公告," 2008年７月16日［Ministry of Housing and Urban-Rural Development, "Announcement of 'Green Building Label' Project Names," July 16, 2008], http://www.mohurd.gov.cn/ 61

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PROMISING SIGNS OF CHINA’S GREENTECH FUTURE

Fig .23: ACTUAL ENERGY INTENSITIES OF GDP, 2008, Tons of Oil Equivalent per US$1 million

South Africa

477

China

455

Russia

408

India

358

South Korea

253

United States

161

Brazil Japan United Kingdom

x4.5

145 103 79

Sources: 1. BP, “BP Statistical Review of World Energy June 2009” 2. International Monetary Fund, “World Economic Outlook Database April 2009” 3. The China Greentech Initiative analysis

„ UNTAPPED POTENTIAL The achievements progress made by China improving the sustainability of Fig .22:and STANDARDIZED COMPARISON OF in INTERNATIONAL FUEL its economic activities are remarkable. While theper sustainability of China’s ecological ECONOMY STANDARDS, Miles Gallon Z`Z[LTPZHSHYNLYJOHSSLUNL[OLYLHYLZPNUPÄJHU[HYLHZVM\U[HWWLKWV[LU[PHSZ\JO as renewable energy generation, new modes of transportation and green building. U.S. 50

CALIFORNIA

CANADA Regarding power supply, even if China were to achieve itsEUtarget of deriving 20% EU of energy fromAUSTRALIA renewable sources by 2020, most of the non-renewable energy 45 would still be JAPAN derived from coal. Given that the overallJAPAN capacity for electricity CHINA generation will potentially double between 2008 and 2020, greenhouse gas CHINA (Phase III) 40 LTPZZPVUZ^PSSTVZ[SPRLS`JVU[PU\L[VPUJYLHZL(PYWVSS\[HU[ZZ\JOHZ:6 and NOX, X will continue to pose a danger to human health and the natural environment unless AUSTRALIA [OLPY YLTV]HS PZ LUMVYJLK TVYL Z[YPJ[S` -VY [OPZ YLHZVU [OLYL PZ NYLH[ WV[LU[PHS CALIFORNIA 35 to expand the role of renewable sources beyond the current targets and further CANADA improve the sustainability of conventional energy. UNITED STATES

30

(Obama Plan)

*OPUH»Z LULYN` PU[LUZP[` VM .+7 ^OPSL OH]PUN KLJSPULK ZPNUPÄJHU[S` V]LY [OL past thirty 25 years, remains one of the highest in the world. In fact, China’s energy intensity is nearly three times that of the U.S. and more than four times that of 1HWHUZLL-PN\YL67 ;OLPTWYV]LTLU[VMLULYN`LMÄJPLUJ`^PSSYLTHPUHRL` 20 focus of future Despite2008 the development of a range 2002 development. 2004 2006 2010 2012 2014 of new 2016hybrid and fully electric vehicles, few have been embraced by the local market, which is expected to purchase 10 million new gasoline and diesel vehicles this year alone.68 Note: Values are for CAFE test cycle; dotted lines represent proposed standards TheSource: market forAn, EVs is largely and the future Feng Revised Chartsuntapped for World Standards, 2009 of the transportation industry PZ`L[[VILKLÄULK In regards to green buildings, estimates suggest that that only a tiny fraction, SLZZ[OHU VMHSSÅVVYZWHJLL_WLJ[LK[VILI\PS[PU ^PSSILJLY[PÄLKHZ NYLLUI`HU`JLY[PÄJH[PVUZ[HUKHYK^OL[OLYUH[PVUHSVYPU[LYUH[PVUHS;OLYLMVYL the potential for new design and planning approaches, optimized construction [LJOUPX\LZ Z\Z[HPUHISL TH[LYPHSZ HUK LMÄJPLU[ HWWSPHUJLZ PZ ]HZ[ WHY[PJ\SHYS` considering the size of China’s plans for continued urbanization.

Fridley, David et al., Impacts of China’s Current Appliance Standards and Labeling Program to 2020 (Berkeley, CA, U.S.: Lawrence Berkeley National Laboratory, 2007), 1 BP, "BP Statistical Review of World Energy June 2009;" International Monetary Fund, "World Economic Outlook Update, July 2009;" China Greentech Initiative analysis 68 Gasgoo, "China Ups 2009 Vehicle Sales Target to 10.2 Million," May 11, 2009, http://autonews.gasgoo.com/ 66

67

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MARKET CONTEXT

„ A UNIQUE MOMENT IN TIME The fundamentals are largely in place to drive China’s economic development for decades to come and the importance of increased environmental sustainability is ILJVTPUNTVYL^PKLS`YLJVNUPaLK;OLÄYZ[ZPNUZVM[YHUZMVYTH[PVUHYLWYVTPZPUN as the government, private business and average citizens are motivated by the vision of a China that is both economically and ecologically sustainable. China’s government has already established policies and provided incentives to stimulate green development. Businesses are adapting to the new operating environment and are beginning to explore opportunities by developing new [LJOUVSVNPLZWYVK\J[ZHUKI\ZPULZZTVKLSZ(IYVHKZWLJ[Y\TVMHKVW[LYZMYVT individual consumers to large industrial players, are becoming increasingly aware VM[OLILULÄ[ZVMNYLLU[LJOUVSVNPLZ¶[V[OLLU]PYVUTLU[I\ZPULZZZLJ[VYHUK society. While the path to sustainable development will not be easy, it will be a journey encouraged by international support and guided by strong government leadership.

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CHINA’S

REGULATORY RESPONSE

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THE CHINA GREENTECH REPORT 2009

www.china-greentech.com

CHINA’S REGULATORY RESPONSE

China’s array of national and local regulators has initiated a wide range of policies and regulations to address environmental issues and promote greentech markets. This policy environment is further influenced by international policy principles, agreements and relationships. While clear progress has already been made, policy challenges remain. CHINESE REGULATORS HAVE ALREADY TAKEN MANY CONCRETE STEPS to address environmental issues and support the development of greentech markets. In fact, when compared to other countries, both developing and developed, China appears to be on the path of becoming a global greentech leader. Given the magnitude and pace of environmental change, however, there are still many important regulatory challenges that must be addressed. The China Greentech Initiative, taking into account the critical role of government in China, investigated four key questions related to the regulatory environment: „ >OPJORL`*OPULZLYLN\SH[VY`HNLUJPLZL_LY[PUÅ\LUJLV]LY*OPUH»Z greentech markets? „ What principles guide their policies? „ >OH[ZWLJPÄJHJ[PVUZOH]L[OL`[HRLU[VZ\WWVY[LU]PYVUTLU[HS sustainability and greentech markets in China? „ /V^OHZ[OLPU[LYUH[PVUHSWVSPJ`LU]PYVUTLU[PUÅ\LUJLKHUKPTWHJ[LK *OPUH»ZNYLLU[LJOTHYRL[Z& ;OPZ JOHW[LY L_WSVYLZ [OLZL X\LZ[PVUZ H[ H OPNO SL]LS 4VYL ZLJ[VYZWLJPÄJ details on the regulatory environment are provided in the sector chapters included in the full version of the report.

China’s Policy Environment CHINA’S POLICY ENVIRONMENT IS COMPLEX with a large number of entities exerting control at national and local levels.

CHINA’S CENTRAL GOVERNMENT *OPUH»ZUH[PVUHSNV]LYUTLU[^OPJOKL]LSVWZ[HYNL[ZN\PKLSPULZHUKYLN\SH[PVUZ concerning environmental, sustainability and greentech issues in China, encompasses many different types of policy bodies. ;OL JV\U[Y`»Z OPNOLZ[ SLNPZSH[P]L IVK` PZ [OL 5H[PVUHS 7LVWSL»Z *VUNYLZZ 57* YLZWVUZPISLMVYMVYT\SH[PUN*OPUH»ZSH^ZHZ^LSSHZHWWYV]PUNHUK[YHJRPUNPTWSLTLU[H[PVU VM*OPUH»Z-P]L@LHY.\PKLSPULZMVY,JVUVTPJHUK:VJPHS+L]LSVWTLU[ ;OL :[H[L *V\UJPS *OPUH»Z OPNOLZ[ L_LJ\[P]L IVK` [HRLZ KPYLJ[PVU MYVT [OL 5H[PVUHS 7LVWSL»Z *VUNYLZZ 0[Z YVSL PZ [V LUHJ[ YLN\SH[PVUZ [OH[ HJOPL]L [OL NV]LYUTLU[»ZRL`KL]LSVWTLU[VIQLJ[P]LZHUKJVVYKPUH[L[OLHJ[P]P[PLZVM*OPUH»Z ]HYPV\ZTPUPZ[YPLZ-VYWHY[PJ\SHYS`PTWVY[HU[JYVZZZLJ[VYPZZ\LZ*OPUH»Z*LU[YHS NV]LYUTLU[ ZVTL[PTLZ LZ[HISPZOLZ 3LHKLYZOPW .YV\WZ KPYLJ[S` \UKLY [OL :[H[L *V\UJPS [V N\PKL WVSPJPLZ HUK WYPUJPWSLZ HJYVZZ [OL YLZ[ VM [OL NV]LYUTLU[ -VY L_HTWSL PU 1\UL  [OL 3LHKPUN .YV\W MVY 5H[PVUHS 9LZWVUZL [V *SPTH[L *OHUNL ,ULYN` *VUZLY]H[PVU HUK ,TPZZPVU 9LK\J[PVU ^HZ LZ[HISPZOLK [V JVVYKPUH[L Z[H[L LMMVY[Z ^P[O 7YLTPLY >LU 1PHIHV HZ [OL NYV\W SLHKLY HUK TLTILYZPUJS\KPUNH=PJL7YLTPLY[OL:LJYL[HY`.LULYHSVM[OL:[H[L*V\UJPSHUK heads of 27 central government ministries. ;OL *OPUH .YLLU[LJO 0UP[PH[P]L PKLU[PÄLK   KPMMLYLU[ UH[PVUHS NV]LYUTLU[ HNLUJPLZ \UKLY [OL :[H[L *V\UJPS ^P[O YLZWVUZPIPSP[PLZ YLSH[LK [V NYLLU[LJO THYRL[Z(Z\TTHY`VM[OLZLPZWYLZLU[LKPU-PN\YL +\L [V [OL JVTWSL_P[` VM *OPUH»Z WVSP[PJHS LU]PYVUTLU[ T\S[PWSL NV]LYUTLU[ H\[OVYP[PLZV]LYZLLKPMMLYLU[HZWLJ[ZVM*OPUH»ZNYLLU[LJOTHYRL[Z0UZVTLZLJ[VYZ www.china-greentech.com

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CHINA’S POLICY ENVIRONMENT

Fig.1

Fig.1

GOVERNMENT ENTITY

44

: CHINA’S CENTRAL GOVERNMENT GREENTECH REGULATORS GREENTECH RESPONSIBILITIES

National People’s Congress (NPC)

„ Highest national legislative body in China; enacts basic environment and energy laws „ ,_HTPULZHWWYV]LZHUK[YHJRZ[OLPTWSLTLU[H[PVUVM[OL-P]L@LHY.\PKLSPULZMVYUH[PVUHS economic and social development

State Council (SC)

„ Chief administrative authority; top executive apparatus; coordinates activities of ministries „ ,UHJ[ZYLN\SH[PVUZ[VHJOPL]L[OLNVHSZZL[PU*OPUH»Z-P]L@LHY.\PKLSPULZHUKSH^Z

Administration of Quality Supervision, Inspection, and Quarantine (AQSIQ)

„ 4PUPZ[LYPHSSL]LSVYNHUPUJOHYNLVMHKTPUPZ[LYPUN*OPUH»Z[LJOUPJHSWYVK\J[X\HSP[`LU]PYVUTLU[HS WYVK\J[ZHML[`HUKV[OLYZ[HUKHYKZHZ^LSSHZTHUHNPUN*OPUH»ZHJJYLKP[H[PVUHUKJLY[PÄJH[PVU activities

China Meteorological Administration (CMA)

„ 9LZWVUZPISLMVYVYNHUPaH[PVUHUKTHUHNLTLU[VM*OPUH»ZUH[PVUHSTL[LVYVSVNPJHS^VYRPUJS\KPUN monitoring and assessment of atmospheric signs of climate change

Ministry of Agriculture (MOA)

„ In charge of agriculture and rural economic development including long-term development planning, regulation and policy implementation

Ministry of Commerce (MOFCOM)

„ 9LZWVUZPISLMVYMVYT\SH[PUNWVSPJ`VUMVYLPNU[YHKLL_WVY[HUKPTWVY[YLN\SH[PVUZMVYLPNUKPYLJ[ investments, consumer protection and market competition

Ministry of Environment Protection (MEP)

„ 9LZWVUZPISLMVY*OPUH»ZV]LYHSSLU]PYVUTLU[HSTHUHNLTLU[ „ :L[ZWVSS\[PVUHZ^LSSHZLULYN`HUKYLZV\YJLLMÄJPLUJ`Z[HUKHYKZ

Ministry of Finance (MOF)

„ 4VUP[VYZÄZJHSWVSPJPLZ"LUHJ[ZÄUHUJLZKPZ[YPI\[LZHUK[YHJRZZ\IZPKPLZ „ *VU[YVSZPU[LYLZ[YH[LZHUK[OLÅV^VMJHWP[HSPU*OPUH»ZLJVUVT`

Ministry of Housing and UrbanRural Development (MOHURD)

„ 9LZWVUZPISLMVYPUMYHZ[Y\J[\YLKL]LSVWTLU[PUJS\KPUN^HZ[L^H[LY[YLH[TLU[HUKZVSPK^HZ[LTHUHNLTLU[ „ +YHM[ZI\PSKPUNJVKLZHUKLUMVYJLZJVTWSPHUJLPUJS\KPUNV]LYZPNO[VM*OPUH»Z¸.YLLU)\PSKPUN Label” standard

Ministry of Industry and Information Technology (MIIT)

„ 9LZWVUZPISLMVYHSSPUK\Z[Y`WYVQLJ[HWWYV]HSM\UJ[PVUZHZ^LSSHZYLN\SH[PVUHUKKL]LSVWTLU[VM information and communications technology regulations

Ministry of Land and Resources (MOLR)

„ 9LZWVUZPISLMVY[OLWSHUUPUNHKTPUPZ[YH[PVUHUKWYV[LJ[PVUVMSHUKTPULYHSHUKTHYPULYLZV\YJLZ „ *LY[PÄLZSHUKHWWYHPZHSHNLUJPLZJVUÄYTZSHUK\ZLWYPJLZL_HTPULZHWWSPJH[PVUZMVYSHUK\ZL

Ministry of Railway (MOR)

„ +YHM[ZHUKZ\WLY]PZLZ[OLL_LJ\[PVUVMKL]LSVWTLU[Z[YH[LNPLZZ[HUKHYKZYLN\SH[PVUZHUKWVSPJPLZ NV]LYUPUN*OPUH»ZYHPS^H`PUK\Z[Y`

Ministry of Science and Technology (MOST)

„ -VYT\SH[LZWVSPJLZHUKTLHZ\YLZVUZJPLUJLHUK[LJOUVSVN`KL]LSVWTLU[ „ +L]LSVWZWYVTV[LZHUKZ\WLY]PZLZUH[PVUHSIHZPJYLZLHYJOHUKOPNO[LJO9 +WYVNYHTZ

Ministry of Transportation (MOT)

„ +L]LSVWZHUKVYNHUPaLZ[OLPTWSLTLU[H[PVUVMWSHUUPUNWVSPJPLZHUKZ[HUKHYKZMVY^H[LY^H`YVHK and air transportation, and promotes convergence of the various modes of transport

Ministry of Water Resources (MWR)

„ 9LZWVUZPISLMVYV]LYHSS^H[LYYLZV\YJLTHUHNLTLU[ZVPSHUK^H[LYJVUZLY]H[PVUHUKÅVVKJVU[YVS „ Grants licenses for water extraction and water use

National Bureau of Statistics (NBS)

„ In charge of statistics and economic accounting in China including collection and publication of pollution, energy consumption and energy intensity statistics at national and local levels

National Development and Reform Commission (NDRC)

„ 4VZ[WV^LYM\STPUPZ[Y`SL]LSIVK`\UKLY[OL:[H[L*V\UJPS"WSH`ZHRL`YVSLPUKL]LSVWPUNHUK PTWSLTLU[PUN-P]L@LHY.\PKLSPULZ „ 6]LYZLLZ5H[PVUHS,ULYN`(KTPUPZ[YH[PVU5,(HUKYLSH[LKWVSPJ`M\UJ[PVUZ

State Administration of Taxation (SAT)

„ +YHM[Z[H_SH^ZHUKYLN\SH[PVUZ"MVYT\SH[LZPTWSLTLU[H[PVUY\SLZ „ 9LZWVUZPISLMVYVYNHUPaPUNJVSSLJ[PVUHUKHKTPUPZ[YH[PVUMVYJLU[YHS[H_LZ

State-owned Assets Supervision and Administration Commission (SASAC)

„ 9LZWVUZPISLMVYTHUHNPUN*OPUH»ZZ[H[LV^ULKLU[LYWYPZLZPUJS\KPUNHWWVPU[PUN[VWL_LJ\[P]LZ and approving any mergers or sales of stock or assets, as well as drafting laws related to stateowned enterprises

State Electricity Regulatory Commission (SERC)

„ 9LZWVUZPISLMVYYLN\SH[PVUVM[OLWV^LYZLJ[VY „ +L]LSVWZHUKPTWSLTLU[ZRL`YLN\SH[PVUZLZ[HISPZOLZY\SLZMVYLSLJ[YPJP[`THYRL[VWLYH[PVUZHUK issues business licenses

State Forestry Administration (SFA)

„ 9LZWVUZPISLMVY[OLTHUHNLTLU[VMUH[PVUHSMVYLZ[ZHUKLJVSVNPJHSJVUZ[Y\J[PVUWYVQLJ[Z „ 6YNHUPaLZJVVYKPUH[LZN\PKLZHUKZ\WLY]PZLZ[OL^VYRVMUH[PVUHSHMMVYLZ[H[PVU^L[SHUK WYV[LJ[PVUKLZLY[PÄJH[PVUJVU[YVSHUK[LYYLZ[YPHS^PSKSPMLYLZV\YJLWYV[LJ[PVU

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CHINA’S REGULATORY RESPONSE

Z\JO HZ YHPS^H` YLN\SH[PVU PUKP]PK\HS HNLUJPLZ SPRL [OL 4PUPZ[Y` VM 9HPS^H`Z OH]L YLSH[P]LS`PUKLWLUKLU[H\[OVYP[`V]LYKLÄULKWVSPJ`HYLHZ0UV[OLYHYLHZHU\TILY VMLU[P[PLZZOHYLYLN\SH[VY`YLZWVUZPIPSP[`-VYL_HTWSL[OL5H[PVUHS+L]LSVWTLU[ HUK9LMVYT*VTTPZZPVU5+9*5H[PVUHS,ULYN`(KTPUPZ[YH[PVU5,(4PUPZ[Y`VM :JPLUJLHUK;LJOUVSVN`46:;:[H[L,SLJ[YPJP[`9LN\SH[VY`*VTTPZZPVU:,9* and others all have responsibilities related to different aspects of energy policy.

LOCAL CHINESE POLICYMAKERS 7YV]PUJPHSHUKV[OLYSVJHSNV]LYUTLU[ZHSZVWSH`HUPTWVY[HU[YVSLPUYLN\SH[PUN *OPUH»ZNYLLU[LJOTHYRL[ZTHRPUNP[PTWVY[HU[[V\UKLYZ[HUK[OLVM[LUJVTWSL_ relationships between national and local policymakers.Immediately below the national-level agencies is the provincial level, which includes the provinces, MV\Y WYV]PUJLSL]LS T\UPJPWHSP[PLZ )LPQPUN *OVUNXPUN :OHUNOHP HUK ;PHUQPU Ä]L H\[VUVTV\Z YLNPVUZ Z\JO HZ ;PIL[ HUK 0UULY 4VUNVSPH HUK [OL ZWLJPHS administrative regions of Hong Kong and Macau. Most central government agencies have corresponding bodies at local levels that are commonly tasked ^P[OPTWSLTLU[PUN[OLWVSPJPLZVM[OLJLU[YHSYLN\SH[VYZ`L[HYLVM[LUPUÅ\LUJLK by both central government agencies as well as entities within the provincial and other local administrations. )LULH[O [OL WYV]PUJLZ *OPUH PZ Z\IKP]PKLK PU[V WYLMLJ[\YLZ [OH[ HYL PU [\YU usually subdivided into counties composed of multiple townships. This structure PZV\[SPULKPU-PN\YL Fig. 2 :

CHINA’S ADMINISTRATIVE STRUCTURE

NATIONAL PEOPLE’S CONGRESS

STATE COUNCIL MINISTRIES

PROVINCES PREFECTURES

LOCAL AUTHORITIES

COUNTIES TOWNSHIPS VILLAGES

A Number of Key Policy Principles Guide China’s Greentech Policies CHINA’S DOMESTIC POLICY PRINCIPLES PLAY AN IMPORTANT ROLE in driving sustainability, climate change and greentech markets policies and regulations. The China .YLLU[LJO0UP[PH[P]LPKLU[PÄLKLPNO[RL`WYPUJPWSLZ[OH[KYP]L[OLKL]LSVWTLU[VM *OPUH»ZNYLLU[LJOTHYRL[ZHZZOV^UPU-PN\YL Fig. 3:

KEY PRINCIPLES UNDERLYING CHINA’S SUSTAINABILITY, CLIMATE CHANGE AND GREENTECH POLICIES

„ Scientific Approach to Development „ Harmonious Society „ Equal Emphasis on Mitigation and Adaptation „ Efficiency Improvement and Conservation „ Energy Structure Optimization „ Ecological Preservation and Construction „ Agriculture Productivity Enhancement „ Indigenous Innovation

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A NUMBER OF KEY POLICY PRINCIPLES GUIDE CHINA’S GREENTECH POLICIES

SCIENTIFIC APPROACH TO DEVELOPMENT

-PYZ[IYV\NO[MVY^HYKI`*OPUH»Z7YLZPKLU[/\1PU[HVPU[OPZWYPUJPWSLJHSSZ MVY ¸WLVWSLJLU[LYLK KL]LSVWTLU[ ^OPJO PZ JVTWYLOLUZP]L JVVYKPUH[LK HUK sustainable, for the promotion of overall harmonic development of the economy, ZVJPL[`HUKO\THUILPUNZ¹0[HSZVZ[YLZZLZ¸JVVYKPUH[LKKL]LSVWTLU[IL[^LLU urban and rural areas, among different regions and between economic and social development, harmony between human beings and nature and coordination of domestic development and opening to the outside world” as means of pushing forward reform and progress.;OLWYPUJPWSLVMH:JPLU[PÄJ(WWYVHJO[V+L]LSVWTLU[ ^HZPUJVYWVYH[LKHZHUHTLUKTLU[[V[OL*VUZ[P[\[PVUVM[OL*VTT\UPZ[7HY[`VM *OPUH*7*PU6J[VILY2

HARMONIOUS SOCIETY

)\PS[VU[OLMV\UKH[PVUZVM[OL:JPLU[PÄJ(WWYVHJO[V+L]LSVWTLU[ZLLHIV]L HUK PUJS\KLK PU [OL 6J[VILY  HTLUKTLU[ [V [OL *7* *VUZ[P[\[PVU [OPZ principle marks a transition from an overall national focus on economic growth to a broader focus on greater social harmony and balance. This incorporates the JYLH[PVUVMHULJVSVNPJHSJP]PSPaH[PVU[OH[^PSSILULÄ[MYVTLU]PYVUTLU[HSWYV[LJ[PVU economic growth and social development.3,4

EQUAL EMPHASIS ON MITIGATION AND ADAPTATION

*OPUH»Z5H[PVUHS*SPTH[L*OHUNL7YVNYHTOPNOSPNO[Z[OLWYPUJPWSLVMWSHJPUNLX\HS emphasis on mitigating and adapting to climate change. This means that while LULYN`LMÄJPLUJ`HUKHYLK\J[PVUPUNYLLUOV\ZLNHZLTPZZPVUZJVU[PU\LZ[VIL H MVJ\Z VM *OPUH»Z TP[PNH[PVU LMMVY[Z TLHZ\YLZ Z\JO HZ LJVZ`Z[LT WYV[LJ[PVU UH[\YHSKPZHZ[LYWYL]LU[PVUHUKPUMYHZ[Y\J[\YLKL]LSVWTLU[^PSSKL[LYTPUL*OPUH»Z experience of adapting to climate change.5

ENERGY EFFICIENCY IMPROVEMENT AND CONSERVATION

7YVTV[PUN LULYN` LMÄJPLUJ` HUK LULYN` JVUZLY]H[PVU OHZ ILLU H RL` KYP]LY VM LU]PYVUTLU[HS WVSPJ` MYVT HZ LHYS` HZ [OL   WYVT\SNH[PVU VM *OPUH»Z ,ULYN` *VUZLY]H[PVU 3H^ 0UK\Z[YPHS HUK I\PSKPUN LULYN` LMÄJPLUJ` HYL [^V RL` HYLHZ of focus.6

ENERGY STRUCTURE OPTIMIZATION

;VNL[OLY^P[OLULYN`JVUZLY]H[PVULULYN`Z[Y\J[\YLVW[PTPaH[PVUOHZILLUHRL` WYPUJPWSL\UKLYS`PUN*OPUH»ZJSPTH[LJOHUNLTP[PNH[PVUWVSPJPLZ;OLJVYLHPTVM this policy principle is to increase the percentage of renewable energy and cleaner JVU]LU[PVUHSLULYN`PU*OPUH»ZM\LSTP_7

ECOLOGICAL PRESERVATION AND CONSTRUCTION

This guiding principle is leading to important policies that support forestation HUK NYHZZSHUK YLOHIPSP[H[PVU HZ ^LSS HZ KYP]PUN [OL LMMVY[ [V TPUPTPaL VY L]LU YL]LYZL[OLKLZLY[PÄJH[PVUVMHYHISLVYOHIP[HISLSHUKMYVTV]LY\ZLHUKJOHUNPUN climate conditions.8(ZHUL_HTWSL*OPUH»Z^H[LY\ZHNLZ[H[PZ[PJZYLÅLJ[UV[VUS` agricultural, domestic and industrial water use, but since 2003 they illustrate an increasing trend of water being used for ecological protection and the reconstruction or rehabilitation of natural water resources and wetlands.

AGRICULTURAL PRODUCTIVITY ENHANCEMENT

-VJ\ZLKVUPUJYLHZPUNHNYPJ\S[\YHSWYVK\J[P]P[`[OPZWYPUJPWSLOHZN\PKLKHU\TILY VM WVSPJPLZ [OH[ Z\WWVY[ [OL TVKLYUPaH[PVU VM *OPUH»Z HNYPJ\S[\YHS ZLJ[VY ;OLZL LMMVY[Z LUJV\YHNL PUJYLHZLK TLJOHUPaH[PVU HUK LMÄJPLU[ PYYPNH[PVU KLJYLHZL WVSS\[PVU JH\ZLK I` MLY[PSPaLY HUK WLZ[PJPKL Y\UVMM HUK Z\WWVY[ HNYPJ\S[\YHS greenhouse gas capture.

INDIGENOUS INNOVATIION

;OL -PM[O 7SLUHY` :LZZPVU VM [OL [O *7* 5H[PVUHS *VUNYLZZ  WYVWVZLK [OH[Z[YLUN[OLUPUNPUKPNLUV\ZPUUV]H[PVUPZHRL`MV\UKH[PVUMVYWYVTV[PUN*OPUH»Z ZJPLU[PÄJ KL]LSVWTLU[ This principle supports policies that target domestic KL]LSVWTLU[VMNYLLU[LJOZVS\[PVUZPUJS\KPUNI\PSKPUN*OPUH»ZJHWHJP[`PUIHZPJ research and original innovation.

1 People’s Daily Online, “Scientific Concept of Development Crucial to China’s Future Growth: Premier,” March 1, 2009, http://english.peopledaily.com. cn/ 2 Xinhua News Agency, “Major Previous Amendments to CPC Constitution,” October 21, 2007, http://news.xinhuanet.com/ 3 China Council for International Cooperation on Environment and Development (CCICED), “Environment and Development for a Harmonious Society,” (Beijing, China: CCICED, 2008) 4 A variety of definitions have been used for the term “social development.” In China, achievements classified as “social development” under the Program of Action for Sustainable Development in the early 21st Century (2007) include that “the trend of excessive population growth has been checked; science, technology and education have made positive headway; and remarkable progress has also been made in social security, poverty eradication, disaster relief and prevention, medical care, and narrowing the regional gap in development.” National Development and Reform Commission (NDRC), Program of Action for Sustainable Development in the early 21st Century, (Beijing, China: NDRC, February 5, 2007), http://en.ndrc.gov.cn/ 5 National Development and Reform Commission (NDRC), National Climate Change Program, (Beijing, China: NDRC, June 2007) 6 Ibid

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Greentech-Related Policies and Regulations CHINA’S GOVERNMENT HAS MADE SIGNIFICANT STEPS in understanding the key environmental issues facing the country and responding with greentech-related WVSPJPLZ*OPUH»ZLUVYTV\ZNLVNYHWOPJHUKWVW\SH[PVUZJHSLPZM\UKHTLU[HS[V[OL challenge of developing and implementing a coordinated set of central policies ^OPSLHKKYLZZPUN[OLULLKZVMSVJHSTHYRL[JVUKP[PVUZ(ZHYLZ\S[*OPUH»ZWVSPJ` environment represents a complex array of policy instruments. Among these are national plans, programs, laws, standards, industry promotion policies and market WYPJL JVU[YVSZ ¶ HSS RL` [VVSZ \ZLK I` *OPUH»Z NV]LYUTLU[ [V LUHISL HUK KYP]L *OPUH»ZNYLLU[LJOTHYRL[Z-PN\YLWYV]PKLZHUV]LY]PL^VM[OLKPMMLYLU[SL]LSZVM WVSPJPLZPUÅ\LUJPUN*OPUH»ZNYLLU[LJOTHYRL[Z

Fig .4: SCHEMATIC OVERVIEW OF CHINA’S KEY REGULATORY INSTRUMENTS PUBLISHING BODIES: NATIONAL PEOPLE’S CONGRESS STATE COUNCIL

PRC CONSTITUTION LAWS

5 YEAR GUIDELINES

STATE COUNCIL REGULATIONS

MINISTERIAL AND NDRC REGULATIONS MINISTRIES MINISTERIAL AND NDRC MEASURES* LOCAL AUTHORITIES

LOCAL** REGULATIONS AND MEASURES

Note: *Ministerial measures include standards, circulars, implementation guidelines, interpretations, rules, orders, ordinance, proposals, etc. ** Local includes provincial, municipal, city, prefecture/county levels

„ CHINA’S POLICYMAKING PRACTICES )LMVYLPU]LZ[PNH[PUN^OH[WVSPJPLZ*OPUH»ZNV]LYUTLU[OHZW\[PUWSHJL[VN\PKL [OLJV\U[Y`»ZNYLLU[LJOTHYRL[KL]LSVWTLU[P[PZPTWVY[HU[[VIYPLÅ`V\[SPULZVTL of the practices policymakers use to develop these policies. (Z KYHM[ IPSSZ HYL KL]LSVWLK *OPUH»Z SLNPZSH[VYZ \UKLY [OL 5H[PVUHS 7LVWSL»Z *VUMLYLUJL 57* [HRL PU[V HJJV\U[ SLNHS WYHJ[PJLZ VM ]HYPV\Z SLNHS Z`Z[LTZ HYV\UK[OL^VYSK6UJLHIPSSPZKYHM[LKHUKW\[VU[OL57*»ZSLNPZSH[P]LHNLUKH there are complex procedures for deliberation of the draft bill that can include, MVYL_HTWSLYL]PL^PUZWLJPHSJVTTP[[LLZ\UKLY[OL57*L_WLY[YV\UK[HISLZVY W\ISPJOLHYPUNZ9L]PZLK]LYZPVUZVMKYHM[IPSSZJHUIL]V[LKPU[VSH^I`HZPTWSL THQVYP[`HTVUNHWSLUHY`ZLZZPVUVM[OL57*0MHIPSSWHZZLZ*OPUH»ZWYLZPKLU[ issues a presidential order to promulgate the law. ;OLWYVJLK\YLZ\ZLKMVYKYHM[PUNHUKPTWSLTLU[PUNPZZ\LZWLJPÄJYLN\SH[PVUZ HUK KPYLJ[P]LZ H[ [OL :[H[L *V\UJPS HUK TPUPZ[Y` SL]LS HUK ILSV^ ILHY THU` similarities to those used in the legislative process. A ministry or other sponsoring regulatory agency commonly develops a draft regulation after considering Ibid Ibid National Bureau of Statistics of China, “China Statistical Yearbook 2008” 10 National Development and Reform Commission, National Climate Change Programme (Beijing, China: NDRC, June 2007), 45 11 National Natural Science Foundation of China, Guide to Programmes 2006 (Beijing, China: NSFC, November 20, 2005) 12 There is a second option for China’s legislative process, often utilized between plenary sessions of the NPC, whereby draft bills are submitted to, deliberated under, and voted on, by the Standing Committee of the NPC, a permanent committee with legislative powers under the NPC. 13 Chenfeng Cai, Chunhua Li, The Legislative Process in China (Ontario, Canada: The Parliamentary Centre of Canada, 2006),5 7 8 9

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47

GREENTECH-RELATED POLICIES AND REGULATIONS

international regulatory precedents, then invites feedback on the draft regulation through a variety of channels. If the regulation addresses issues that cut across separate ministerial mandates or involve fundamental issues, such as how a WPLJLVMSLNPZSH[PVUPZ[VILPTWSLTLU[LK[OL:[H[L*V\UJPSVYWLYOHWZHNYV\W VM TPUPZ[YPLZ ^PSS PZZ\L [OL YLN\SH[PVU 0M P[ PU]VS]LZ [OL Q\YPZKPJ[PVU VM VUS` VUL ministry, that ministry alone may issue the regulation. -VY IV[O SLNHS HUK YLN\SH[VY` TH[[LYZ NYLLU[LJO THYRL[ Z[HRLOVSKLYZ OH]L opportunities to directly input feedback to the draft policies before they are L]LU[\HSS`HKVW[LK(Z*OPUH»ZWVSPJ`THRLYZJVU[PU\L[VYLÄULTL[OVKZ[OYV\NO which they are able to incorporate public input into their new policies, market Z[HRLOVSKLYZ ZOV\SK OH]L VWWVY[\UP[PLZ [V PUÅ\LUJL *OPUH»Z NYLLU[LJO WVSPJ` development.

„ CHINA’S PLANS AND PROGRAMS *OPUH»Z NV]LYUTLU[ THRLZ Z\IZ[HU[PHS \ZL VM UH[PVUHS WSHUUPUN HJ[P]P[PLZ HUK WYVNYHTZ[VWYV]PKLHWWYVWYPH[LMYHTL^VYRZMVY*OPUH»ZYLZWVUZL[VLU]PYVUTLU[HS issues and to generate development targets. A summary listing of several key VUNVPUNHUKM\[\YLNYLLU[LJOYLSL]HU[WSHUZPZJVU[HPULKPU-PN\YL Fig .5: SUMMARY OF ISSUING AGENCIES AND TIME FRAMES OF SELECTED CHINESE GOVERNMENT PLANS IMPACTING GREENTECH SECTORS ISSUING AGENCY

TIME FRAME

11th Five Year Guidelines for Economic and Social Development

NPC

2006-2010

12th Five Year Guidelines for Economic and Social Development

NPC

2011-2015

Five Year Plan for Energy Development

NDRC

2006-2010

Five Year Plan for Coal Industry Development

NDRC

2006-2010

Five Year Plan for Railway Development

MOR

2006-2010

Five Year Plan for the Development and Utilization of Coal Bed Methane and Coal Mine Methane

NDRC

2006-2010

Five Year Plan for Sulfur Dioxide Treatment in Existing Coal-Fired Power Plants

NDRC, MEP

2006-2010

Five Year Plan for Acid Rain and Sulfur Dioxide Pollution Control

NDRC, MEP

2006-2010

MEP

2006-2010

Medium and Long Term Science and Technology Development Plan

State Council

2000-2020

Medium and Long Term Energy Development Plan

State Council

2004-2020

Medium and Long Term Plan for the Oil Refining Industry

State Council

2005-2020

Medium and Long Term Energy Conservation Plan

NDRC

2006-2020

Medium and Long Term Plan for Renewable Energy Development

NDRC

2007-2020

Medium and Long Term Rail Network Development Plan

NDRC

2008-2020

Shipping Revitalization Plan

State Council

2009-2011

Logistics Industry Revitalization Plan

State Council

2009-2011

Equipment Manufacturing Revitalization Plan

State Council

2009-2011

PLAN

Five Year Plan for Ecological Protection

,]LY` Ä]L `LHYZ *OPUH»Z 5H[PVUHS 7LVWSL»Z *VUNYLZZ ]V[LZ [V LUKVYZL UL^ “关于印发《国家酸雨和二氧化硫污染防治 Sources: 9. 中华人民共和国环境保护部, 1. 中国人民共和国国务院办公厅,” 国务院常务会议原则通过《能源中长期 2008年1月3日 [Ministry of Environmental -P]L@LHY .\PKLSPULZ MVY ,JVUVTPJ HUK :VJPHS +L]LSVWTLU[“十一五”规划》的通知”, ;OL th -P]L@LHY 发展规划纲要》（草案）,” 2006年6月30日[The Central people’s Protection, PRC, “Notice of Issuing ,” January 3, 2008] Development (2004-2020), (Draft),”development, June 30, 2006], http://www.gov.cn/ 10.中华人民共和国环境保护部, “国家发展改革委，国家环保总局关于印 their new focus on sustainable and in the importance they placed (accessed on May 30, 2009) 发现有燃煤电厂二氧化硫“十一五”规划的通知”, 2008年4月10日 [Ministry VU H OHYTVUPV\Z ZVJPL[` HUK ZL]LYHS VM *OPUH»Z V[OLY RL` LU]PYVUTLU[HS HUK 2. 中国国家发展和改革委员会,可再生能源中长期发展规划,2007年8月, of Environmental Protection, PRC, “Notice of Issuing ,” April 10, Climateprinciples. Change Info-Net, Medium and set Long-Term Plan for Sulfur Dioxide Treatment Renewable Energy Development (2007-2020)], (Beijing, 2008] KLJYLHZL *OPUH»Z LULYN` PU[LUZP[` WLY \UP[ VM China: .+7National I`   IL[^LLU  HUK Development and Reform Commission, August, 2007) 11. 环境保护部环境规划院, “全国“十一五”生态保护规划”, 2006年1月10日 >OPSLZWLJPÄJZOH]LUV[`L[ILLUW\ISPZOLKZVTLTHYRL[L_WLY[ZZ\NNLZ[ 3.中国国家发展和改革委员会,”节能中长期专项规划,” 2004年11月25日, [Chinese Academy For Environmental Planning, “Five Year Plan for th [National-P]L@LHY.\PKLSPULZ^PSSW\[L]LUNYLH[LYLTWOHZPZVU Development and Reform Commission, “Medium and Ecological Protection,” January 10, 2006] [OH[[OL Long-Term Plan for Energy Conservation,” November 25, 2004], 12.中国国家发展和改革委员会, 煤炭工业发展“十一五”规划, 2007年1月, environmental and sustainability issues, and may even contain a national target for http://www.sdpc.gov.cn/ (accessed on May 30, 2009) [China Development Gateway, Five Year Plan for Coal Industry  “国家中长期科学技术发展纲领,” 1992年3月8日, carbon4.南阳市科技信息网, emissions intensity. Development, National Development and Reform Commission, January, [NanYang Science and Information Website, “Medium and Long-Term Plan for Science and Technology Development ,” March 3, 1992],

2007] 13. 中国煤炭网, “煤层气开发利用“十一五”规划书

Note: After the 10th Five-Year Plan (2001-2005), subsequent plans have been renamed “Five Year Guidelines” http://www.nysti.ha.cn/ (accessed on Mayfive 30,year 2009) http://www.ccoalnews.co) accessed on August 11, 2009) [China Coal 15 Chinese Government’s Official Web Portal, “NPC Endorses 11th Five-Year Plan,” March 14, 2006, http://www.gov.cn/ 5.中国国家发展和改革委员会,”国家发展改革委批准<<中长期铁路网规划 Net, “Five Year Plan for the Development and Utilization of Coal Bed 16 Financial Times, “Chinese Group Buys Voluntary Carbon Credits,” August 6, 2009, http://www.ft.com/ 14

48

(2008年调整)>>,” 2008年10月, [National Development and Reform Commission, “On issuing Medium and Long-Term Plan for Rail Network Development<<2008 revision>>,” October, 2008], http://www.ndrc.gov.cn/ (accessed on May 30, 2009) 6. 广州市发展和改革委员会, “炼油工业中长期发展专项规划,” 2005年12月 [Guangzhou Municipal Development & Reform Commission, “Medium and Long Term Plan for the Oil Refining Industry”, December, 2005]

Methane and Coal Mine Methane”] 14. Sina, “National Energy Bureau: New Energy Revitalization Plan To be Issued Within ThisCHINA Year,”GREENTECH http://www.sina.com.cn/ (accessed on August THE REPORT 2009 www.china-greentech.com 11, 2009) 15. Sina, “Introduction of Shipping Revitalization Plan Details,” http://www.sina.com.cn/ (accessed on August 11, 2009) 16. 中华人民共和国人民政府, “国务院关于印发物流业调整和振兴规划的

CHINA’S REGULATORY RESPONSE

;VZ\WWVY[[OL-P]L@LHY.\PKLSPULZMVY,JVUVTPJHUK:VJPHS+L]LSVWTLU[[OL 5+9*HUKV[OLYRL`TPUPZ[YPLZYLSLHZLKL[HPSLKWSHUZ[VN\PKL[OLKL]LSVWTLU[ VMZWLJPÄJWHY[ZVM[OLLJVUVT`V]LY[OLZHTLÄ]L`LHYWLYPVKZ;OL-P]L@LHY ,ULYN`7SHU[OL-P]L@LHY7SHUMVY*VHS0UK\Z[Y`+L]LSVWTLU[HUK[OL-P]L @LHY7SHUMVY[OL+L]LSVWTLU[HUK<[PSPaH[PVUVM*VHS)LK4L[OHULHUK*VHS4PUL Methane HYL[OYLLL_HTWSLZVMZ\WWVY[PUNÄ]L`LHYWSHUZK\YPUN[OLthÄ]L`LHY WLYPVK^P[OYLSL]HUJLMVY*OPUH»ZNYLLU[LJOTHYRL[Z ¸4LKP\THUK3VUN;LYT7SHUZ¹HYLV[OLYWVSPJ`WSHUUPUN[VVSZ\ZLKI`*OPUH»Z NYLLU[LJO YLN\SH[VYZ WYV]PKPUN JYVZZTPUPZ[Y` WVSPJ` N\PKHUJL MVY  `LHY WLYPVKZHUKJVTWSLTLU[PUN[OLTVYLKL[HPSLKÄ]L`LHYWSHUZ9LJLU[NYLLU[LJO YLSL]HU[4LKP\THUK3VUN;LYT7SHUZOH]LILLUJYLH[LKMVY,ULYN`+L]LSVWTLU[ 209LUL^HISL,ULYN`+L]LSVWTLU[,ULYN`*VUZLY]H[PVU 22 :JPLUJL HUK ;LJOUVSVN` +L]LSVWTLU[  23 HUK 9HPS 5L[^VYR+L]LSVWTLU[24 4HU`4LKP\THUK3VUN;LYTWSHUZ[OLTZLS]LZJVU[HPUUH[PVUHSSL]LSWYVQLJ[Z ^P[O PTWVY[HU[ NYLLU[LJO PTWSPJH[PVUZ ;OL 4LKP\T HUK 3VUN;LYT ,ULYN` *VUZLY]H[PVU7SHUMVYL_HTWSLSH`ZV\[HWYVNYHTVMRL`LULYN` JVUZLY]H[PVU WYVQLJ[Z ^OPJO ZOV\SK JVSSLJ[P]LS` SLHK [V LULYN` JVUZLY]H[PVU LX\P]HSLU[[VTPSSPVU[VUZVMJVHS(SPZ[PUNVM[OLZLRL`LULYN`JVUZLY]H[PVU WYVQLJ[ZJHUILMV\UKPU-PN\YL25 Fig.6: THE TEN KEY ENERGY CONSERVATION PROJECTS IN CHINA’S MEDIUM

AND LONG TERM ENERGY CONSERVATION PLAN (2006-2020)

„ Coal-fired industrial boiler retrofit „ District heating and power cogeneration „ Residual heat and pressure utilization „ Petroleum saving and substituting „ Motor system energy saving „ Energy system optimization „ Building energy conservation „ Green lighting projects „ Government agency energy conservation „ Energy saving monitoring and testing, and technology service system building Whereas Medium and Long-Term plans commonly focus on individual policy [VWPJZ PUK\Z[Y` YL]P[HSPaH[PVU WSHUZ HYL [HYNL[LK H[ PUKP]PK\HS PUK\Z[YPLZ *OPUH»Z NV]LYUTLU[OHZYLSLHZLKHU\TILYVMNYLLU[LJOYLSL]HU[PUK\Z[Y`YL]P[HSPaH[PVUWSHUZ for industries such as new energy, shipping, logistics and equipment manufacturing. (TVUN[OLRL`WYVQLJ[ZMVYYL]P[HSPaPUN*OPUH»ZLX\PWTLU[THU\MHJ[\YPUNPUK\Z[Y` PU[OL9LZ[Y\J[\YPUNHUK9L]P[HSPaH[PVU7SHUMVY[OL,X\PWTLU[4HU\MHJ[\YPUN0UK\Z[Y`   MVY L_HTWSL *SLHU HUK ,MÄJPLU[ 7V^LY .LULYH[PVU ,X\PWTLU[ <S[YHOPNO ]VS[HNL 1'5&´WK)LYH
18

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THE CHINA GREENTECH REPORT 2009



GREENTECH-RELATED POLICIES AND REGULATIONS

0UHKKP[PVU[VHSSVM[OLZLWSHUZ*OPUH»ZWVSPJ`THRLYZHSZVTHRLZ\IZ[HU[PHS\ZL VM UH[PVUHS WYVNYHTZ ^OPJO WYV]PKL WVSPJ` KPYLJ[PVU VY ZWLJPÄJ YLN\SH[PVUZ HJYVZZ H YHUNL VM PTWSLTLU[PUN HNLUJPLZ 6UL VM [OL TVZ[ ZPNUPÄJHU[ NYLLU[LJOYLSH[LK WYVNYHTZPUYLJLU[`LHYZPZ[OL5H[PVUHS*SPTH[L*OHUNL7YVNYHTYLSLHZLKI`[OL 5H[PVUHS+L]LSVWTLU[HUK9LMVYT*VTTPZZPVUPU;OL5H[PVUHS*SPTH[L*OHUNL 7YVNYHTMVYTHSS`PUJVYWVYH[LZHU\TILYVM*OPUH»ZLU]PYVUTLU[HSWVSPJ`WYPUJPWSLZ HUK HKKP[PVUHSS` SH`Z V\[ H IYVHK YHUNL VM ZWLJPÄJ WVSPJ` VIQLJ[P]LZ [V IL JHYYPLK V\[I`Z[HRLOVSKLYZHJYVZZ*OPUH»ZYLN\SH[VY`SHUKZJHWL>P[OYLZWLJ[[VLTPZZPVUZ [YHJRPUNMVYL_HTWSL[OLWYVNYHTJHSSZMVY¸[OLLZ[HISPZOTLU[VMZ[H[PZ[PJHSZ`Z[LTZ catering to the compilation of emission inventory, collection of testing and monitoring data for emission factors, methodologies for inventory quality control, assessment VM JSPTH[L JOHUNL PTWHJ[ HUK HKHW[H[PVU WYVQLJ[PVU VM M\[\YL LTPZZPVUZ HUK [OL development and management of national greenhouse gas emission database.”27 *OPUH»Z ;VW ,ULYN`*VUZ\TPUN ,U[LYWYPZLZ 7YVNYHT  PZ HUV[OLYUH[PVUHSWYVNYHT^P[OHZ\IZ[HU[PHSPTWHJ[VU[OLKL]LSVWTLU[VM*OPUH»Z NYLLU[LJO THYRL[Z ;OPZ QVPU[ WYVNYHT PU]VS]PUN [OL 5H[PVUHS +L]LSVWTLU[ HUK 9LMVYT *VTTPZZPVU [OL 5H[PVUHS )\YLH\ VM :[H[PZ[PJZ [OL Z[H[LV^ULK (ZZL[Z :\WLY]PZPVU HUK (KTPUPZ[YH[PVU *VTTPZZPVU WS\Z [OL .LULYHS (KTPUPZ[YH[PVU VM 8\HSP[` :\WLY]PZPVU 0UZWLJ[PVU HUK 8\HYHU[PUL ^HZ SH\UJOLK PU (WYPS  ;OL LU[LYWYPZLZ PUJS\KLK PU [OL WYVNYHT YLWYLZLU[ UPUL THQVY LULYN`JVUZ\TPUN industries: iron and steel, petroleum and petrochemicals, chemicals, electric power generation, non-ferrous metals, coal mining, construction materials, textile and pulp and paper. )` LZ[HISPZOPUN LULYN` JVUZLY]H[PVU [HYNL[Z MVY *OPUH»Z OPNOLZ[ LULYN` consuming enterprises, the program aims to reduce total energy consumption by [OLLX\P]HSLU[VMTPSSPVU[VUZVMJVHSI`28 0U[OLJVU[L_[VM[OLNSVIHSLJVUVTPJKV^U[\YUVMHUK P[PZPTWVY[HU[ [V UV[L *OPUH»Z HUUV\UJLTLU[ PU 5V]LTILY  VM H  [YPSSPVU `\HU <: IPSSPVU LJVUVTPJ Z[PT\S\Z WSHU >OPSL VUS`  IPSSPVU `\HU <: IPSSPVU PZ KPYLJ[S` LHYTHYRLK MVY NYLLU PU]LZ[TLU[Z H M\Y[OLY  IPSSPVU `\HU <: IPSSPVU^PSSILJOHUULSSLKPU[V[LJOUVSVN`\WNYHKLZHUKPUK\Z[YPHSYLZ[Y\J[\YPUNPU *OPUH»ZLULYN`PU[LUZP]LMHJ[VYPLZIYPUNPUN[OL[V[HSWVY[PVUVM[OLZ[PT\S\Z\ZLK MVYJ\[[PUNJHYIVULTPZZPVUZ\W[V  ;OL/VUNRVUNHUK:OHUNOHP)HURPUN *VYWVYH[PVU /:)* LZ[PTH[LZ [OH[ <: IPSSPVU VM [OL V]LYHSS WSHU PUJS\KPUN grid, water and rail infrastructure investments, is greentech-related, making it the SHYNLZ[Z\JOZ[PT\S\ZWHJRHNLPU[OL^VYSKMVSSV^LKI`[OL(TLYPJHU9LJV]LY` HUK9LPU]LZ[TLU[7SHU»Z<:IPSSPVUV\[VMH[V[HS<:IPSSPVUHSSVJH[LK[V NYLLUHYLHZPU[OL<:30

„ LAWS AND STANDARDS While principles, programs and development plans guide policies across a range VMYLN\SH[VY`HNLUJPLZ*OPUH»ZSH^ZHUKZ[HUKHYKZHYL[OLMVYTHSYLX\PYLTLU[Z [OH[JVTWHUPLZHUKPUKP]PK\HSZHYLSLNHSS`VISPNLK[VMVSSV^:WLJPÄJÄULZMVYUVU compliance are commonly included in the law or standard itself. 6]LY YLJLU[ `LHYZ *OPUH»Z NV]LYUTLU[ OHZ WHZZLK H YHUNL VM SH^Z [OH[ OHZ HMMLJ[LK [OL KL]LSVWTLU[ VM [OL UH[PVU»Z NYLLU[LJO THYRL[Z ;OL 9LUL^HISL ,ULYN`3H^HUK*PYJ\SHY,JVUVT`3H^MVYL_HTWSLJVU[HPUUV[HISL provisions for the promotion of renewable power generation to meet energy ZLJ\YP[`HUKLU]PYVUTLU[HSVIQLJ[P]LZHUKMVY[OLKL]LSVWTLU[VMYLJ`JSPUNHUK WVSS\[PVUYLK\J[PVUHJ[P]P[PLZYLZWLJ[P]LS`-PN\YLJVU[HPUZHUV]LY]PL^VMZL]LYHS important greentech-related laws introduced over the last two decades. :[HUKHYKZ HYL HUV[OLY PTWVY[HU[ JVTWVULU[ VM *OPUH»Z NYLLU[LJO WVSPJ` LU]PYVUTLU[ *OPUH»Z (KTPUPZ[YH[PVU VM 8\HSP[` :\WLY]PZPVU 0UZWLJ[PVU HUK 8\HYHU[PUL (8:08 PZ YLZWVUZPISL MVY HKTPUPZ[LYPUN [LJOUPJHS WYVK\J[ X\HSP[` LU]PYVUTLU[ HUK WYVK\J[ ZHML[` Z[HUKHYKZ PU HKKP[PVU [V THUHNPUN *OPUH»Z HJJYLKP[H[PVUHUKJLY[PÄJH[PVUHJ[P]P[PLZ National Development and Reform Commission, National Climate Change Program, (Beijing, China: NDRC, June 2007),62 Price, Lynn et al., China’s Top-1000 Energy-Consuming Enterprises Program, Reducing Energy Consumption of the 1000 Largest Industrial Enterprises in China (Berkeley, CA, U.S.: Lawrence Berkeley National Laboratory, June 2008), 6 29 China Daily, “Billions from Stimulus Tagged to Cut Emissions,” August 6, 2009, http://www.chinadaily.com.cn/ 30 HSBC Bank plc, A Climate for Recovery: The Colour of Stimulus Goes Green (London, United Kindom: HSBC Bank plc, February 25, 2009), 3 27 28

50

THE CHINA GREENTECH REPORT 2009

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CHINA’S REGULATORY RESPONSE

Fig. 7 :

LAW

SELECTED CHINA GREENTECH LAWS PROVISIONS

Circular Economy Promotion Law (2008)

„ +LÄULZJPYJ\SHYLJVUVT`HZYLMLYYPUN[V[OLYLK\J[PVUYL\ZLHUKYLJ`JSPUNVMYLZV\YJLZPU production, circulation and consumption „ ,Z[HISPZOLZZ`Z[LTZMVYYLJ`JSPUNWSHUUPUNYLZV\YJLTHUHNLTLU[LTPZZPVUZJVU[YVSHUK environmental monitoring and auditing

Water Pollution Control Law (2008)

„ ,TWOHZPaLZHJJV\U[HIPSP[`VMSVJHSNV]LYUTLU[ZHUKLU[LYWYPZLZMVYWVSS\[HU[V]LYKPZJOHYNL" increases penalties, removes penalty limits „ 9LX\PYLZSVJHSNV]LYUTLU[Z[VLZ[HISPZOJLU[YHSPaLKT\UPJPWHS^HZ[L^H[LY[YLH[TLU[MHJPSP[PLZ

Energy Conservation Law (Revised 2008)

„ *VUÄYTZLULYN`JVUZLY]H[PVUHZHN\PKPUNZ[H[LWVSPJ` „ 3H`ZV\[WYLMLYLUJLMVYLULYN`LMÄJPLU[LX\PWTLU[HUKWYVK\J[ZPUW\ISPJWYVJ\YLTLU[ „ ,TWOHZPaLZYLZWVUZPIPSP[PLZMVYOPNOLULYN`JVUZ\TPUNLU[P[PLZ

Urban-Rural Planning Law (2007)

„ 6IQLJ[P]L[VZ[YLUN[OLU[OLHKTPUPZ[YH[PVUVMJP[`[V^UHUK[V^UZOPWWSHUUPUN „ :WLJPÄLZJVTW\SZVY`LSLTLU[ZVM\YIHUHUKY\YHSWSHUZPUJS\KPUNLSLJ[YPJP[`^H[LY transportation and communications infrastructure „ Contains requirements for plans to address environmental and ecological protection

Renewable Energy Law (2005)

„ 6IQLJ[P]LZPUJS\KLWYVTV[PUNLULYN`ZLJ\YP[`HUKWYV[LJ[PUN*OPUH»ZLJVSVNPJHSLU]PYVUTLU[ „ Includes provisions on public funding for renewable energy development, discounted lending HUK[H_WYLMLYLUJLZHUKJVUULJ[PVUVMYLUL^HISLNLULYH[PVU[V*OPUH»ZLSLJ[YPJP[`NYPK

Law on Prevention and Control of Environmental Pollution Caused by Solid Waste (Revised 2005)

„ Lays out guidelines on the prevention, supervision and administration of household and industrial solid waste „ :WLJPHSWYV]PZPVUZVU[OLPTWVY[H[PVUVMZVSPK^HZ[LHUKVUOHaHYKV\Z^HZ[LTHUHNLTLU[ „ Includes a detailed schedule of penalties up to one million yuan for non-compliance

Cleaner Production Promotion Law (2003)

„ 6IQLJ[P]L[VKLJYLHZLULNH[P]LPTWHJ[VMTHU\MHJ[\YPUNVUOLHS[OHUK[OLLU]PYVUTLU[ „ 3H`ZV\[VIQLJ[P]LZPTWSLTLU[H[PVUN\PKLSPULZHUKM\UKPUNWSHUZMVY*SLHULY7YVK\J[PVU „ ,TWOHZPZPUJS\KLZTHUHNLTLU[PTWYV]LTLU[JSLHULULYN`\ZLHUKWVSS\[PVUYLK\J[PVU

Water Law (Revised 2002)

„ (TLUKZ >H[LY3H^[VPUJS\KLNYLH[LYLTWOHZPZVU^H[LYZH]PUNTLHZ\YLZHUK technology and on balancing the water needs of municipal, agricultural and domestic users „ :WLJPÄLZTPUPZ[YPLZ»HUKWYV]PUJPHSNV]LYUTLU[Z»^H[LYYLZV\YJLTHUHNLTLU[YLZWVUZPIPSP[PLZ

Environmental Impact Assessment Law (2002)

„ Outlines necessary environmental impact assessments to be provided to the Ministry of ,U]PYVUTLU[HS7YV[LJ[PVUILMVYLWYVQLJ[JVUZ[Y\J[PVU „ 7YV]PKLZMVYSLNHSSPHIPSP[`\W[V`\HUMVYUVUJVTWSPHUJL

Law on Prevention and Control of Atmospheric Pollution (Revised 2000)

„ ,TWOHZPaLZWYV[LJ[PVUVM[OLH[TVZWOLYPJLU]PYVUTLU[HZHJVTW\SZVY`LSLTLU[VM government planning at all levels „ :L[Z\W[V[HSLTPZZPVUZJVU[YVSWVSS\[LYYLNPZ[YH[PVUSPJLUZPUNHUKKPZJOHYNLMLLZ`Z[LTZ „ +L[HPSZ[YLH[TLU[VMLTPZZPVUZMYVTJVHSJVTI\Z[PVUHUKTV[VY]LOPJSLZ

Environmental Protection Law (Revised 1989)

„ :L[Z\WZ`Z[LTZMVYLU]PYVUTLU[HSZ[HUKHYKKL]LSVWTLU[HUKTVUP[VYPUNLU]PYVUTLU[HS protection and pollution control management „ Imposes three types of non-compliance penalties: administrative sanctions, civil liability and criminal liability

4HU`VM*OPUH»ZNYLLU[LJOZVS\[PVUZZ\JOHZ^H[LYWPWLTH[LYPHSZHUKPUK\Z[YPHS THU\MHJ[\YPUN LX\PWTLU[ HYL Z\IQLJ[ [V PU[LYUH[PVUHS Z[HUKHYKZ \UKLY [OL 0U[LYUH[PVUHS :[HUKHYKZ 6YNHUPaH[PVU 0:6 VY [OL 0U[LYUH[PVUHS ,SLJ[YV[LJOUPJHS *VTTPZZPVU0,*)V[O[OLZLIVKPLZHYLYLWYLZLU[LKPU*OPUHI`HIVK`\UKLY [OL(8:08JHSSLK[OL:[HUKHYKPaH[PVU(KTPUPZ[YH[PVUVM*OPUH:(* +VTLZ[PJZ[HUKHYKZMVY[OLTVZ[WHY[HYLKL]LSVWLKI`[OL:(*PUJVVYKPUH[PVU ^P[OHU\TILYVMHMÄSPH[LKVYNHUPaH[PVUZHUKPUK\Z[Y`ZWLJPÄJ[LJOUPJHSJVTTP[[LLZ H[[OLUH[PVUHSSL]LS;OL:(*PZHSZVYLZWVUZPISLMVY[OLL_HTPUH[PVUHUKHWWYV]HS VM WYVK\J[Z Z\IQLJ[ [V [OL UH[PVUHS Z[HUKHYKZ 4VYL KL[HPS VU ZLJ[VYZWLJPÄJ standards is included in the sector chapters of the full version of this report.

„ FISCAL INCENTIVES AND SUBSIDIES Aside from the laws and standards outlined above, China also uses an array of ÄZJHSHUKWVSPJ`PUZ[Y\TLU[Z[VWYVTV[LKVTLZ[PJNYLLU[LJOTHYRL[Z

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THE CHINA GREENTECH REPORT 2009



GREENTECH-RELATED POLICIES AND REGULATIONS

(ZPUV[OLYJV\U[YPLZ[H_ILULÄ[ZMVYZVS\[PVUWYV]PKLYZHUKHKVW[LYZHYLHRL` HZWLJ[ VM *OPUH»Z NYLLU[LJO WYVTV[PVU WVSPJPLZ (S[OV\NO *OPUH OHZ UV Z[HUK alone environmental tax regime, multiple tax exemptions, consumption-related [H_LZ UH[\YHS YLZV\YJLYLSH[LK [H_LZ HUK V[OLY [H_ ILULÄ[Z LTILKKLK PU [OL L_PZ[PUNÄZJHSZ`Z[LTHPT[VWYVTV[LLU]PYVUTLU[HSHUKNYLLU[LJOHJ[P]P[` 6UL UV[HISL HYLH ^OLYL [OLZL [H_ ILULÄ[Z OH]L ILLU HWWSPLK PZ PU *OPUH»Z JVYWVYH[LPUJVTL[H_*0;WVSPJPLZ9L]LU\LLHYULKMYVTJLY[HPU[`WLZVM*SLHU +L]LSVWTLU[4LJOHUPZT*+4LU]PYVUTLU[HSWYV[LJ[PVULULYN`JVUZLY]H[PVU HUK^H[LYZH]PUNJVUZLY]H[PVUWYVQLJ[ZMVYL_HTWSLPZLSPNPISLMVYH[OYLL`LHY L_LTW[PVUHUK[OYLL`LHY YLK\J[PVUVMJVYWVYH[LPUJVTL[H_LZ ;H_ JYLKP[Z HYL H ZLJVUK HWWYVHJO \ZLK [V Z\WWVY[ NYLLU[LJO PU *OPUH»Z *0; Y\SLZ .YLLU[LJO HKVW[LYZ THRPUN PU]LZ[TLU[Z PU X\HSPÄLK LX\PWTLU[ \ZLK MVY environmental protection, energy or water conservation may be eligible for a CIT JYLKP[LX\HS[V VM[OLPU]LZ[TLU[]HS\L32 -PUHSS`[OLYLHYLZL]LYHSWYV]PZPVUZPU[OL*0;YLNPTL[OH[^OPSLUV[ILPUNZWLJPÄJ to the greentech sector, are favorable to greentech solution providers. One example VM[OPZ[`WLVMY\SLPZ[OL/PNOHUK5L^;LJOUVSVN`,U[LYWYPZLZ/5;,WYV]PZPVUZ whereby qualifying companies that meet a variety of criteria including spending HTPUPT\TWLYJLU[HNLVM[OLPYYL]LU\LVU9 +MVY[LJOUVSVNPLZZLSLJ[LKI`[OL government as being in priority areas, can be granted a reduction in corporate income tax liability.33 =HS\LHKKLK [H_LZ =(; YLM\UKZ HUK L_LTW[PVUZ HYL HUV[OLY RL` [H_H[PVU [VVS \ZLK[VZ\WWVY[NYLLU[LJOPU*OPUH-VYL_HTWSLZPUJL+LJLTILY[OLYLOHZ ILLU =(; L_JS\ZPVU MVY WYVK\J[Z VY ZLY]PJLZ THRPUN H JVTWYLOLUZP]L \[PSPaH[PVU VMYLZV\YJLZ¶MVYL_HTWSLTHRPUN\ZLVMLULYN`LMÄJPLU[WYVJLZZPUNVY\[PSPaPUN waste heat, wastewater or different types of solid wastes as production inputs. .YLLU[LJO ZVS\[PVUZ ZWLJPÄJHSS` LSPNPISL MVY [OPZ ILULÄ[ PUJS\KL I\PSKPUN TH[LYPHSZ ^P[O H[ SLHZ[   YLJ`JSLK JVU[LU[ 9LJSHPTLK >HZ[L^H[LY *VTIPULK /LH[ HUK 7V^LYZVS\[PVUZ:OHSL6PSHUKV[OLYWYVK\J[Z34 Another important area where VATIHZLK [H_ WVSPJ` OHZ ZW\YYLK *OPUH»Z NYLLU[LJO KL]LSVWTLU[ OHZ ILLU *OPUH»Z wind power sector, where importers of Wind Turbine Components and domestic >PUK7V^LY,X\PWTLU[THU\MHJ[\YLYZIV[OYLJLP]LZPNUPÄJHU[=(;ILULÄ[Z35 (Z H ÄUHS L_HTWSL *OPUH \ZLZ L_[YHJ[PVU HUK UH[\YHS YLZV\YJL [H_LZ [V manage many upstream activities like mining, oil and gas exploitation, and water extraction and waste-related charges to control downstream waste and pollution THUHNLTLU[(KQ\Z[PUN[OLMLLSL]LSZMVY[OL]HYPV\ZHJ[P]P[PLZJHUOH]LZPNUPÄJHU[ impacts on greentech companies involved in those areas. (ZPKLMYVT[H_PUJLU[P]LZ*OPUH»ZNV]LYUTLU[HSZVKPYLJ[S`Z\IZPKPaLZWYV]PKLYZ and adopters of several strategic greentech technologies, perhaps more than any V[OLY JV\U[Y` :L]LYHS PTWVY[HU[ YLJLU[ NYLLU[LJO Z\IZPKPLZ HYL SPZ[LK PU -PN\YL  (U L_HTWSL VM *OPUH»Z NYLLU[LJO Z\IZPKPaH[PVU PZ ZLLU PU [OL [YHUZWVY[H[PVU ZLJ[VY^OLYL[OL4PUPZ[Y`VM:JPLUJLHUK;LJOUVSVN`ZL[V\[UL^Z\IZPKPLZMVY [OL HKVW[PVU VM /`IYPK =LOPJSLZ ,SLJ[YPJ =LOPJSLZ HUK -\LS *LSSIHZLK =LOPJSLZ PU -LIY\HY`  36 (KKP[PVUHSS` PU .YLLU )\PSKPUN [OL 4PUPZ[Y` VM /V\ZPUN HUK
中华人民共和国财政部, “国家税务总局关于中国清洁发展机制基金及清洁发展机制项目实施企业有关企业所得税政策问题的通知,” 2009年03月23日, [Ministry of Finance, “Tax Notice on China’s Clean Development Mechanism Fund and the Implementation of CDM project-related Corporate Income Tax Policy Issues,” March 23, 2009],http://www.js-n-tax.gov.cn/ 32 中国人民共和国国务院办公厅, “中华人民共和国国务院令第512号,” 2007年12月6日 [General Office of the State Council,“State Council Circular 512,” December 6, 2007] http://www.gov.cn/ 33 Ministry of Science and Technology, “Circular on Printing and Issuing of the Guidelines for the Administration of the Recognition of Hitech Enterprises,” August, 12, 2008, http://english.mofcom.gov.cn/ 34 [1]中华人民共和国财政部, “国家税务总局关于资源综合利用及其他产品增值税政策的通知,” 2008年12月09日[Ministry of Finance and State Administration of Taxation, “Tax Policy on the Comprehensive Utilization of Resource and Other Products,” December 9, 2008] http://www.js-n-tax.gov.cn/ 35 Renewable Energy World, “China’s Wind Power Industry: Localizing Equipment Manufacturing,” July 18, 2009 http://www.renewableenergyworld.com/ 36 中华人民共和国科学技术部, “关于开展节能与新能源汽车示范推广试点工作的通知”，2009年2月11日 [Ministry of Science and Technology, Provisional Measure on the Management of Government Subsidies for Energy-Saving and New Energy Vehicles, February 11, 2009] http://www.most.gov.cn/ 37 中国人民共和国住房和城市建设部,”建筑节能：科技创新是重中之重,” 2008年3月17日[Ministry of Housing and Urban-Rural Development,”Building Energy: Technology innovation is the most important,” March 17, 2008,] http://www.mohurd.gov.cn/ 31

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Fig.8 : SUBSIDY

SUMMARY OF SELECTED GREENTECH SUBSIDIES IN CHINA ANNOUNCEMENT DATE

AMOUNT OF SUBSIDY

DESCRIPTION OF ELIGIBILITY

t  VMNYPKJVUULJ[ed solar investment t  VMVMMNYPK7= power investment

t 300 kW min capacity t `LHYTH_JVUZ[Y\J[PVUWLYPVK t 20+ year operations requirement

GOLDEN SUN

1\S`

SOLAR ROOFS

4HYJO

t `\HUWLY^H[[ of capacity

t Targets new construction t 4PUPT\TLMÄJPLUJ`N\PKLSPULZ t 50 kW min installation

PHEV/EV/FC*

1HU\HY`

t 28K-600K yuan per vehicle

t 4PUPT\TM\LSZH]PUN MVYWHZZLUger and light commercial vehicles t 4PUPT\TM\LSZH]PUN MVYI\ZZLZ

t 600 yuan per kW for [OLÄYZ[\UP[Z

t Only Chinese turbine manufacturers t ZWSP[IL[^LLUJVTWVULU[Z\Wpliers and turbine manufacturers t 4>TPUPT\TJHWHJP[`

WIND TURBINE

August 2008

BIOMASS POWER GENERATION

July 2008

t Temporary electricity [HYPMMPUJYLHZLI` `\HUR>O

t Certain types of feedstock only MVYLZ[ÄYLKHTWHUKZ[YH^

COAL BED METHANE MINING

April 2007

t 0.2 yuan per cubic meter

t Methane for consumer or chemical industry sale only, not power generation

Source: China Greentech Initiative analysis

9LN\SH[VYZ OH]L ILLU WHY[PJ\SHYS` HJ[P]L PU [OL Z\IZPKPaH[PVU VM YLUL^HISL LULYN` +VTLZ[PJ ^PUK [\YIPUL THU\MHJ[\YLYZ HUK ^PUK [\YIPUL JVTWVULU[ THU\MHJ[\YLYZ IV[O OH]L HJJLZZ [V Z\IZPKPLZ MYVT [OL 4PUPZ[Y` VM -PUHUJL38 )PVTHZZWV^LYNLULYH[PVUHUKIPVL[OHUVSWYVK\J[PVUHYLZ\IZPKPaLKPU*OPUH»Z bioenergy sector. In addition to the building-integrated solar subsidy announced PU4HYJO HZLJVUKTHQVYZ\IZPK`WYVNYHT·[OL.VSKLU:\UWYVNYHTMVY \[PSP[`ZJHSLZVSHYPUZ[HSSH[PVUZ^HZHUUV\UJLKI`[OL5H[PVUHS+L]LSVWTLU[HUK 9LMVYT*VTTPZZPVUPU1\S` 40  >OPSL [OL HIV]L KPZJ\ZZPVU MVJ\ZLZ VU *OPUH»Z JLU[YHS NV]LYUTLU[ P[ PZ PTWVY[HU[[VUV[L[OH[WYV]PUJPHSHUKYLNPVUHSNV]LYUTLU[ZHSZVOH]LZPNUPÄJHU[ WVSPJ`SL]LYZ[OL`JHU\ZL[VZ\WWVY[NYLLU[LJOKL]LSVWTLU[PU[OLPYQ\YPZKPJ[PVUZ ;OL @P_PUN 0UK\Z[YPHS 7HYR PU [OL JP[` VM >\_P PU 1PHUNZ\ WYV]PUJL MVY L_HTWSL VMMLYZ IV[O [H_ OVSPKH`Z HUK ZPNUPÄJHU[ [H_ YLK\J[PVUZ MVY \W [V Ä]L `LHYZ MVY greentech and other high-tech companies setting up business there. Other WVSPJPLZ\ZLKI`*OPUH»ZSVJHSYLN\SH[VYZ[VLU[PJLNYLLU[LJOI\ZPULZZLZ[VZL[\W PU[OLPYQ\YPZKPJ[PVUZPUJS\KLKPZJV\U[LKVMÄJLYH[LZKPYLJ[ÄUHUJPUNHZZPZ[HUJL ^P[OWYLWHYH[PVUZMVYPUP[PHSW\ISPJVMMLYPUNZ076ZYLPTI\YZLTLU[ZMVYLTWSV`LL [YHPUPUNHUKV[OLYILULÄ[Z

CMS Cameron McKenna, “Renewable Energy Project Subsidies: What Has China To Offer?” http://www.mondaq.com/ (accessed on August 5, 2009) Institutue of Science in Society,”Biogas China,” http://www.i-sis.org.uk/ (accessed on April 28, 2009) 40 中华人民共和国财政部, “关于实施金太阳示范工程的通知”, 2009年07月16日 [Ministry of Finance, “Regarding the Golden Sun Policy,” July 16, 2009] http://www.mof.gov.cn/ 41 China Yixing Industrial Park for Environmental Science and Technology, “Policies and Regulations,” http://hky.gov.cn/ (accessed August 14, 2009) 38

39

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„ INDUSTRIAL PROMOTION POLICIES Whereas tax incentives and subsidies promote greentech in China by directly PUÅ\LUJPUN YLSH[PVUZOPWZ IL[^LLU JVTWHUPLZ HUK [OL NV]LYUTLU[ *OPUH»Z policymakers also support greentech through industrial promotion policies SL]LYHNPUNÄUHUJPHSPU[LYTLKPHYPLZ -VYPUZ[HUJLYLN\SH[VYZVM[LUKPYLJ[MH]VYHISLPU]LZ[TLU[ÄUHUJPUN[VNYLLU[LJO ZLJ[VYZ]PH*OPUH»Z[OYLLWVSPJ`IHURZ(NYPJ\S[\YHS+L]LSVWTLU[)HURVM*OPUH *OPUH+L]LSVWTLU[)HURHUK0TWVY[,_WVY[)HURVM*OPUHHUK[OLMV\YSHYNLZ[ Z[H[LV^ULKIHURZ(NYPJ\S[\YHS)HURVM*OPUH)HURVM*OPUH*OPUH*VUZ[Y\J[PVU )HURHUK0UK\Z[YPHSHUK*VTTLYJPHS)HURVM*OPUH-VYL_HTWSLI`[OLLUKVM *OPUH+L]LSVWTLU[)HUROHKTVYL[OHU IPSSPVU`\HU<:IPSSPVU in loans outstanding for environmental protection, energy conservation and LTPZZPVUZYLK\J[PVUWYVQLJ[Z (SZV PU [OL ÄUHUJPHS ZLJ[VY *OPUH»Z WVSPJ`THRLYZ OH]L \ZLK H ]HYPL[` VM regulations to promote sustainability and the development of greentech markets. (Z HU L_HTWSL *OPUH»Z .YLLU *YLKP[ WVSPJ`  YLX\PYLZ JVTTLYJPHS IHURZ to incorporate environmental performance criteria into their lending decisions. -\Y[OLY*OPUH»Z.YLLU:LJ\YP[PLZWVSPJ`YLX\PYLZLU]PYVUTLU[HSHUKLULYN` disclosures from heavy industry companies seeking to list on domestic stock THYRL[Z  )V[O [OLZL HUK V[OLY L_HTWSLZ PSS\Z[YH[L OV^ *OPUH»Z YLN\SH[VYZ HYL \ZPUNHJJLZZ[VÄUHUJLHUKJHWP[HSHZ[VVSZ[VWYVTV[LLU]PYVUTLU[HSH^HYLULZZ and greentech adoption. 0UHKKP[PVU[V[OLTHU`[H_ILULÄ[ZZ\IZPKPLZHUKMH]VYHISLSVHUZ[OH[*OPUH WYVTV[LZ[VKL]LSVWP[ZNYLLU[LJOPUK\Z[YPLZ[OLYLPZHSZVZPNUPÄJHU[Z\WWVY[MVY infrastructure construction. As noted earlier with respect to the economic stimulus plan, electric power infrastructure and railway network development are two key priorities of the government. Aside from these initiatives, China continues to develop Fig. 9 : COMPARISON OF SELECTED PRICES BETWEEN Fig .5: COMPARISON OF PRICES CHINA AND THE UNITED STATES CHINA AND BETWEEN THE UNITED STATES CATEGORY NATURAL GAS1,2 3,4

COAL

5,6

ELECTRICITY WATER7

CHINA AVERAGE PRICE 2008-09

UNITED STATES AVERAGE PRICE 2008-09

US$ 192.30 per thousand cubic meters

US$ 455.70 per thousand cubic meters

US$ 91.85 per ton

US$ 121.33 per ton

US$ 82.96 per MWh

US$ 115.56 per MWh

US$0.31 per ton

US$ 0.74 per ton

Sources: 1. Ningbo People’s Government, China, “Natural Gas Price To Be Line Exchange rate is 1USDMunicipal = 6.75 Yuan With That in International Market,” March 15, 2009 / http://english.ningbo.gov.cn 2. Energy Information Administration, “Natural Gas Prices,” http://tonto.eia.doe.gov/ (accessed on Aug 15, 2009) 3. China Coal Resource, “Coal Prices Database” http://en.sxcoal.com/ (accessed on Aug 15, 2009) 4. Energy Information Administration, “Coal Prices,” April 14, 2009, http://www.eia.doe.gov/ 5. 中国电力, “电监会：2008年居民电价广东最高 青海最低”, 2009 年4月24 [China Power, “State Electricity Regulatory Commission: Residential Electricity Price in 2008 is the Highest in Guangdong, the Lowest in Qinghai,” April 24, 2009] http://www.chinapower.com.cn/ 6. Energy Information Administration, US Government, “Average Retail Price of Electricity to Ultimate Customers by End-Use Sector, by State,” http://www.eia.doe.gov/ (accessed on Aug 15, 2009) 7. The Wall Street Journal , “China Cities Raise Water Price in Bid to Conserve”, http://online.wsj.com/ (accessed on August 15, 2009)

China Development Bank, “Overview of Operations,” http://www.cdb.com.cn/ (accessed on August 14, 2009) Ministry of Environmental Protection (MEP), “Blacklist of Polluters Distributed,” August 6, 2007, http://english.sepa.gov.cn/ 中华人民共和国环境保护部, “国家环境保护总局办公厅文件,” 2007年8月30日, [Ministry of Environmental Protection (MEP), “Circular on Environmental Protection Verification of Highly Polluting Industries to Further Standardize the Production and Management of Companies Applying for Public Listing or Refinancing,” September 30, 2007], http://www.mep.gov.cn/ (accessed on August 14, 2009

42 43 44

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other multi-province infrastructure initiatives which can incorporate anything from WPWLSPULZMVYSPX\LÄLKUH[\YHSNHZHUKJVHSILKTL[OHUL[VTHZZP]L^H[LYKP]LYZPVU WYVQLJ[Z (Z THU` NYLLU [LJOUVSVNPLZ MVJ\Z VU THRPUN PUMYHZ[Y\J[\YL ºZTHY[LY» HUKTVYLLMÄJPLU[[OLZLJVU[PU\LKPUMYHZ[Y\J[\YLWSHUZZOV\SKWYV]PKLZPNUPÄJHU[ opportunities for greentech solution providers. (Z HIV]L PU [OL KPZJ\ZZPVU VM SVJHS [H_ HUK V[OLY ÄZJHS PUJLU[P]LZ \ZLK [V Z\WWVY[*OPUH»ZNYLLU[LJOKL]LSVWTLU[SVJHSPUMYHZ[Y\J[\YLPU]LZ[TLU[JHUHSZV WSH` H ZPNUPÄJHU[ YVSL 3VJHS YLN\SH[VYZ JHU HUK KV PUJVYWVYH[L LU]PYVUTLU[HS considerations into their planning processes for public works infrastructure, and PUZVTLHYLHZSPRL[OL:PUV:PUNHWVYL;PHUQPU,JVJP[`[OL`HYLZOV^PUNZPNUZVM making such considerations an important part of their urban planning processes.

„ PRICING MANAGEMENT (UV[OLY PTWVY[HU[ YLN\SH[VY` PUZ[Y\TLU[ [OH[ PUÅ\LUJLZ [OL KL]LSVWTLU[ VM *OPUH»ZNYLLU[LJOTHYRL[ZPZWYPJPUNJVU[YVSZ(Z*OPUH»ZLJVUVT`OHZSPILYHSPaLK V]LY [OL WHZ[  `LHYZ H U\TILY VM NVVKZ HUK ZLY]PJLZ WYL]PV\ZS` Z\IQLJ[ [V WYPJPUNJVU[YVSZOH]LILLUWLYTP[[LK[VÅ\J[\H[L^P[OTHYRL[MVYJLZ The low cost of converting natural resources into useable enery in China compared to in other countries is a key factor enabling lower end-user costs. The government continues to exert control over the prices of electricity, gas, district heating and water utilities, in addition to commodities such as gasoline, to enable [OL HMMVYKHIPSP[` VM [OLZL NVVKZ MVY *OPUH»Z SV^PUJVTL OV\ZLOVSKZ -PN\YL  gives some examples of the price differentials on these basic goods and service IL[^LLU*OPUHHUK[OL<: While less visible to end-users, upstream prices such as the feed-in tariffs for the JVUULJ[PVUVMYLUL^HISLLULYN`[V*OPUH»ZLSLJ[YPJWV^LYNYPKZVYWYL[YLH[TLU[ ^H[LYYLZV\YJLJVZ[ZHYLHSZVJVU[YVSSLKI`*OPUH»ZYLN\SH[VYZWHY[S`[OYV\NO[OL taxation mechanisms described above, but also using other policy tools. *OPUH»ZNV]LYUTLU[OHZILLUPUJYLHZPUN[OLÅL_PIPSP[`VMUH[\YHSYLZV\YJLHUK \[PSP[`WYPJLZ[VÅ\J[\H[L^P[OTHYRL[MVYJLZHSSV^PUNWYV]PKLYZZVTLPUÅ\LUJLPU ZL[[PUNMLLKPUWYPJLZPUZVTLJHZLZ)\[WV^LYWYPJPUNPZHJVTWSL_PZZ\LHUK [OLZLTV]LZOH]LILLUZ\IQLJ[[VT\JOKLIH[LZVML^UH[PVU^PKLWYPJPUNWSHUZ have been unveiled. (ZHUV[HISLL_JLW[PVU[OL5+9*PU1\S` YLSLHZLKHUH[PVUHSMLLKPU[HYPMM MVY^PUKWV^LYNP]PUNP[HZPNUPÄJHU[WYLTP\TV]LY[OL[`WPJHSMLLKPUWYPJLMVYJVHS power.45)LZPKLZ[OLUL^UH[PVUHS^PUKWV^LYWYPJPUNZJOLTL[OLYLHYLHU\TILY of pilot pricing programs in place in cities around China experimenting with new models to raise prices in other greentech sectors while continuing to protect lowPUJVTLJVUZ\TLYZ9LSL]HU[JOHSSLUNLZHUKVWWVY[\UP[PLZYLSH[LK[V[OLZLUL^ pricing schemes are discussed in more detail in later sections.

The International Policy Environment „ INTERNATIONAL POLICY CONTEXT >OPSL [OL *OPULZL NV]LYUTLU[ OHZ [OL TVZ[ PUÅ\LUJL HUK JVU[YVS V]LY *OPUH»Z LU]PYVUTLU[HSZ\Z[HPUHIPSP[`PZZ\LZTHU`PU[LYUH[PVUHSVYNHUPaH[PVUZHUKYLN\SH[VY` IVKPLZHSZVPTWHJ[[OLKL]LSVWTLU[VM*OPUH»ZNYLLU[LJOTHYRL[Z ;OLVYSK 4L[LVYVSVNPJHS

45 中华人民共和国国家发展和改革委员会, “关于完善风力发电上网电价政策的通知,” 2009年7月24日, [National Development and Reform Commission, Notice on Improvements to the Wind Power Feed-In Pricing Policy, July 24, 2009]

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6YNHUPaH[PVU>46HUK<5,7[OL0U[LYNV]LYUTLU[HS7HULSVU*SPTH[L*OHUNL 07** PZ [HZRLK ^P[O L]HS\H[PUN [OL YPZRZ VM JSPTH[L JOHUNL JH\ZLK I` O\THU HJ[P]P[` -PUHSS` V[OLY <5 HNLUJPLZ Z\JO HZ [OL 0U[LYUH[PVUHS *P]PS (]PH[PVU 6YNHUPaH[PVU0*(6HUK[OL0U[LYUH[PVUHS4HYP[PTL6YNHUPaH[PVU046HYLTVYL accurately international regulators, setting standards and playing policy roles in ZWLJPÄJNYLLU[LJOZLJ[VYZ ;OL>VYSK;YHKL6YNHUPaH[PVU>;60U[LYUH[PVUHS4VUL[HY`-\UK04->VYSK )HUR HUK (ZPHU +L]LSVWTLU[ )HUR (+) HYL V[OLY PU[LYUH[PVUHS VYNHUPaH[PVUZ ^OPJO L_LY[ PUÅ\LUJL V]LY [OL KL]LSVWTLU[ VM *OPUH»Z NYLLU[LJO THYRL[Z ]PH their role in guiding trade relations between individual countries, managing the global economy and promoting economic development. :PUJLNYLLU[LJOUVSVNPLZJHUVM[LUOLSWZ\WWVY[[OLKL]LSVWTLU[VIQLJ[P]LZVM PU[LYUH[PVUHSÄUHUJPHSPUZ[P[\[PVUZZVM[SVHUZ46 are often available from the World )HUR (ZPHU +L]LSVWTLU[ )HUR HUK V[OLY KL]LSVWTLU[ HNLUJPLZ ;OL >VYSK )HUROHZH[SLHZ[MV\YM\UKZ[OH[KPYLJ[ÄUHUJPUN[VNYLLU[LJOWYVQLJ[Z·[OL*SLHU ;LJOUVSVN`-\UK[OL:[YH[LNPJ*SPTH[L-\UK[OL*HYIVU7HY[ULYZOPW-\UKHUK[OL -VYLZ[*HYIVU7HY[ULYZOPW-HJPSP[`47

„ INTERNATIONAL POLICY PRINCIPLES (Z *OPUH»Z LJVUVT` OHZ NYV^U ZV [VV OHZ P[Z YVSL PU PU[LYUH[PVUHS WVSPJ` circles. In addition to the Chinese policy principles discussed above, a number VM PU[LYUH[PVUHS WVSPJ` WYPUJPWSLZ HSZV L_LY[ PUÅ\LUJL VU [OL KL]LSVWTLU[ VM *OPUH»ZNYLLU[LJOTHYRL[Z7LYOHWZ[OLTVZ[PTWVY[HU[VM[OLZLPZ[OLJVUJLW[ of sustainable development :\Z[HPUHISL KL]LSVWTLU[ PZ JVTTVUS` KLÄULK HZ KL]LSVWTLU[¸TLL[PUN[OLULLKZVM[OLWYLZLU[^P[OV\[JVTWYVTPZPUN[OLHIPSP[` of future generations to meet their own needs.”48*OPUH»ZNV]LYUTLU[»Z¸(NLUKH ¶>OP[L7HWLYVU*OPUH»Z7VW\SH[PVU,U]PYVUTLU[HUK+L]LSVWTLU[PU[OLZ[ *LU[\Y`¹SHPKV\[*OPUH»ZZ\Z[HPUHISLKL]LSVWTLU[WYPUJPWSLZHUKTVYLYLJLU[S` P[Z  ¸7YVNYHT VM (J[PVU MVY :\Z[HPUHISL +L]LSVWTLU[ PU *OPUH PU [OL ,HYS` Z[*LU[\Y`¹PZHSZVHTVUN[OLTHU`YLMLYLUJLZ[V[OLWYPUJPWSLVMZ\Z[HPUHISL development in Chinese policies.  As climate change becomes an increasingly important international policy area, other principles have emerged to help guide countries in collectively addressing [OPZPZZ\L;OLZLWYPUJPWSLZWSH`ZPNUPÄJHU[YVSLZPUVUNVPUNPU[LYUH[PVUHSJSPTH[L JOHUNL ULNV[PH[PVUZ (U PTWVY[HU[ WYPUJPWSL MYLX\LU[S` YLMLYYLK [V I` *OPUH»Z policymakers is *VTTVU I\[ +PMMLYLU[PH[LK 9LZWVUZPIPSP[PLZ HUK 9LZWLJ[P]L Capabilities*I+99*;OL\UKLYS`PUNJVUJLW[PZ[OH[HSSJV\U[YPLZ^OPSLZOHYPUN a common responsibility to mitigate the impact of climate change, have unique capabilities to do so that are directly related to their level of socioeconomic development. Accordingly, the actions taken by each country, for example reducing greenhouse gas emissions, should correlate with their individual capabilities as KL[LYTPULKI`[OLPY\UPX\LZVJPVLJVUVTPJJVUKP[PVUZ*OPUH»Z5H[PVUHS*SPTH[L *OHUNL 7YVNYHTTL L_WSPJP[S` UV[LZ [OH[ HJJVYKPUN [V *I+99*! ¸KL]LSVWLK countries should take the lead in reducing greenhouse gas emissions as well as WYV]PKPUN ÄUHUJPHS HUK [LJOUPJHS Z\WWVY[ [V KL]LSVWPUN JV\U[YPLZ ;OL ÄYZ[ HUK overriding priorities of developing countries are sustainable development and poverty eradication.”51 Another key principle in international climate change negotiations relates to 4LHZ\YHISL 9LWVY[HISL HUK =LYPÄHISL 49= HJ[PVUZ ;OL )HSP 9VHK 4HW NLULYH[LK HZ H YLZ\S[ VM [OL +LJLTILY  )HSP JSPTH[L JOHUNL ULNV[PH[PVUZ JHSSLK MVY ¸TLHZ\YHISL YLWVY[HISL HUK ]LYPÄHISL WVSPJPLZ HUK HJ[PVUZ¹ MYVT developing countries, and a strong commitment to reducing emissions from developed countries. The plan also required developed countries to assess,

Soft loans are commonly loans provided at interest rates below market levels or with other concessionary terms World Bank, The World Bank and Climate Change: An Operational Update (Beijing, China: World Bank, November 2008.) United Nations, “General Assembly: Report of the World Commission on Environment and Development,” December 11th, 1987, http:// www.un.org/ 49 The Administrative Center for China’s Agenda 21, “White Paper on China’s Population, Environment, and Development in the 21st Century,” http://www.acca21.org.cn/ (accessed on August 14, 2009) 50 People’s Daily, “Program of Action for Sustainable Development in China in the Early 21st Century,” July 16, 2003 //english.peopledaily. com.cn/ 51 National Development and Reform Commission,National Climate Change Program,(Beijing,China: NDRC, June 2007),3 46 47 48

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report and verify a range of support measures for developing countries, including ÄUHUJPUN[LJOUVSVN`HUKHKHW[H[PVUHZZPZ[HUJL52

„ INTERNATIONAL AGREEMENTS Going beyond these principles, certain international agreements commit China to ZWLJPÄJ WVSPJ`HJ[PVUZHUKWSHJL*OPUH»ZWVSPJPLZPU[OL JVU[L_[ VMPU[LYUH[PVUHS environmental efforts. ;OL  4VU[YLHS7YV[VJVSVU:\IZ[HUJLZ;OH[+LWSL[L[OL6aVUL3H`LYPZVM[LU highlighted as an example of a successful international climate change agreement. 0[ ^HZ YH[PÄLK I` *OPUH HUK HSS V[OLY TLTILYZ VM [OL OPSL*OPUH»ZVMÄJPHSWVZP[PVUVUPZZ\LZZ\YYV\UKPUNJSPTH[LJOHUNLPZJVU[PU\HSS` ILPUNYLÄULK7YLTPLY>LU1PHIHVWYV]PKLKHJVUJPZLZ\TTH[PVUVM*OPUH»ZHWWYVHJO [VPU[LYUH[PVUHSJSPTH[LJOHUNLPZZ\LZPUHZWLLJO0UH5V]LTILYZWLLJO! First, climate change must be tackled through international cooperation… Second, climate change must be tackled under the framework of sustainable development… Third, the principle of “common but differentiated responsibilities” must be followed… Fourth, the UN Millennium Development Goals must be upheld… Fifth, climate change must be tackled by relying on technological progress.59 China has actively been preparing for the Copenhagen meetings, engaging in multiple high-level talks on the issue with other countries. In many public

52 World Resources Institute, Comment on the Chinese National Program and its Potential Connection to an MRV Approach in Comments on China’s Policies and Actions Addressing Climate Change, 2009-03, (Beijing,China: Global Environmental Institute, 2009), 22 53 United National Environment Programme Ozone Secretariat, “Status of Ratification,” http://ozone.unep.org/ (Accessed on August 5, 2009) 54 Earth System Research Laboratory,“Twenty Questions and Answers About the Ozone Layer: 2006 Update,” http://www.esrl.noaa.gov/ (accessed on August 16, 2009) 55 United Nations Environment Programme, “China Closes Ozone Depleting Chemical Plants,” July 1, 2007, http://www.unep.org/ 56 United Nations Framework Convention on Climate Change, “Full text of the Convention, Article 2,” http://unfccc.int/ (accessed on July 26, 2009) 57 United Nations Framework Convention on Climate Change, Kyoto Protocol Status of Ratification (Bonn, Germany: UNFCCC, July 08,2009) 58 Original Source: United Nations Framework Convention on Climate Change, “CDM: Issuance,” http://cdm.unfccc.int/ (accessed on August 11, 2009) 59 Wen Jiabao, Strengthen International Technology Cooperation and Address Climate Change Actively, (Speech given at the Beijing Highlevel Conference on Climate Change: Technology Development and Technology Transfer, Beijing, China, 7 November,2009)

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THE INTERNATIONAL POLICY ENVIRONMENT

statements issued by key policymakers, China has reinforced its commitment to [OLWYPUJPWSLVM*VTTVUI\[+PMMLYLU[PH[LK9LZWVUZPIPSP[PLZV\[SPULKHIV]L While it is too early to speculate on the details of any agreement that might come out of the Copenhagen meetings, it seems likely that all possibilities will stress the importance of reducing global greenhouse gas emissions. In doing so, it will present opportunities for continued greentech development both in China and in other countries.

„ BILATERAL RELATIONSHIPS (ZPKL MYVT [OL HJ[PVUZ VM PU[LYUH[PVUHS VYNHUPaH[PVUZ [YLH[PLZ HUK JVU]LU[PVUZ KPYLJ[YLSH[PVUZOPWZ^P[OV[OLYJV\U[YPLZHUKLJVUVTPJISVJZHSZVPTWHJ[*OPUH»Z NYLLU[LJOTHYRL[Z9LN\SH[VYZMYVTRL`[YHKPUNWHY[ULYZZ\JOHZ[OL<:[OL ,\YVWLHU
Washington Foreign Press Center, “Foreign Press Center Briefing with Senior Administration Officials: Preview of the First Joint-Meeting of the U.S.-China Strategic and Economic Dialogue” July 23, 2009, http://beijing.usembassy-china.org.cn/ (accessed on August 14, 2009) 61 US Department of Energy, “US-China Clean Energy Research Center Announced,” July 15, 2009 http://www.energy.gov/ 62 US Department of Energy, Memorandum of Understanding between the US DOE and the PRC NDRC Concerning Industrial Energy Efficiency Cooperation (Washington D.C., U.S.: United States Department of Energy, 2007), 2 63 European Commission, “Environment-Climate Change-China,” http://ec.europa.eu/ (accessed on July 26, 2009) 64 British Broadcasting Corporation, “China, Japan Sign 2005-2010 Long-Term Trade Agreement,” December 12, 2005, http://www. nautilus.org/ (accessed on August 14, 2009) 65 The European Parliament and The Council of the European Union, “Regulation (EC) No 1907/2006 concerning the Registration, Evaluation, Authorisation and Restriction of Chemicals (REACH)” 60

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Regulatory Challenges Still Hamper the Full Potential of Greentech in China RECOGNIZING CHINA’S NATURAL RESOURCE LIMITATIONS, increasingly pressing environmental issues and vulnerability to the impacts of climate change, Chinese and international policymakers have innovated a variety of approaches to support the development of healthy Chinese greentech markets. However, the ongoing challenge remains of having to develop and implement LMMLJ[P]L WVSPJPLZ HJYVZZ *OPUH»Z ]HZ[ SHUK HYLH KP]LYZL JSPTH[L aVULZ HUK large population, all the while continuing to support social stability and ongoing economic development. :WLJPÄJYLN\SH[VY`JOHSSLUNLZL_HTPULKSH[LYPU[OPZYLWVY[PUJS\KL[OVZLYLSH[LK[V! „ *VVYKPUH[PUN[OLJVTWSL_HYYH`VMZ[HRLOVSKLYZHUKWVSPJPLZL_LY[PUNPUÅ\LUJL on the greentech sector „ Achieving uniform compliance with existing policies across geographies and different types of market participants „ 7YV]PKPUNZ\MÄJPLU[[YHUZWHYLUJ`PU[OL[PTPUNHUKZWLJPÄJZVMUL^WVSPJPLZPU order for participants to effectively build regulatory considerations into their business models and respond to regulatory drivers ;OLYL PZ UV KLÄULK WH[O^H` [V TLL[ [OL ZJHSL JVTWSL_P[` HUK \YNLUJ` VM *OPUH»ZJOHSSLUNLZ"NYLLU[LJOTHYRL[Z[HRLOVSKLYZHYL^VYRPUN[VZ\YTV\U[[OL JOHSSLUNLZHUK[OLYLI`HSSL]PH[L*OPUH»ZLU]PYVUTLU[HSPZZ\LZ The following chapters of this report look at the approaches commercial JVTWHUPLZ HYL [HRPUN [V YLZWVUK [V *OPUH»Z Z\Z[HPUHIPSP[` HUK JSPTH[L JOHUNL issues. They highlight the different challenges that are impeding progress and identify opportunities all market stakeholders have in overcoming these hurdles and in contributing to the acceleration of greentech in China.

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THE CHINA GREENTECH REPORT 2009



EXISTING AND

EMERGING SOLUTIONS

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EXISTING AND EMERGING SOLUTIONS

Businesses are delivering hundreds of existing and emerging greentech solutions to China markets, providing the potential for significant positive impact on the environment. While these solutions are often already attractive to adopters and represent tremendous market opportunities, some areas are closed to foreign and private entities. CHINA’S TRANSFORMATION TO ENVIRONMENTAL SUSTAINABILITY requires solutions that do not contribute to climate change, do not pollute the atmosphere or water and KVUV[YLS`VUÄUP[LYLZV\YJLZZ\JOHZJVHSHUKVPS0[HSZVYLX\PYLZ[LJOUVSVNPLZ [OH[LUHISL[OLLMÄJPLU[KLSP]LY`HUK\ZLVMLULYN`>H[LYZOVY[HNLZHUKWVSS\[PVU land degradation, and the proliferation of hazardous and other waste all require ZVS\[PVUZHZ^LSS-VY[\UH[LS`HUL_[LUZP]LU\TILYVML_PZ[PUNHUKLTLYNPUNNYLLU [LJOUVSVNPLZHYLILPUNHWWSPLKPU*OPUH[VHKKYLZZ[OLZLJOHSSLUNLZ ( RL` VIQLJ[P]L VM [OL *OPUH .YLLU[LJO 0UP[PH[P]L ^HZ [V \UKLYZ[HUK ^OPJO greentech solutions are likely to play key roles in the short to medium term as *OPUHHKKYLZZLZ[OLZ\Z[HPUHIPSP[`VMP[ZNYV^[OHUK[OLYLSH[P]LHK]HU[HNLZHUK KPZHK]HU[HNLZVMLHJO The analysis carried out by the Initiative suggests: „ (NYLH[U\TILYVMNYLLU[LJOZVS\[PVUZPU*OPUHOH]L[OLWV[LU[PHSMVYZPNUPÄJHU[ WVZP[P]LPTWHJ[VU[OLLU]PYVUTLU[ „ >OPSLHU\TILYVMZVS\[PVUZHYLZ[PSSPUKL]LSVWTLU[THU`HYLHSYLHK` JVTTLYJPHSS`H]HPSHISLPU*OPUHHUKHYLH[[YHJ[P]L[VHKVW[LYZ „ *OPUHPZNLULYHSS`HUH[[YHJ[P]LTHYRL[MVY[OLHWWSPJH[PVUVMNYLLU[LJO ZVS\[PVUZNP]LUP[ZSHYNLZPaLHUKYHWPKNYV^[O"/V^L]LYZVTLTHYRL[Z HYLJSVZLK[VWYP]H[LHUKMVYLPNUWHY[PJPWHU[Z ;OPZJOHW[LYWYLZLU[Z[OLHWWYVHJO[OL0UP[PH[P]LOHZ[HRLU[VPKLU[PM`HUKL]HS\H[L NYLLU[LJOZVS\[PVUZPU*OPUHKLÄULZWYPVYP[PaLKZVS\[PVUZI`ZLJ[VYHUKWYV]PKLZ RL`ÄUKPUNZMYVT[OLHZZLZZTLU[

Fig.1: PRIORITIZED GREENTECH SOLUTIONS EVALUATED BY THE CHINA GREENTECH INITIATIVE Coal

CLEANER CONVENTIONAL ENERGY

Oil

Gas

12

3

1 2

18

Solar

Wind

Bio

11

14

10

RENEWABLE ENERGY ELECTRIC POWER INFRASTRUCTURE

12

GREEN BUILDING

15 Road

CLEANER TRANSPORTATION

Nuclear

Rail

9

3

Air

Waterway

3

3

CLEANER INDUSTRY CLEAN WATER

35

TOTAL 125 SOLUTIONS

18

15 12

Note: The number of solutions prioritized within each sector does not imply judgement on the environmental or commercial potential of the sector

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EVALUATION APPROACH

Fig.2 DEFINITION OF CRITERIA IN THE SOLUTION EVALUATION FRAMEWORK SOLUTION ATTRACTIVENESS

UNIT ENVIRONMENTAL IMPACT POTENTIAL „ Potential of the solution to abate negative impact on the natural environment ^OPSLKLSP]LYPUNILULÄ[ZZPTPSHY[V VYNYLH[LY[OHU[OLJVU]LU[PVUHSZVS\[PVU „ -VJ\ZLZVUone target metric VMULNH[P]LPTWHJ[ LN:6_LTPZZPVU^H[LY\ZLLSLJ[YPJP[`\ZLVM[OL JVU]LU[PVUHSZVS\[PVUHIH[LK[V[OLSHYNLZ[KLNYLL „ 0Zmeasured in percent on unit basis¶PL[OLWV[LU[PHS [VHIH[LULNH[P]LPTWHJ[PUKLSP]LY`VMVUL\UP[VMILULÄ[ LNTPSLZKYP]LU2^OWYVK\JLK VALUE

DEFINITION

„ Economic attractivenessVM[OLZVS\[PVU[VHKVW[LYZ¶PL HIPSP[`[VKLSP]LYL_WLJ[LKILULÄ[H[JVTWL[P[P]LJVZ[PZ TLHZ\YLKVUSPMLIHZPZKYP]LUVYPUÅ\LUJLKI`! – Lifecycle unit cost HNHPUZ[[OLHS[LYUH[P]L – Policies encouraging the adoption – Risk of not becoming industry standard in China „ All solutions mandated by the regulation are considered advantaged, regardless of actual penetration

VALUE

Very high: „ 7V[LU[PHS[VKLJYLHZLPTWHJ[VU[OLLU]PYVU ment of the target metric by over 40%

Advantaged: „ 3V^LYJVZ[[OHUJVU]LU[PVUHSHS[LYUH[P]LZ0Z[OL industry standard „ 0ZYLNHYKLKHZ[OLPUK\Z[Y`Z[HUKHYK

High: „ 7V[LU[PHS[VKLJYLHZLPTWHJ[VU[OLLU]PYVU ment of the target metric by 30%-40%

Attractive: „ *VZ[VUWHY^P[OJVU]LU[PVUHSHS[LYUH[P]LZ „ On way to become industry standard in China

Medium: „ 7V[LU[PHS[VKLJYLHZLPTWHJ[VU[OLLU]PYVU ment of the target metric by 20%-30%

Emerging: „ 4VYLL_WLUZP]LI\[JVZ[KLJSPUPUN „ (J[P]LJVTWL[P[PVUMYVTV[OLY[LJOUVSVNPLZ

Incremental-medium: „ 7V[LU[PHS[VKLJYLHZLPTWHJ[VU[OLLU]PYVU ment of the target metric by 10%-20%

Disadvantaged: „ :PNUPÄJHU[S`TVYLL_WLUZP]L[OHUHS[LYUH[P]L „ No indication of becoming major industry force

Incremental: „ 7V[LU[PHS[VKLJYLHZLPTWHJ[VU[OLLU]PYVU ment of the target metric by under 10%

Unavailable: „ Still a concept or in early research phase „ /PNOYPZRVMW\YZ\PUN[OL[LJOUVSVN`

MARKET ACCESSIBILITY

ADDRESSABLE MARKET SIZE „ Annual sales of the solution if it were purchased by 100% of potential adopters that year „ Adopters are organizations and individuals that purchase solutions LP[OLYJVU]LU[PVUHSVYNYLLU[LJOZVS\ [PVU\UKLYL]HS\H[PVU[VHJOPL]LJLY[HPUILULÄ[Z „ 0ZTLHZ\YLKPU<:IPSSPVUIPSSPVU`\HUWLY`LHYHUK TH[OLTH[PJHSS`PZHWYVK\J[VM! ;V[HSnumber of potential adopters that year Price of current “standard” substitute VALUE

DEFINITION Very large: „ 6]LY<:IPSSPVUIPSSPVU`\HUWLY`LHY

62

DEFINITION

„ DegreeVMTHYRL[HJJLZZPIPSP[`MVYWYP]H[LMVYLPNUWSH`LYZ „ 0ZKYP]LUVYPUÅ\LUJLKI`! +LNYLLVMdirect state influenceV]LY[OLZLJ[VY Openness to foreign capital and ownership Preferential treatment of SOEs or local players „ >OLYLHJJLZZPIPSP[`MVYWYP]H[LPZKPMMLYLU[[OHUMVYMVYLPNU WSH`LYZ[OLTVYLYLZ[YPJ[LK]HS\LPZ\ZLK „ 0UJHZLZ^OLYL[PLYL]HS\H[PVUPZ\ZLK[LYTZHWWSPLK are shown in parenthesis

VALUE

!

DEFINITION Fully open (Mostly open): „ Low to no state control of the sector „ -\SS`VWLU[VWYP]H[LMVYLPNUJHWP[HSV^ULYZOPW



Large: „ )L[^LLU<:HUK<:IPSSPVU HUKIPSSPVU`\HUWLY`LHY

Open with restrictions (Mostly open): „ .LULYHSS`VWLUI\[YLZ[YPJ[PVUZVU[OLKLNYLL VMWYP]H[LMVYLPNUV^ULYZOPWHWWS`



Medium: „ )L[^LLU<:HUK<:IPSSPVUHUK IPSSPVU`\HUWLY`LHY

Partially limited (Limited): „ Some parts of the sector are open while others are YLZ[YPJ[LK[VWYP]H[LMVYLPNUV^ULYZOPW



Limited-medium: „ )L[^LLU<:HUK<:IPSSPVUHUK IPSSPVU`\HU<:+WLY`LHY

Limited (Limited): „ .LULYHSS`Z[YVUNZ[H[LJVU[YVSVM[OLZLJ[VY „ 0UL_JLW[PVUZWYP]H[LMVYLPNUV^ULYZOPWHSSV^LK

Limited: „
Restricted (Restricted): „ -\SSZ[H[LJVU[YVSVM[OLZLJ[VY „ 7YP]H[LVYMVYLPNUV^ULYZOPWPZUV[HSSV^LK

THE CHINA GREENTECH REPORT 2009

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EXISTING AND EMERGING SOLUTIONS

Evaluation Approach ;OL *OPUH .YLLU[LJO 0UP[PH[P]L KL]LSVWLK HU PUP[PHS ZL[ VM V]LY  NYLLU[LJO ZVS\[PVUZ HJYVZZ ZL]LU ZLJ[VYZ ^OPJO ^LYL [OLU WYPVYP[PaLK PU[V H SPZ[ VM  ZVS\[PVUZ ZLL -PN\YL  IHZLK VU LU]PYVUTLU[HS PTWHJ[ HUK JVTTLYJPHSPaH[PVU WV[LU[PHS ,HJO WYPVYP[PaLK ZVS\[PVU ^HZ [OLU L]HS\H[LK \ZPUN [OL :VS\[PVU ,]HS\H[PVU-YHTL^VYRKL]LSVWLKI`[OL0UP[PH[P]L ;OL :VS\[PVU ,]HS\H[PVU -YHTL^VYR :,- ^HZ KL]LSVWLK [V HZZLZZ ZVS\[PVUZ PUHJVTWYLOLUZP]LJVUZPZ[LU[YPNVYV\ZHUKÅL_PISLTHUULY;OL:,-WYV]PKLZ H Z[Y\J[\YL PU ^OPJO [V JHW[\YL YLSL]HU[ H]HPSHISL X\HSP[H[P]L HUK X\HU[P[H[P]L information, apply judgment in a structured way and compare results both within HUKHJYVZZZLJ[VYZ ;OL:,-L]HS\H[LZZVS\[PVUZHJYVZZMV\YKPTLUZPVUZ!unit environmental impact potential, solution attractiveness, addressable market size and market accessibility. ;OLSHZ[[OYLLJYP[LYPHJVSSLJ[P]LS`YLWYLZLU[[OLV]LYHSSJVTTLYJPHSWV[LU[PHSVM[OL ZVS\[PVUPU*OPUH(ZKLZJYPILKPU-PN\YLLHJOKPTLUZPVUTH`[HRLVUVULVM Ä]LKPZ[PUJ[]HS\LZ=PZ\HSS`H/HY]L`)HSSPZ\ZLK[VL_WYLZZ[OLYH[PUN^P[OHU LTW[`IHSSYLWYLZLU[PUN[OLSV^LZ[HUKHM\SSIHSSYLWYLZLU[PUN[OLOPNOLZ[]HS\L :VS\[PVUZ^LYLL]HS\H[LKHJJVYKPUN[V[OYLL[PTLWLYPVKZ!:OVY[\UKLYVUL`LHY 4LKP\T`LHYZHUK3VUN`LHYZ;OLHUHS`ZPZPU[OPZJOHW[LYMVJ\ZLZVU [OL4LKP\T[LYTL]HS\H[PVUZ +\L[V[OLUH[\YLVM[OL:,-[OL0UP[PH[P]LWHY[ULYZHUKHK]PZVYZZVTL[PTLZOHK KPMMLYLU[]PL^ZVUOV^[VL]HS\H[LNP]LUZVS\[PVUZ:PNUPÄJHU[H[[LTW[Z^LYLTHKL [V]HSPKH[LHUKYLJVUJPSLKPMMLYPUNWLYZWLJ[P]LZ"OV^L]LY\S[PTH[LS`[OL0UP[PH[P]L YLZLHYJO[LHT\ZLKP[ZQ\KNTLU[[VKL[LYTPUL[OL]HS\LMVYLHJOJYP[LYPVU.P]LU [OH[[OL:,-PZVUS`H[VVSTLHU[[VMHJPSP[H[L[OLL]HS\H[PVUVMNYLLU[LJOZVS\[PVUZ as with any framework, it has limitations and its results should be interpreted HJJVYKPUNS`

UNIT ENVIRONMENT IMPACT POTENTIAL
Fig.3: DISTRIBUTION OF SECTORS BY ENVIRONMENTAL DIMENSIONS TARGETED BY PRIORITIZED SOLUTIONS

AIR / ENERGY SECTOR NAME ABBREVIATIONS LEGEND:

EPI RE CT

CCE - Cleaner Conventional Energy RE - Renewable Energy

CCE

EPI - Electric Power Infrastructure

GB CI

IAL

S

CW

MA TER

TER WA www.china-greentech.com

GB - Green Building

THE CHINA GREENTECH REPORT 2009

CT - Cleaner Transportation CI -

Cleaner Industry

CW - Clean Water



EVALUATION APPROACH

-PN\YL  KLTVUZ[YH[LZ [OL KPZ[YPI\[PVU VM *OPUH»Z NYLLU[LJO ZLJ[VYZ HTVUN [OYLL KPTLUZPVUZ VM LU]PYVUTLU[HS PTWHJ[ HIH[LTLU[! (PY,ULYN` >H[LY HUK 4H[LYPHSZ(PYHUKLULYN`HYLJVTIPULKPU[VVULKPTLUZPVUILJH\ZL[OLTHQVYP[` of air pollution and CO2 emissions in China comes from fossil fuels, which can IL HIH[LK [OYV\NO PTWYV]LK LULYN` LMÄJPLUJ` HUK PUJYLHZLK \ZL VM YLUL^HISL LULYN`ZV\YJLZ-VYLHJOWYPVYP[PaLKNYLLU[LJOZVS\[PVU[OLKPTLUZPVUVU^OPJO [OLNYLH[LZ[\UP[LU]PYVUTLU[PTWHJ[HIH[LTLU[JV\SKILKLSP]LYLK^HZJOVZLU ;OPZ NYHWOPJ ZOV^Z [OH[ [OL 9LUL^HISL ,ULYN` ,SLJ[YPJ 7V^LY 0UMYHZ[Y\J[\YL HUK*SLHULY;YHUZWVY[H[PVUZLJ[VYZWYPTHYPS`PTWHJ[[OLLU]PYVUTLU[I`YLK\JPUN atmospheric emissions, including CO2 HUK PTWYV]PUN LULYN` LMÄJPLUJ` *SLHU >H[LYZVS\[PVUZMVJ\ZVUHKKYLZZPUNJOHSSLUNLZHZZVJPH[LK^P[O[OLZOVY[HNLHUK WVSS\[PVU VM ^H[LY *SLHULY *VU]LU[PVUHS ,ULYN` ZVS\[PVUZ HIH[L LU]PYVUTLU[HS PTWHJ[VUIV[OHPYHUK^H[LY.YLLU)\PSKPUNHUK*SLHULY0UK\Z[Y`PUJS\KLZVS\[PVUZ [OH[HKKYLZZHSS[OYLLLU]PYVUTLU[HSKPTLUZPVUZ
SOLUTION ATTRACTIVENESS :VS\[PVUH[[YHJ[P]LULZZHPTZ[VJHW[\YL[OL]HS\LVMHKVW[PUNHNYLLU[LJOZVS\[PVU JVTWHYLK[VHS[LYUH[P]LZMVJ\ZPUNVU[OLHIPSP[`VM[OLZVS\[PVU[VKLSP]LYILULÄ[Z [VHKVW[LYZH[JVZ[ZLX\HS[VVYSV^LY[OHUZ\IZ[P[\[LZVUHSPMLJ`JSLIHZPZLN LULYN`ZH]PUNZMYVT[OL\ZLVMH*VTIPULK/LH[HUK7V^LY*/7Z`Z[LTVYHU ,ULYN`,MÄJPLU[4V[VY *VZ[ JVTWL[P[P]LULZZ NLULYHSS` PZ JVYYLSH[LK ^P[O [LJOUVSVNPJHS TH[\YP[` -VY PUZ[HUJL[OLJVZ[VMLSLJ[YPJP[`NLULYH[LK\ZPUNZVSHYWOV[V]VS[HPJ7=[LJOUVSVN` PZJ\YYLU[S`T\JOOPNOLY[OHU[OH[VMLSLJ[YPJP[`NLULYH[LK\ZPUN[OLYTHSJVHSÄYLK WV^LYWSHU[Z+\L[V[OLZLOPNOLYJVZ[Z[OL:,-KVLZUV[X\HSPM`:VSHY7=MVYH rating of attractive, but rather emerging;OPZYH[PUNYLÅLJ[Z[OLMHJ[[OH[ZVSHY7= [LJOUVSVN`PZJ\YYLU[S`\UKLYYHWPKKL]LSVWTLU[HUKHZ[LJOUVSVN`TH[\YLZP[^PSS SPRLS`HJOPL]LJVZ[WHYP[`^P[OJVU]LU[PVUHSLULYN`ZV\YJLZSPRLJVHSH[^OPJO[PTL it would be rated attractive :VS\[PVUZ[OH[HYLTHUKH[LKPU*OPUHZ\JOHZ-S\L.HZ+LZ\SWO\YPaH[PVU+L :6_HUK-S\L.HZ+LUP[YH[PVU+L56_Z`Z[LTZHYLYH[LKHZadvantaged;OPZ HZZ\TLZ[OH[UVUJVTWSPHUJLHTVUNZVS\[PVUHKVW[LYZ^P[O*OPUH»ZYLN\SH[PVUPZ HZOVY[[LYTWOLUVTLUVUHUK[OH[PU[OLSVUNY\UP[^PSSILHUL_JLW[PVU

ADDRESSABLE MARKET SIZE (KKYLZZHISLTHYRL[ZPaLPKLU[PÄLZ[OLWV[LU[PHSZJHSLH[^OPJOHWHY[PJ\SHYZVS\[PVU JV\SK IL HWWSPLK PU *OPUH 0[ PZ HU LZ[PTH[L VM [OL [V[HS YL]LU\LZ H WHY[PJ\SHY ZVS\[PVUL_WYLZZLKPU<:VY`\HUJV\SKHJOPL]LPMP[^LYLadvantaged in terms of ZVS\[PVUH[[YHJ[P]LULZZ[VKH`;OPZPZHO`WV[OL[PJHSU\TILYTLHU[[VKPMMLYLU[PH[L [LJOUVSVNPLZ YH[OLY [OHU MVYLJHZ[ THYRL[ [YLUKZ 0U V[OLY ^VYKZ HKKYLZZHISL market size helps differentiate between power plants, turbines used in power plants and blades used in turbines, as the latter are components of the former and [OLYLMVYLOH]LZTHSSLYHKKYLZZHISLTHYRL[ZPaLI`KLÄUP[PVU =HS\LZ^LYLLZ[PTH[LKI`[OL*OPUH.YLLU[LJO0UP[PH[P]LYLS`PUNVUPUMVYTH[PVU NH[OLYLKI`[OLYLZLHYJO[LHTHUKMLLKIHJRMYVTWHY[ULYZHUKHK]PZVYZ

MARKET ACCESSIBILITY ;OLVIQLJ[P]LVM[OLTHYRL[HJJLZZPIPSP[`JYP[LYPHPZ[VKPMMLYU[PH[LIL[^LLUTHYRL[Z [V^OPJOMVYLPNUHUKWYP]H[LWSH`LYZOH]LHJJLZZHUK[OVZL[OH[HYLYLZ[YPJ[LKK\L [VYLN\SH[PVUZVYV[OLYIHYYPLYZMostly openTHYRL[ZHYLUV[ZWLJPÄJHSS`YLZ[YPJ[LK I` [OL *OPULZL NV]LYUTLU[ ,_HTWSLZ VM mostly open markets include home appliances, machinery equipment and components, and select technologies that *OPUH PZ PU[LYLZ[LK PU KL]LSVWPUN Limited access markets are those that China controls and allows partial access to, such as construction design, wind power

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EXISTING AND EMERGING SOLUTIONS

v

Fig. 4: SECTOR EVALUATION BY CRITERIA AVERAGE SOLUTION ATTRACTIVENESS (1-5 YEARS)

AVERAGE SOLUTION UNIT ENVIRONMENTAL IMPACT POTENTIAL RELATIVELY HIGHER

Renewable Energy Cleaner Transportation

MIDDLE

*SLHULY*VU]LU[PVUHS,ULYN` .YLLU)\PSKPUN

RELATIVELY LOWER

*SLHULY0UK\Z[Y` *SLHU>H[LY ,SLJ[YPJ7V^LY0UMYHZ[Y\J[\YL

 

 

RELATIVELY HIGHER

*SLHULY0UK\Z[Y` .YLLU)\PSKPUN



MIDDLE

*SLHULY*VU]LU[PVUHS,ULYN` *SLHU>H[LY Renewable Energy

  

RELATIVELY LOWER

,SLJ[YPJ7V^LY0UMYHZ[Y\J[\YL Cleaner Transportation

 

  

AVERAGE 3.5

AVERAGE: 3.6

AVERAGE SOLUTION ADDRESSABLE MARKET SIZE (1-16 YEARS)

RELATIVELY LARGER

Cleaner Transportation Renewable Energy

MIDDLE

.YLLU)\PSKPUN *SLHULY*VU]LU[PVUHS,ULYN`

RELATIVELY SMALLER

*SLHU>H[LY *SLHULY0UK\Z[Y` ,SLJ[YPJ7V^LY0UMYHZ[Y\J[\YL



 

 

AVERAGE SOLUTION MARKET ACCESSIBILTY 

RELATIVELY HIGHER

*SLHULY0UK\Z[Y` .YLLU)\PSKPUN

MIDDLE

Renewable Energy *SLHULY*VU]LU[PUHS,ULYN` *SLHU>H[LY

  

RELATIVELY LOWER

Cleaner Transportation ,SLJ[YPJ7V^LY0UMYHZ[Y\J[\YL

 



   AVERAGE: 3.1

AVERAGE 3.5

Note: Three tiers of sectors on each dimension and tier labels are used to facilitate discussion about relative position of the sector and not absolute.

KL]LSVWTLU[ HUK JVU]LU[PVUHS WV^LY NLULYH[PVU Restricted markets are those [OH[ *OPUH UVYTHSS` KVLZ UV[ HSSV^ MVYLPNU HUKVY WYP]H[L WSH`LYZ [V WHY[PJPWH[L PUZ\JOHZHPY[YHMÄJJVU[YVSHUK[OLJVUZ[Y\J[PVUHUKVWLYH[PVUVMLSLJ[YPJHSNYPK UL[^VYRZ

Cross-Sector Findings -PN\YL  ZOV^Z [OL H]LYHNL ]HS\LZ NP]LU [V ZVS\[PVUZ ^P[OPU LHJO VM [OL ZL]LU NYLLU[LJOZLJ[VYZHJYVZZ[OLMV\YL]HS\H[PVUKPTLUZPVUZPU[YVK\JLKHIV]L;OL ZLJ[VYZHYLYHURLKMYVTOPNOLZ[[VSV^LZ[ZVS\[PVUH]LYHNLVULHJOKPTLUZPVUHUK JH[LNVYPaLKPU[V[OYLL[PLYZ;OLSHILSZ\ZLK[VKLZJYPIL[OL[PLYZWYV]PKLHYLSH[P]L HZZLZZTLU[VMZLJ[VYZPUJVTWHYPZVU[V[OLV[OLYZLJ[VYZ-VYL_HTWSL[OL relatively higher label applied to the Renewable Energy and Cleaner Transportation sectors VU[OL¸(]LYHNL:VS\[PVU
UNIT ENVIRONMENTAL IMPACT POTENTIAL (ZOPNOSPNO[LKHIV]L9LUL^HISL,ULYN`HUK*SLHULY;YHUZWVY[H[PVUZVS\[PVUZVU H]LYHNL OH]L relatively higher LU]PYVUTLU[HS PTWHJ[ JVTWHYLK [V V[OLY ZLJ[VYZ ;OPZPZILJH\ZLTHU`VM[OLZLZVS\[PVUZZ\JOHZZVSHYWOV[V]VS[HPJZ^PUK[\YIPULZ HUKUL^LULYN`]LOPJSLZOH]L[OLWV[LU[PHSVUHWLY\UP[IHZPZ[VHIH[L\W[V  VM[OLLTPZZPVUZHZZVJPH[LK^P[OMVZZPSM\LSI\YUPUN *SLHULY 0UK\Z[Y` *SLHU >H[LY HUK ,SLJ[YPJ 7V^LY 0UMYHZ[Y\J[\YL ZVS\[PVUZ OH]L VUH]LYHNLrelatively lower\UP[LU]PYVUTLU[HSPTWHJ[JVTWHYLK[VV[OLYZLJ[VYZ ;OPZ PZ THPUS` K\L [V [OL PUJYLTLU[HS PTWYV]LTLU[ PU LMÄJPLUJ` HUK HIH[LTLU[ [OH[THU`VM[OLZLTVK\SHYZVS\[PVUZVMMLY

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THE CHINA GREENTECH REPORT 2009



CROSS-SECTOR FINDINGS

;OLH]LYHNLVMZVS\[PVUZPU[OL*SLHULY*VU]LU[PVUHS,ULYN`HUK.YLLU)\PSKPUN sectors falls in the middle [PLY;OPZPZKYP]LUI`HJVTIPUH[PVUVMZVS\[PVUZ^P[Ohigh HUK]ery highLU]PYVUTLU[HSPTWHJ[PULHJOZLJ[VYZ\JOHZ*HYIVU*HW[\YLHUK :LX\LZ[YH[PVU**:HUK+L:6_PU*SLHULY*VU]LU[PVUHS,ULYN`^P[OZVS\[PVUZ [OH[KLSP]LYincremental to mediumLU]PYVUTLU[HSPTWHJ[

SOLUTION ATTRACTIVENESS *SLHULY 0UK\Z[Y` HUK .YLLU )\PSKPUN OH]L relatively higher H]LYHNL ZVS\[PVU H[[YHJ[P]LULZZ [V HKVW[LYZ 4HU` ZVS\[PVUZ PU [OLZL ZLJ[VYZ MVJ\Z VU LULYN` LMÄJPLUJ` HUK HYL HSYLHK` LJVUVTPJHSS` MLHZPISL VU H SPML J`JSL IHZPZ [VKH` *SLHULY0UK\Z[Y`HSZVPUJS\KLZZVS\[PVUZZ\JOHZ+L:6_HUK+L56_^OPJOHYL THUKH[LKI`YLN\SH[PVUPUJLY[HPUPUK\Z[YPLZ ,SLJ[YPJ 7V^LY 0UMYHZ[Y\J[\YL HUK *SLHULY ;YHUZWVY[H[PVU ZVS\[PVUZ HYL YHURLK relatively lower, due to the fact that many of these solutions are in the early stages VM[LJOUVSVNPJHSTH[\YP[`LN*VTWVZP[L4H[LYPHS*HISLZHUK(K]HUJLK4L[LYPUN 0UMYHZ[Y\J[\YLPU[OLMVYTLYHUK)H[[LY`,SLJ[YPJ=LOPJSLZHUK*SLHULY(PYJYHM[-\LSZ PU[OLSH[[LY *SLHULY*VU]LU[PVUHS,ULYN`*SLHU>H[LYHUK9LUL^HISL,ULYN`ZVS\[PVUZWSHJL in the middle JH[LNVY`KYP]LUI`HSHYNLU\TILYVMZVS\[PVUZ[OH[[LJOUVSVNPJHSS` HYLYLSH[P]LS`TH[\YLVYYHWPKS`LTLYNPUNI\[UV[`L[LJVUVTPJHSS`JVTWL[P[P]LPU*OPUH

ADDRESSABLE MARKET SIZE :VS\[PVUZPU*SLHULY;YHUZWVY[H[PVUHUK9LUL^HISL,ULYN`VUH]LYHNLYLJLP]LK [OLOPNOLZ[L]HS\H[PVUZ;OLZLZLJ[VYZPUJS\KLTHU`ZVS\[PVUZ^P[O large [V]LY` large HKKYLZZHISL THYRL[ ZPaLZ Z\JO HZ 5L^ ,ULYN` =LOPJSLZ HUK (K]HUJLK (PYJYHM[PU*SLHULY;YHUZWVY[H[PVUHUK:VSHY7OV[V]VS[HPJ*VUJLU[YH[PUN:VSHYHUK )PVTHZZ*VTI\Z[PVU:VS\[PVUZPU9LUL^HISL,ULYN` *SLHU>H[LY*SLHULY0UK\Z[Y`HUK,SLJ[YPJ7V^LY0UMYHZ[Y\J[\YLYHURLKSV^LZ[ due to the fact that solutions in these sectors are more specialized and are often PUKP]PK\HSJVTWVULU[ZVMSHYNLYZ`Z[LTZ .YLLU )\PSKPUN HUK *SLHULY *VU]LU[PVUHS ,ULYN` ZVS\[PVUZ HYL WVZP[PVULK PU the middle VM [OL YHURPUN 0U MHJ[ H U\TILY VM ZVS\[PVUZ PU [OLZL ZLJ[VYZ ^LYL L]HS\H[LK [V OH]L SHYNL HUK very large addressable market size, but fewer than [OVZLPU[OL[VW[^VZLJ[VYZ

MARKET ACCESSIBILITY 4HYRL[HJJLZZPIPSP[`MVYZVS\[PVUZPU*SLHULY0UK\Z[Y`HUK.YLLU)\PSKPUNZLNTLU[Z PZ VU H]LYHNL relatively higher JVTWHYLK [V ZVS\[PVUZ PU V[OLY ZLJ[VYZ 4HU` VM [OLZL ZVS\[PVUZ HYL TVK\SHY I` UH[\YL ^P[O H SHYNL U\TILY VM WYP]H[L I\ZPULZZ WYV]PKLYZIV[OKVTLZ[PJHUKMVYLPNUHSYLHK`VWLYH[PUNPU*OPUH *SLHULY ;YHUZWVY[H[PVU HUK ,SLJ[YPJ 7V^LY 0UMYHZ[Y\J[\YL HYL THYRL[Z ^P[O relatively lower HJJLZZPIPSP[`PU*OPUH*SLHULY;YHUZWVY[H[PVUPUJS\KLZZVS\[PVUZPU [OLYHPS^H`HUKHPY[YHUZWVY[ZLNTLU[Z^OLYLHJJLZZ[VTHU`]HS\LJOHPULSLTLU[Z is restricted;OL,SLJ[YPJ7V^LY0UMYHZ[Y\J[\YLTHYRL[PZHYLNPVUHSPaLKTVUVWVS` JVU[YVSSLK I` [OL NV]LYUTLU[ >OPSL L_JLW[PVUZ L_PZ[ ZVS\[PVU WYVJ\YLTLU[ NLULYHSS`MH]VYZSVJHSZ[H[LV^ULKLU[LYWYPZLZ 9LUL^HISL ,ULYN` *SLHULY *VU]LU[PVUHS ,ULYN` HUK *SLHU >H[LY ZVS\[PVUZ place in the middle(S[OV\NOTHYRL[ZMVYHU\TILYVMZVS\[PVUZPU[OLZLZLJ[VYZ are mostly openHSHYNLU\TILYVMZVS\[PVUZHYLHWWSPJHISL[VTHYRL[Z[OH[OH]L limited accessibility, and in some cases, markets that are restricted, which is the JHZL^P[OH[LY

CROSS-SECTOR AVERAGE SOLUTION EVALUATION MATRIX -PN\YLWYLZLU[ZH]LYHNLZLJ[VYÄUKPUNZPUHTH[YP_MVYTH[\ZPUN[^VH_LZHUK [OLZPaLHUKJVSVYVM[OLIHSS[VPUJVYWVYH[LYLSH[P]LL]HS\H[PVUVMZLJ[VYZVUHSSMV\Y JYP[LYPHMVY[OLTLKP\T[LYT[PTLMYHTLVM`LHYZ)HZLKVU[OPZHUHS`ZPZMV\Y NYV\WZVMZLJ[VYZLTLYNL!

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EXISTING AND EMERGING SOLUTIONS

Cleaner Transportation

Size of the ball indicates relative average addressable market size of solutions in the sector:

Renewable Energy

MIDDLE

RELATIVELY HIGHER

BALL SIZE AND COLOR INTERPRETATION LEGEND:

RELATIVELY LARGE

Cleaner *VU]LU[PVUHS,ULYN`

RELATIVELY LOWER

AVERAGE SOLUTION UNIT ENVIRONMENTAL IMPACT POTENTIAL

Fig.5: CROSS-SECTOR AVERAGE SOLUTION EVALUATION MATRIX

Electric Power 0UMYHZ[Y\J[\YL

RELATIVELY LOWER

MIDDLE

RELATIVELY SMALLER

Color of the ball indicates relative average market accessibility of solutions in the sector:

Clean >H[LY

Cleaner 0UK\Z[Y`

MIDDLE

RELATIVELY HIGHER

RELATIVELY HIGHER

MIDDLE

RELATIVELY LOWER

AVERAGE SOLUTION ATTRACTIVENESS (1-5 YEARS)

„ Cleaner Transportation and Renewable Energy - sectors in which solutions VUH]LYHNLOH]Lrelatively higherLU]PYVUTLU[HSPTWHJ[relatively larger addressable market size, while being in the relatively lower or in the middle category in terms of ZVS\[PVUH[[YHJ[P]LULZZ[VHKVW[LYZHUKM\UJ[PVUPUNPUTHYRL[Z[OH[YHURrelatively lower or in the middle on accessibility, compared to other sectors „ Green Building and Cleaner Industry  ZVS\[PVUZ VU H]LYHNL OH]L relatively higher H[[YHJ[P]LULZZ [V HKVW[LYZ ^P[O relatively higher market accessibility, ^OPSL VMMLYPUN LU]PYVUTLU[HS PTWHJ[ [OH[ YHURZ relatively lower or in the middle and addressable market size that ranks in the middle or in the relatively smaller category, compared to solutions in other sectors „ Cleaner Conventional Energy and Clean WaterZVS\[PVUZYHURPU[OL middle PU [LYTZ VM YLSH[P]L H[[YHJ[P]LULZZ [V HKVW[LYZ HUK THYRL[ HJJLZZPIPSP[` WYLZLU[ LU]PYVUTLU[HS PTWHJ[ [OH[ YHURZ PU [OL relatively lower or the middle categories and addressable market size that ranks in the middle or the relatively smaller tiers, compared to other sectors „ Electric Power infrastructure  ZVS\[PVUZ VU H]LYHNL OH]L relatively lower LU]PYVUTLU[HSPTWHJ[relatively lowerH[[YHJ[P]LULZZ[VHKVW[LYZHUKrelatively smaller addressable market size with relatively lower accessibility, compared to other sectors TWO DISTINCT INSIGHTS RESULT FROM THIS ANALYSIS: „ Correlation of solution attractiveness with market accessibility: Sectors ^P[OTVYLH[[YHJ[P]LZVS\[PVUZNLULYHSS`L_PZ[PUTHYRL[Z[OH[HYLTVYLVWLUPU[OL TLKP\T[LYT`LHY[PTLMYHTL;OL[^VZLJ[VYZ^P[OZVS\[PVUZ[OH[VUH]LYHNL HYLMV\UK[VOH]Lrelatively higherH[[YHJ[P]LULZZ[VHKVW[LYZ.YLLU)\PSKPUNHUK *SLHULY0UK\Z[Y`HWWLHY[VOH]LTHYRL[Z^P[Orelatively higher accessibility than V[OLYZLJ[VYZ6U[OLV[OLYOHUK[OL[^VZLJ[VYZ^P[OZVS\[PVUZ[OH[VUH]LYHNL OH]Lrelatively lower H[[YHJ[P]LULZZ*SLHULY;YHUZWVY[H[PVUHUK,SLJ[YPJ7V^LY0U MYHZ[Y\J[\YL[LUK[VOH]LTHYRL[Z[OH[YHURrelatively lower VUHJJLZZPIPSP[` „ Correlation of solution unit environmental impact potential with addressable market size: :LJ[VYZ ^OPJO JVU[HPU ZVS\[PVUZ ^P[O OPNOLY H]LYHNL LU]PYVUTLU[HS PTWHJ[ HSZV OH]L NYLH[LY H]LYHNL HKKYLZZHISL THYRL[ ZPaL -VY instance, the two sectors that fall into relatively higher [PLYVU\UP[LU]PYVUTLU[HS PTWHJ[WV[LU[PHS*SLHU;YHUZWVY[H[PVUHUK9LUL^HISL,ULYN`HSZVOH]Lrelatively larger HKKYLZZHISLTHYRL[ZPaLJVTWHYLK[VV[OLYZLJ[VYZ;OPZPZWHY[PHSS`K\L[V [OLJVUJLU[YH[LKUH[\YLVMZVS\[PVUZPU[OLZLZLJ[VYZZ\JOHZ]LOPJSLZHPYJYHM[ SVJVTV[P]LZHUK:VSHY7OV[V]VS[HPJZYH[OLY[OHUTVK\SHYVYJVTWVULU[VYPLU[LK ZVS\[PVUZHZPZ[OLJHZLPUV[OLYZLJ[VYZ www.china-greentech.com

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CLEANER CONVENTIONAL ENERGY SOLUTIONS

KEY FINDINGS FROM THE CLEANER CONVENTIONAL ENERGY SOLUTION EVALUATION ANALYSIS INCLUDE: „ OVER HALF OF ALL SOLUTIONS HAVE VERY HIGH UNIT ENVIRONMENTAL IMPACT POTENTIAL. ;OPZPUJS\KLZHSSJVHSWVZ[JVTI\Z[PVUZVS\[PVUZ¶-S\L.HZ+LZ\SM\YPaH[PVU+L:6_-S\L.HZ+LUP[YH[PVU+L56_ 7HY[PJ\SH[L4H[[LY749LTV]HSHUK*HYIVU*HW[\YLHUK:LX\LZ[YH[PVU**:ZVS\[PVUZ,HJOVM[OLZLPZHISL[V JHW[\YLHUKHIH[L\W[V  VM[OL[HYNL[LKHPYWVSS\[HU[(KKP[PVUHSS`JSLHULYVPSHUKU\JSLHYWV^LYZVS\[PVUZVMMLY very highLU]PYVUTLU[HSPTWHJ[5LHYS`HSSV[OLYZVS\[PVUZVMMLYSV^LY[OV\NOZPNUPÄJHU[LU]PYVUTLU[HSPTWHJ[(U L_JLW[PVUPZ*VHS3PX\LMHJ[PVU^OPJOKVLZUV[WYLZLU[HIH[LTLU[WV[LU[PHSK\L[V[OLOPNOLULYN`PU[LUZP[`VM[OL SPX\LMHJ[PVUWYVJLZZI\[PZJVUZPKLYLKMVYP[ZZ[YH[LNPJLULYN`ZLJ\YP[`ILULÄ[Z „ A MAJORITY OF SOLUTIONS ARE CONSIDERED TO BE ATTRACTIVE OR ADVANTAGED TO ADOPTERS. ;OLZLZVS\[PVUZHYLLP[OLYTHUKH[LKI`YLN\SH[PVUZ\JOHZ+L:6_+L56_HUK749LTV]HSZ`Z[LTZVYHYL LJVUVTPJHSS` MLHZPISL VU H SPML J`JSL IHZPZ TVZ[S` K\L [V [OL LULYN` LMÄJPLUJ` NHPUZ [OL` VMMLY Z\JO HZ *VHS )SLUKPUN*VTIPULK/LH[HUK7V^LY*/7<S[YH:\WLYJYP[PJHS7V^LY.LULYH[PVU<:7.HUK-JSHZZ.HZ;\YIPUL *HYIVU *HW[\YL HUK :LX\LZ[YH[PVU **:
Fig.6: CLEANER CONVENTIONAL ENERGY SECTOR SOLUTION EVALUATION MATRIX (1-5 Years) MHTGCR

Advanced Coal Mining Equipment

CCS

PM Removal

De-SOx De-NOx

>H[LY Reinjection

UNIT ENVIRONMENTAL IMPACT POTENTIAL

-59 *HW[\YLHUK
5.**

<*.**

0.**

CHP

-*SHZZ

DISADVANTAGED

EMERGING

Ultra Supercritical

Coal Blending

Coal Liquefaction

UNAVAILABLE

Coal Screening and Scrubbing

ATTRACTIVE

ADVANTAGED

SOLUTION ATTRACTIVENESS (1-5 YEARS) BALL SIZE AND COLOR INTERPRETATION LEGEND: Size of the ball indicates addressable market size:

VERY LARGE



LARGE

MEDIUM

LIMITED MEDIUM

LIMITED

Color of the ball indicates market accessibility:

MOSTLY OPENED

LIMITED

THE CHINA GREENTECH REPORT 2009

RESTRICTED

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EXISTING AND EMERGING SOLUTIONS

Cleaner Conventional Energy Solutions THE CHINA GREENTECH INITIATIVE PRIORITIZED 18 CLEANER CONVENTIONAL ENERGY SOLUTIONSMVYKL[HPSLKL]HS\H[PVUMYVT[OH[ ^LYLVYPNPUHSS`PKLU[PÄLKHZHYLZ\S[VMYLZLHYJOHUKWHY[ULYMLLKIHJR:VS\[PVUZ^LYLJOVZLUMYVTHJYVZZMV\YZLNTLU[Z! *SLHULY*VHS*SLHULY.HZ*SLHULY6PSHUK5\JSLHY7V^LY ;OLWYPTHY`MVJ\Z^HZVUJSLHULYJVHSZVS\[PVUZK\L[V*OPUH»ZOLH]`YLSPHUJLVUJVHSHZHWYPTHY`LULYN`ZV\YJL  JSLHULY JVHS ZVS\[PVUZ ^LYL VYNHUPaLK PU[V [OYLL JH[LNVYPLZ! 7YL*VTI\Z[PVU *VU]LYZPVU HUK *VTI\Z[PVU 7VZ[ CVTI\Z[PVUZVS\[PVUZ Ü

CLEANER COAL PRE-COMBUSTION

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CLEANER COAL - CONVERSION AND COMBUSTION

Ü Ü Ü

Ü

Ü

CLEANER COAL - POSTCOMBUSTION

Ü Ü Ü Ü Ü

CLEANER GAS

Ü Ü

Coal Liquefaction¶7YVJLZZ[OH[JVU]LY[ZJVHSPU[VSPX\PKM\LSZ F-Class Gas Turbine¶(K]HUJLK[LJOUVSVN`NHZ[\YIPUL^OPJOPZHYV[HY` LUNPUL[OH[L_[YHJ[ZLULYN`MYVTHÅV^VMJVTI\Z[PVUNHZH[[OLYTHSWV^LY plants Integrated Gasification Combined Cycle (IGCC) – System that turns coal into synthesis gas which is then combusted in gas turbines to generate LSLJ[YPJP[`"[OL^HZ[LOLH[PZJHW[\YLKHUKWHZZLK[VHZ[LHT[\YIPULZ`Z[LT MVYLULYN`YLJV]LY` Ultra Supercritical Power Generation (USPG)¶*VHSÄYLKWV^LYWSHU[[OH[ VWLYH[LZH[]LY`OPNO[LTWLYH[\YLZHUK\ZLZHK]HUJLKZ[LHTJ`JSLZ[OH[ YLZ\S[PUOPNOLYOLH[LMÄJPLUJPLZHUKSLZZLTPZZPVUZ[OHUJVU]LU[PVUHSJVHS power plants Underground Coal Gasification Combined Cycle (UCGCC) – Process by ^OPJOJVHSPZJVU]LY[LKPU[VHWYVK\J[NHZ\UKLYNYV\UKHUK[OLUJVTI\Z[LK HIV]LNYV\UK[VNLULYH[LLSLJ[YPJP[`PUJVTI\Z[PVUZ`Z[LTZ[OH[JHW[\YLHUK utilize waste heat Carbon Capture and Sequestration (CCS) – System that captures carbon KPV_PKLMYVTMVZZPSM\LSLP[OLYWYPVY[VVYHM[LYJVTI\Z[PVUHUKZLX\LZ[LYZP[ for long term storage underground Flue Gas Denitration (De-NOx)¶:`Z[LT[OH[YLTV]LZUP[YVNLUV_PKLZMYVT Å\LNHZ Flue Gas Desulfurization (De-SOx)¶:`Z[LT[OH[YLTV]LZZ\SM\YV_PKLZ MYVTÅ\LNHZ Particulate Matter (PM) Removal¶:`Z[LT[OH[YLTV]LZWHY[PJ\SH[LTH[[LY ¶OHYTM\SÄULWHY[[JSLZ¶MYVTÅ\LNHZ Capture and Use of Coal Mine Ventilation Air Methane – Capture and use VMTL[OHULJVU[HPULKPU[OLL_OH\Z[HPYMYVT\UKLYNYV\UKJVHSTPULZ Combined Heat and Power (CHP) – System that simultaneously generates electricity and usable heat by capturing heat that would normally be lost Natural Gas Combined Cycle (NGCC) – System that generates electricity using gas turbines, and then captures waste heat to generate steam and additional electricity using a steam turbine

Ü

Water Reinjection¶9LPUQLJ[PVUVM^H[LYYLJV]LYLKH[.HZ6PS:LWHYH[PVU 7SHU[Z.6:7ZIHJRPU[VVPSYLZLY]VPYZHZHTL[OVKVM,UOHUJLK6PS 9LJV]LY`,69

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Fast Neutron Reactor (FNR) – Type of nuclear reactor that can utilize U\JSLHY^HZ[LMYVTJVU]LU[PVUHSU\JSLHYYLHJ[VYZHZMLLKZ[VJRHUKVWLYH[L H[OPNOLYLMÄJPLUJPLZ Modular High-Temperature Gas-Cooled Reactor (MHTGCR) – Type VMU\JSLHYYLHJ[VY[OH[PZZHMLYHUKOHZOPNOLYLMÄJPLUJ`JVTWHYLK[V JVU]LU[PVUHSU\JSLHYYLHJ[VYZ

CLEANER OIL

NUCLEAR POWER Ü

www.china-greentech.com

Advanced Coal Mining Equipment – Coal mining equipment that is more LULYN`LMÄJPLU[HUKLUHISLZOPNOLYL_[YHJ[PVUYH[LZ[OHUJVU]LU[PVUHSLX\PWTLU[ Coal Blending¶7YVJLZZVMJVTIPUPUN]HYPV\Z[`WLZVMW\S]LYPaLKJVHS[V [HRLHK]HU[HNLVM[OLPYKPMMLYLU[JVTI\Z[PVUHUKLTPZZPVUWYVWLY[PLZ Coal Screening and Scrubbing – Processes that reduce impuritities, such as ash and sulfur, contained in coal prior to burning, normally carried out at or close to the coal mine

THE CHINA GREENTECH REPORT 2009



RENEWABLE ENERGY SOLUTIONS

Renewable Energy Solutions THE CHINA GREENTECH INITIATIVE EVALUATED 35 RENEWABLE ENERGY SOLUTIONS. These ZVS\[PVUZHYLZWSP[ULHYS`LX\HSS`HJYVZZ[OYLLZLNTLU[Z!:VSHY>PUKHUK)PVLULYN` >OPSL [OL 9LUL^HISL ,ULYN` ZLJ[VY PZ KLÄULK [V PUJS\KL O`KYVLSLJ[YPJP[` ^H]L HUKNLV[OLYTHSZLNTLU[Z[OLZLZVS\[PVUZHYLUV[JV]LYLKPU[OPZYLWVY[ +\L [V [OL HI\UKHUJL VM ZVS\[PVUZ PU [OPZ ZLJ[VY [OL` OH]L ILLU NYV\WLK PU[V [LUHYLHZ[VMHJPSP[H[LHUHS`ZPZ;OL:VSHYZLNTLU[PUJS\KLZ[OYLLZVS\[PVUHYLHZ! 7OV[V]VS[HPJ *VUJLU[YH[PUN HUK >H[LY /LH[LYZ >PUK 7V^LY LUJVTWHZZLZ MV\YHYLHZ!;\YIPULZ+L]LSVWTLU[4HPU[LUHUJLHUK,ULYN`Z[VYHNL;OL[OYLL )PVLULYN`ZVS\[PVUHYLHZHYL!,SLJ[YPJP[`/LH[HUK-\LSZ
KEY FINDINGS FROM THE RENEWABLE SOLUTIONS EVALUATION ANALYSIS INCLUDE: „ NEARLY ALL AREAS HAVE VERY HIGH AVERAGE SOLUTION UNIT ENVIRONMENTAL IMPACT POTENTIAL. This is based mainly VU[OLHIPSP[`VMYLUL^HISLLULYN`ZV\YJLZWHY[PJ\SHYS`:VSHYHUK>PUK[VJVTWSL[LS`HIH[L*62 and other air LTPZZPVUZ HZZVJPH[LK ^P[O MVZZPS M\LS JVTI\Z[PVU PU NLULYH[PUN LSLJ[YPJP[` ;OL [^V L_JLW[PVUZ HYL ^P[OPU [OL ^PUKZLNTLU[HUKPUJS\KL>PUK¶+L]LSVWTLU[HUK>PUK¶4HPU[LUHUJLHYLHZ^OPJOOH]Lincremental-medium to mediumWV[LU[PHS;OLZL[^VHYLHZMVJ\ZVUKPZJYL[LWHY[ZVM[OL^PUK]HS\LJOHPUHUKVMMLYLMÄJPLUJ`NHPU PTWYV]LTLU[Z YH[OLY [OHU KPYLJ[ LTPZZPVUZ HIH[LTLU[ )PVLULYN`,SLJ[YPJP[` OHZ OPNO LU]PYVUTLU[HS PTWHJ[ VYTVYL[OHU HIH[LTLU[;OPZPZZPNUPÄJHU[ILJH\ZL[OPZHYLHPUJS\KLZ)PVTHZZ*V-PYPUNZVS\[PVU[OH[ normally abates less than 40% of CO2LTPZZPVUZK\L[V[OLMHJ[[OH[IPVTHZZPZUVYTHSS`*V-PYLK^P[OJVHS „ WHILE SOLAR–WATER HEATERS ALREADY ARE ADVANTAGED FROM THE ADOPTER PERSPECTIVE, SOLUTIONS IN MOST AREAS ON AVERAGE ARE BETWEEN EMERGING AND ATTRACTIVE.>PUK¶+L]LSVWTLU[HUK>PUK¶4HPU[LUHUJLHYLHZPUJS\KL solutions that are either attractive or advantaged^OPJOKL[LYTPULK[OLPYWVZP[PVUIL[^LLU[OL[^VL]HS\H[PVUZ )PVLULYN`,SLJ[YPJP[` HUK )PVLULYN`/LH[ IV[O YLS` VU IPVTHZZ JVTI\Z[PVU HUK HYL MV\UK [V IL IL[^LLU emerging and attractive ;OL HUHS`ZPZ Z\NNLZ[Z [OH[ HTVUN :VSHY >PUK 7V^LY HUK )PVM\LSZ ZVS\[PVUZ TVZ[ H[[YHJ[P]LHYL>PUK;\YIPULZZVS\[PVUZMVSSV^LKI`:VSHY7OV[V]VS[HPJHUK[OLUI`)PVLULYN`-\LSZZVS\[PVUZ ;OPZYHURPUNWHYHSSLSZ[OL[LJOUVSVNPJHSTH[\YP[`VMZVS\[PVUZ^P[OPU[OLZLZLNTLU[Z>PUK7V^LYPZHWWYVHJOPUN JVZ[WHYP[`^P[OLSLJ[YPJP[`NLULYH[LK\ZPUNJVU]LU[PVUHSZV\YJLZZ\JOHZJVHSHUKUH[\YHSNHZ^OPSLNLULYH[PUN WV^LY\ZPUN:VSHY7OV[V]VS[HPJZVS\[PVUZPZZ[PSSJVUZPKLYHIS`TVYLL_WLUZP]L(S[OV\NOHU\TILYVM)PVLULYN` -\LSZ ZVS\[PVUZ HYL [LJOUVSVNPJHSS` TH[\YL [OL \UYLSPHIPSP[` VM MLLKZ[VJR Z\WWS` ZPNUPÄJHU[S` KLJYLHZLZ [OLPY H[[YHJ[P]LULZZ[VHKVW[LYZ „ THE ADDRESSABLE MARKET SIZE IS ESTIMATED TO BE LARGEST FOR SOLUTIONS IN SOLAR–PHOTOVOLTAIC AND SOLAR– CONCENTRATING AREAS. ;OPZ PZ H YLÅLJ[PVU VM [OL HIPSP[` VM ZVS\[PVUZ PU [OLZL HYLHZ [V JVTWL[L MVY H ZOHYL VM *OPUH»ZMVYLJHZ[LKPUJYLHZLPUWV^LYNLULYH[PVUJHWHJP[`HNHPUZ[JVU]LU[PVUHSWV^LYZV\YJLZLZWLJPHSS`JVHS ÄYLKJHWHJP[`HZZ\TPUN[OL`YLHJO[LJOUVSVNPJHSTH[\YP[`HUKJVZ[WHYP[`V]LY[OLTLKP\T[LYT[PTLMYHTL( U\TILYVMV[OLYZVS\[PVUHYLHZOH]LlargeHKKYLZZHISLTHYRL[ZPaLZZ\JOHZ>PUK¶,ULYN`:[VYHNL:VSHY>H[LY /LH[LY HUK HSS [OYLL )PVLULYN` HYLHZ (WHY[ MYVT [^V VMMNYPK ZVS\[PVUZ PUJS\KLK PU [OL >PUK;\YIPULZ HYLH ZVS\[PVUZ[OLYLHSZVOH]LlargeHKKYLZZHISLTHYRL[ZPaLZ:VS\[PVUZPU>PUK4HPU[LUHUJLHUK>PUK+L]LSVWTLU[ HYLHZVUH]LYHNLVMMLYYLSH[P]LS`ZTHSSLYTHYRL[ZPaLZTHPUS`K\L[VOV^ZWLJPHSPaLK[OLZLZVS\[PVUZHYL „ ON MARKET ACCESSIBILITY, SOLUTION AREAS ARE SPLIT HALFWAY BETWEEN MOSTLY OPEN AND LIMITED. 5V[HIS`[OLÄ]L ZVS\[PVUHYLHZ[OH[YHURSV^LYVUZVS\[PVUH[[YHJ[P]LULZZHYLZLLUHZlimited in terms of market accessibility due to IV[OMVYTHSHUKPUMVYTHSYLZ[YPJ[PVUZ;OLZLHYLHZPUJS\KL>PUK;\YIPULZ:VSHY7OV[V]VS[HPJ)PVLULYN`-\LSZ >PUK¶,ULYN`:[VYHNLHUK:VSHY¶*VUJLU[YH[PUN(U\TILYVMHYLHZOV^L]LYJVU[HPUZVS\[PVUZ[OH[VUH]LYHNL OH]L THYRL[Z [OH[ HYL mostly open Z\JO HZ :VSHY>H[LY /LH[LYZ >PUK4HPU[LUHUJL >PUK+L]LSVWTLU[ )PVLULYN`,SLJ[YPJP[`HUK)PVLULYN`/LH[

A more detailed analysis of each individual solution can be found in the Renewable Energy chapter in the full version of The China Greentech Report

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EXISTING AND EMERGING SOLUTIONS

Fig.7: RENEWABLE ENERGY SECTOR SOLUTION AREAS EVALUATION MATRIX (1-5 Years) )PVLULYN`/LH[ >PUK,ULYN`:[VYHNL

UNIT ENVIRONMENTAL IMPACT POTENTIAL

:VSHY*VUJLU[YH[PUN :VSHY>H[LY/LH[LYZ

)PVLULYN`-\LSZ :VSHY7OV[V]VS[HPJ

>PUK;\YIPULZ >PUK+L]LSVWTLU[

)PVLULYN`,SLJ[YPJP[` >PUK4HPU[LUHUJL

UNAVAILABLE

DISADVANTAGED

EMERGING

ATTRACTIVE

ADVANTAGED

SOLUTION ATTRACTIVENESS (1-5 YEARS) BALL SIZE AND COLOR INTERPRETATION LEGEND: Size of the ball indicates addressable market size:

Color of the ball indicates market accessibility:

VERY LARGE

MOSTLY OPENED

LARGE

SOLAR - PHOTOVALTAIC

MEDIUM

LIMITED MEDIUM

Ü Ü

Ü Ü Ü

SOLAR - CONCENTRATING

Ü Ü Ü Ü Ü

LIMITED

LIMITED

RESTRICTED

Amorphous Silicon Thin Film Photovoltaic Cell (a-Si PV) – Type of thin ÄSTZVSHYJLSSIHZLKVUHTVYWOV\ZZPSPJVUJOLTPJHSJVTWV\UK Building Integrated Photovoltaic (BIPV) ¶(WWSPJH[PVUVMZVSHYWOV[V]VS[HPJ TH[LYPHSZ^OL[OLYJY`Z[HSSPULVY[OPUÄSTPU[VHJ[\HSI\PSKPUNZ[Y\J[\YLZ UVYTHSS`YLWSHJPUNJVU]LU[PVUHSI\PSKPUNTH[LYPHSZPUWHY[ZVM[OLI\PSKPUN LU]LSVWLZ\JOHZ[OLYVVMZR`SPNO[ZVYMHJHKLZ Cadmium Telluride Thin Film Photovoltaic Cell (CdTe PV) – Type of thin ÄSTZVSHYJLSSIHZLKVUJHKTP\T[LSS\YPKLJOLTPJHSJVTWV\UK CIGS Thin Film Photovoltaic Cell (CIGS PV)¶;`WLVM[OPUÄSTZVSHYJLSS based on copper iridium gallium selenide chemical compound Crystalline Silicon Photovoltaic Cell (cSi PV) – Type of solar cell made MYVTHZPUNSLJY`Z[HSVYHWVS`JY`Z[HSSPULZSPJLVMZPSPJVU[OH[^HZ[OLÄYZ[[`WL to be widely commercialized Concentrating Photovoltaic (CPV)+L]PJL[OH[JVUJLU[YH[LZZ\USPNO[ VU[VWOV[V]VS[HPJZ\YMHJLZ[VWYVK\JLLSLJ[YPJP[` Fresnel Mirror – Solar thermal energy collector that consists of a series of SVUNUHYYV^ZSPNO[S`J\Y]LKTPYYVYZ[OH[MVJ\Z[OLSPNO[VU[VSPULHYYLJLP]LYZ WVZP[PVULKHIV]L[OLTPYYVYZ[VILL]LU[\HSS`JVU]LY[LKPU[VLSLJ[YPJP[` Parabolic Dish Stirling Engine¶+L]PJL[OH[JVUJLU[YH[LZZ\USPNO[H[H ZPUNSLMVJHSWVPU[]PHHWHYHIVSPJKPZO[VWYVK\JLLSLJ[YPJP[`HUK[OH[JHU [YHJR[OLZ\UHSVUN[^VH_LZI`H\[VTH[PJHSS`HKQ\Z[PUN[OLKPYLJ[PVUVM[OLKPZO Parabolic Trough – Solar thermal energy collector that consists of a long WHYHIVSPJTPYYVYHUKH+L^HY[\ILY\UUPUNP[ZSLUN[OH[[OLMVJHSWVPU[[OH[ HIZVYIZLULYN`MYVT[OLZ\USPNO[^OPJZ^OPZJVU]LY[LKPU[VLSLJ[YPJP[` Power Towers – Type of solar power plant that uses a tower and a high OLH[JHWHJP[`JVTWVULU[[VYLJLP]L[OLZ\USPNO[MVJ\ZLK I`HUHYYH`VMÅH[TV]HISLTPYYVYZHUKJVU]LY[P[PU[VLSLJ[YPJP[`

SOLAR - WATER HEATERS

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Solar Water Heater (SWH) – System that heats water by absorbing energy MYVTZ\USPNO[UVYTHSS`JVUZPZ[PUNVMZVSHY[OLYTHSJVSSLJ[VYZÅ\PKZ`Z[LTZ to transport the heat and a water tank where water is heated and stored

WIND - TURBINES

Ü

Offgrid / <1 MW / Horizontal ¶/VYPaVU[HS^PUK[\YIPUL^P[O\UKLY4> capacity that generates electricity to be used locally and does not require connection to the power grid

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THE CHINA GREENTECH REPORT 2009

71

RENEWABLE ENERGY SOLUTIONS

WIND -TURBINES

Ü Ü Ü Ü

WIND DEVELOPMENT

Ü

Ü

WIND MAINTENANCE

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WIND ENERGY STORAGE

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Ü

BIOENERGY - ELECTRICITY

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Offgrid / <1 MW / Vertical ¶=LY[PJHS^PUK[\YIPUL^P[O\UKLY4>JHWHJP[` that generates electricity to be used locally and does not require connection to the power grid Ongrid / 1-3 MW / Onshore¶/VYPaVU[HS^PUK[\YIPUL^P[OJHWHJP[`IL[^LLU HUK4>[OH[PZSVJH[LKVUZOVYLHUKMLLKZ[OLNLULYH[LKLSLJ[YPJP[`VU[V[OL power grid Ongrid / >3 MW / Onshore ¶/VYPaVU[HS^PUK[\YIPUL^P[OJHWHJP[`V]LY4> that is located onshore and feeds the generated electricity onto the power grid Ongrid / >3 MW / Offshore¶/VYPaVU[HS^PUK[\YIPUL^P[OJHWHJP[`V]LY4> that is located offshore and feeds the generated electricity onto the power grid Micrositing¶*VUZPKLYH[PVUVMHUHYYH`VMMHJ[VYZYLSH[LK[V^PUKÅV^[LYYHPU SVJHSWV^LYKLTHUKLU]PYVUTLU[HSHUKSHUK\ZLPZZ\LZJHYYPLKV\[K\YPUNZP[L ZLSLJ[PVUMVY^PUK[\YIPULZ[VTH_PTPaL^PUKMHYT»ZVWLYH[PVUHSLMÄJPLUJ`HUK economics Wind Assessment – Process of assessing the quality of wind at a particular location for the purpose of estimating future potential energy production of a wind farm if it were to be installed at that location Control System¶:`Z[LT[OH[TVUP[VYZHUKJVU[YVSZ[OLILOH]PVYVMV[OLY KL]PJLZVYZ`Z[LTZ[VLUZ\YLVW[PTHSVWLYH[PVUVM[OL^PUK[\YIPUL Conversion Technology¶+L]PJL[OH[JVU]LY[ZLSLJ[YPJP[`YLJLP]LKMYVTHZL[ of wind turbines to the standard required by the power grid before feeding the electricity onto the grid Maintenance¶:L[VMPUZWLJ[PVUZYLWHPYZVYTVKPÄJH[PVUZVMPUKP]PK\HS^PUK turbines or wind farms to ensure optimal operation Standard Operating Procedures (SOPs) – Set of prescriptions for employees, VM[LUTHUKH[LKVUOV^[VL_LJ\[LZWLJPÄJ[HZRZVY[VYLHJ[[VJPYJ\TZ[HUJLZ PU[OLTVZ[LMÄJPLU[HUKLMMLJ[P]L^H`Z Battery Storage – Electrochemical cells that can be used to store energy and be charged using electricity and discharged to produce electricity Compressed Air Energy Storage (CAES¶:`Z[LT[OH[JHUZ[VYLLULYN`I` JVTWYLZZPUNHPYPUHJVTWHY[TLU[Z\JOHZHPY[PNO[\UKLNYV\UKJH]LYUHUK then generate electricity by releasing the air from storage through a combustion turbine Pumped Hydro Storage – Method under which energy can be stored by W\TWPUN[OL^H[LY[VHOPNOYLZLY]VPYHUK[OLUYLSLHZLKIHJRPU[VHSV^LY YLZLY]VPY[VNLULYH[LLSLJ[YPJP[`^OLUWHZZPUN[OYV\NOWV^LYNLULYH[PUN turbines Biomass Co-Firing – Combining biomass with coal to be burned to generate electricity at a power plant Biomass Combustion – Burning of biomass to generate electricity at a power plant

BIOENERGY - HEAT

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Civil Heat ¶)\YUPUNVMIPVTHZZ[VNLULYH[LOLH[[VIL\ZLKMVYJP]PSW\YWVZLZ Industrial Heat – Burning of biomass to generate heat to be used for industrial purposes

BIOENERGY - FUELS

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Cassava Bioethanol¶)PVL[OHUVSWYVK\JLKMYVTJHZZH]HJYVW Cellulosic Bioethanol – Bioethanol produced from wood, grasses or other plants Jatropha Diesel – Biodiesel produced from jatropha crop Mircoalgae Diesel¶+PLZLSWYVK\JLKMYVTTPJYVHSNHL^OPJOHYL photosynthetic organisms that can be farmed in water Sweet Sorghum Bioethanol – Bioethanol produced from sweet sorgum crop Waste Vegetable Oil Biodiesel¶)PVKPLZLSWYVK\JLKMYVT^HZ[L]LNL[HISLVPS

Ü Ü Ü Ü

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EXISTING AND EMERGING SOLUTIONS

Electric Power Infrastructure Solutions THE CHINA GREENTECH INITIATIVE PRIORITIZED 12 ELECTRIC POWER INFRASTRUCTURE SOLUTIONS MVYKL[HPSLKL]HS\H[PVUMYVTHUVYPNPUHSZL[VM;OLZLZVS\[PVUZHYL VYNHUPaLK PU MV\Y HYLHZ! 3VZZ 9LK\J[PVU :THY[ .YPK ,ULYN` :[VYHNL HUK .YPK (JJLZZZVS\[PVUZ

KEY FINDINGS FROM THE ELECTRIC POWER INFRASTRUCTURE SOLUTIONS EVALUATION ANALYSIS INCLUDE: „ TWO-THIRDS OF ANALYZED SOLUTIONS OFFER INCREMENTAL UNIT ENVIRONMENTAL IMPACT POTENTIAL. This is due to the focus of [OLZL ZVS\[PVUZ Z\JO HZ +PNP[HS :\IZ[H[PVUZ *VTWVZP[L 4H[LYPHSZ *HISLZ HUK >PKL (YLH 4HUHNLTLU[ :`Z[LT >(4: VU [YHUZTPZZPVU HUK KPZ[YPI\[PVU SVZZ YLK\J[PVU ^OPJO YLWYLZLU[Z SLZZ [OHU   VM [VKH`»Z V]LYHSS LSLJ[YPJP[` NLULYH[PVU PU *OPUH ;OL ILULÄ[ [OLZL ZVS\[PVUZ KLSP]LY PU PTWYV]PUN [OL YLSPHIPSP[` VM [OL UL[^VYR PZ UV[ JHW[\YLK PU [OPZ L]HS\H[PVU /V^L]LY[OL[^VLULYN`Z[VYHNLHUK[^VNYPKHJJLZZZVS\[PVUZYLWYLZLU[very high LU]PYVUTLU[HSPTWHJ[;OPZTLHUZ[OL` HYLHISL[VHIH[LV]LY VMULNH[P]LLU]PYVUTLU[HSPTWHJ[^OPJOPU[OPZJHZLHYL*62 emissions from power generation \[PSPaPUN *OPUH»Z J\YYLU[ M\LS TP_ 9H[OLY [OHU KLSP]LYPUN KPYLJ[ PTWHJ[ [OLZL ZVS\[PVUZ LUHISL [OL JVSSLJ[P]L Z`Z[LT ^OPJO PZ JVTWYPZLK VM WV^LY NLULYH[PVU Z[VYHNL [YHUZTPZZPVU KPZ[YPI\[PVU HUK HWWSPJH[PVU [V HJOPL]L   HIH[LTLU[ „ HALF OF THE SOLUTIONS ARE STILL DISADVANTAGED OR EMERGING, WHILE HALF ARE ALREADY ATTRACTIVE. -YVT [OL HKVW[LY WLYZWLJ[P]LTHU`ZVS\[PVUZHYLZ[PSSdisadvantaged or emergingZ\JOHZ*VTWVZP[L4H[LYPHSZ*HISLZ(K]HUJLK4L[LYPUN 0UMYHZ[Y\J[\YL(40HUK,SLJ[YPJ(\[V=LOPJSL,(=*OHYNPUN:`Z[LT(S[OV\NOHSSVM[OLZL[LJOUVSVNPLZOVSKNYLH[WYVTPZL J\YYLU[S`[OL`HYLPUYLSH[P]LS`LHYS`Z[HNLZVM[LJOUVSVNPJHSTH[\YP[`0UJVTWHYPZVU<S[YH/PNO=VS[HNL(4: [OLZL ZVS\[PVUZ OH]L ]LY` UHYYV^ HWWSPJH[PVU HUK VUJLPUZ[HSSLKOH]LSVUNSPMLZWHUZUV[YLX\PYPUNYLWSHJLTLU[Z;OPZJVUZ[YHPUZ[OL`LHYS`HKKYLZZHISLTHYRL[ZPaLVM[OLZL [LJOUVSVNPLZ;OL[^VLULYN`Z[VYHNLZVS\[PVUZOV^L]LY5H:)H[[LY`HUK=HUHKP\T9LKV_)H[[LY`OH]Llarge addressable THYRL[ZPaLHZ[OL`JV\SKILKLWSV`LK[VZ[VYLLSLJ[YPJP[`NLULYH[LKK\YPUNUVUWLHR[PTLZPUWSHJLVMPUJYLTLU[HSWLHR WV^LYNLULYH[PUNJHWHJP[`HUK\ZLK[VTP[PNH[LWV^LYZ\WWS`HUKKLTHUKÅ\J[\H[PVU(4:*OPUH OHZTHKLZPNUPÄJHU[PU]LZ[TLU[PU[OLZLZVS\[PVUZHUK[OLNV]LYUTLU[PZMVJ\ZPUNVUKLWSV`PUN[OLTPUKLWLUKLU[S`-VY V[OLY [LJOUVSVNPLZ ¶ Z\JO HZ (40 07)HZLK (\[VTH[PJ 4L[LY 9LHKPUN (49 HUK ,(= *OHYNPUN :`Z[LT ¶ THYRL[Z HYL ]PL^LK[VILYLSH[P]LS`TVYLVWLUHSILP[Z[PSS limitedK\L[V[OLNV]LYUTLU[V^ULKYLNPVUHSPaLKTVUVWVS`YLZWVUZPISLMVY[OL JVUZ[Y\J[PVUHUKTHUHNLTLU[VM*OPUH»ZLSLJ[YPJNYPK

Fig.8: ELECTRIC POWER INFRASTRUCTURE SECTOR SOLUTION EVALUATION MATRIX (1-5 Years) ,(=*OHYNPUN:`Z[LTZ NaS Battery

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SOLUTION ATTRACTIVENESS (1-5 YEARS) BALL SIZE AND COLOR INTERPRETATION LEGEND: Size of the ball indicates addressable market size:

VERY LARGE

www.china-greentech.com

LARGE

MEDIUM

LIMITED MEDIUM

THE CHINA GREENTECH REPORT 2009

LIMITED

Color of the ball indicates market accessibility:

MOSTLY OPENED

LIMITED

RESTRICTED



ELECTRIC POWER INFRASTRUCTURE SOLUTIONS

LOSS REDUCTION

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SMART GRID

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ENERGY STORAGE

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GRID ACCESS

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Composite Materials Cables – Transmission and distribution line cables made MYVTJVTWVZ[P]LTH[LYPHSZ[OH[HYLZWLJPÄJHSS`LUNPULLYLK[VYLK\JLSVZZLZ Transformers with Amorphous Core – (S[ULYUH[P]L[YHUZMVYTLYZ[OH[HYLTVYL LULYN`LMÄJPLU[HUKLU]PYVUTLU[HSS`MYPLUKS`[OHUJVU]LU[PVUHS Ultra High Voltage (UHV) Transmission – Power transmission lines with ]VS[HNLZVMR=VYOPNOLYMVYHS[LYUH[PUNJ\YYLU[VYR=VYOPNOLYMVY direct current that allow power to be transmitted at greater distances with lower SVZZLZ[OHUSV^LY]VS[HNL[YHUZTPZZPVUSPULZ Advanced Metering Infrastructure (AMI) ¶0U[LNYH[LKZ`Z[LT[OH[TLHZ\YLZ collects, stores and analyzes utility usage, such as electricity, gas or water \ZHNL"PZHIYVHKLYJVUJLW[[OHU(4907IHZLKZVS\[PVU Digital Substation ¶(\[VTH[LKHUKJVTW\[LYPaLKZ\IZ[H[PVU[OH[WYV]PKLZ NYLH[LY[YHUZWHYLUJ`OPNOLYYLSPHIPSP[`HUKLMÄJPLUJ`VMVWLYH[PVUZ IP-Based Automatic Meter Reading (AMR) – Solutions that automatically NH[OLYKH[HMYVTLULYN`TL[LYPUNKL]PJLZHUK[YHUZTP[[VHJLU[YHSWYVJLZZPUN facility where billing is handled and consumption patterns are analyzed Real-Time Information Processing – Solutions that enable real time communication between core nodes in the electric network, inlcuding customer WYLTPZLHUKHSSV^IL[[LYTHUHNLTLU[VMKLTHUKPTWYV]LKYLSPHIPSPP[`HUK ÅL_PIPSP[`VM[OLUL[^VYR Wide Area Management System (WAMS)¶0U[LNYH[LKZ`Z[LT[OH[TVUP[VYZ HUKJVU[YVSZLSLTLU[ZVM[OLLSLJ[YPJHSWV^LYNYPK[VLUZ\YLH]HPSHIPSP[`HUK PTWYV]LYLSPHIPSP[`HUKLMÄJPLUJ`VM[OLUL[^VYR NaS Battery ¶:VKP\TZ\SWO\YIH[[LY`^P[OOPNOLULYN`KLUZP[`HUKOPNO LMÄJPLUJ`VMJOHYNLKPZJOHYNL[OH[YLX\PYLZOPNOVWLYH[PUN[LTWLYH[\YLZ Vanadium Redox Battery¶-SV^IH[[LY`^P[OKLLWJ`JSPUNSPML[OH[JHUIL TLJOHUPJHSS`YLM\LSLKHUKOHZSV^ULNH[P]LLU]PYVUTLU[HSPTWHJ[ Electric Auto Vehicle (EAV) Charging System ¶:`Z[LT[OH[HSSV^ZMVYWS\N PULSLJ[YPJ]LOPJSLZ[VILJOHYNLK\ZPUNWV^LYMYVT[OLNYPK Renewable Energy Access - Flexible Alternating Current Trasmission System (FACTS¶:`Z[LTJVTWYPZLKVMZ[H[PJLX\PWTLU[\ZLKMVY[OL alternating current transmission that is meant to enhance controllability and increase power transfer capability of the network

Green Building Solutions THE CHINA GREENTECH INITIATIVE PRIORITIZED 15 GREEN BUILDING SOLUTIONS for detailed L]HS\H[PVU MYVT HU VYPNPUHS SPZ[ VM ULHYS`  7YPVYP[PaLK ZVS\[PVUZ MHSS PU[V MV\Y JH[LNVYPLZ! ,ULYN` ,MÄJPLUJ` >H[LY ,MÄJPLUJ` 6W[PTPaLK 4H[LYPHSZ HUK *YVZZ (YLHZVS\[PVUZ

KEY FINDINGS FROM THE GREEN BUILDING SOLUTIONS EVALUATION ANALYSIS INCLUDE: „ HALF OF ALL SOLUTIONS HAVE HIGH TO VERY HIGH UNIT ENVIRONMENTAL IMPACT POTENTIAL. Solutions that offer very highLU]PYVUTLU[HSPTWHJ[PUJS\KL(K]HUJLK,U]LSVWL)\PSKPUN0U[LNYH[LK/LH[HUK7V^LY 7HZZP]L+LZPNU0U[LNYH[LK+LZPNUHUK:\Z[HPUHISL
74

THE CHINA GREENTECH REPORT 2009

www.china-greentech.com

EXISTING AND EMERGING SOLUTIONS

„ SOLUTIONS VARY BY ADDRESSABLE MARKET SIZE AND ONE THIRD OF ALL SOLUTIONS HAVE LARGE TO VERY LARGE MARKETS. (K]HUJLK,U]LSVWL3V^0TWHJ[4H[LYPHSZHUK9LJ`JSLK4H[LYPHSZ^LYLHSSL]HS\H[LK[VOH]Lvery large addressable THYRL[ZKYP]LUI`[OLSHYNLHTV\U[VMUL^I\PSKPUNJVUZ[Y\J[PVU[OH[[HRLZWSHJLPU*OPUHL]LY``LHY([[OLZHTL [PTL)\PSKPUN0U[LNYH[LK/LH[HUK7V^LYHUK9LZV\YJL:LY]PJL*VTWHUPLZZVS\[PVUZ^LYLLZ[PTH[LK[VOH]Llarge HKKYLZZHISLTHYRL[ZPaL^OPJOPZKYP]LUI`[OLYHWPKS`NYV^PUNÅVVYZWHJLPU*OPUHHUK[OLSV^L_PZ[PUNWLUL[YH[PVU VM[OLZLZVS\[PVUZ4VZ[V[OLYZVS\[PVUZ^LYLL]HS\H[LK[VOH]LTLKP\THKKYLZZHISLTHYRL[ZPaL „ EXCEPT FOR PLANNING AND DESIGN SOLUTIONS, NEARLY ALL GREEN BUILDING SOLUTIONS MARKETS ARE VIEWED AS MOSTLY OPEN. *OPUHJ\YYLU[S`SPTP[Z[OLZJVWLVMVWLYH[PVUZVMMVYLPNUI\PSKPUNKLZPNUÄYTZI`YLX\PYPUN[OLPU]VS]LTLU[VMSVJHS HYJOP[LJ[\YLKLZPNUHUKWSHUUPUNI\YLH\ZPUKLZPNUHWWYV]HSHUKKVLZUV[WLYTP[MVYLPNUJVUZ[Y\J[PVUÄYTZ;OPZ ZHPK L_JLW[ MVY 3VJHS :V\YJPUN HUK 9LZV\YJL :LY]PJL *VTWHUPLZ THYRL[Z MVY HSS V[OLY ZVS\[PVUZ HYL ]PL^LK HZ mostly open MVYMVYLPNUHUKWYP]H[LWHY[PJPWHU[Z0UWHY[PJ\SHY.YLLU+L]PJLZHUK:THY[)\PSKPUNZHTVUNV[OLYZHYL JVUZPKLYLK[VILHYLHZ^P[O[OLOPNOLZ[THYRL[HJJLZZPIPSP[`

Fig.9: GREEN BUILDING SECTOR SOLUTION EVALUATION MATRIX (1-5 Years) VERY HIGH

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Smart Buildings

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SOLUTION ATTRACTIVENESS (1-5 YEARS) BALL SIZE AND COLOR INTERPRETATION LEGEND: Size of the ball indicates addressable market size:

VERY LARGE

LARGE

MEDIUM

ENERGY EFFICIENCY SOLUTIONS

LIMITED MEDIUM

Ü

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www.china-greentech.com

Ü

LIMITED

Color of the ball indicates market accessibility:

MOSTLY OPENED

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Advanced Envelope¶0UJS\KLZPUZ\SH[PVU^PUKV^ZYVVÄUNHUKV[OLY WHZZP]LZVS\[PVUZLP[OLYPUZ[HSSLKTVYLHJJ\YH[LS`[OHU*OPUH»ZTHYRL[ JVU]LU[PVUVYJVTIPULK^P[OHJ[P]LZ`Z[LTZZ\JOHZTVPZ[\YLVY temperature sensors to enable reduced heat gain or loss Building-Integrated Heat and Power – Combination of heating and power generation solutions that could be integrated into a building, such as solar WOV[V]VS[HPJJLSSZ^PUK[\YIPULZHUKZVSHY^H[LYOLH[LYZ Green Devices¶,SLJ[YVUPJKL]PJLZ\ZLKPUZPKLI\PSKPUNZPUJS\KPUNSPNO[PUN solutions, appliances and consumer electronics that are more energy LMÄJPLU[[OHUJVU]LU[PVUHSHS[LYUH[P]LZ Smart Buildings¶)\PSKPUNZ[OH[YLS`VUPU[LNYH[LK0;IHZLKYLZV\YJL\ZL TLHZ\YLTLU[HUKTVUP[VYPUNPU[LSSPNLU[HUHS`ZPZVM[OLPU[LYUHSLU]PYVUTLU[HS and performance data, and automation of connected building systems Building-Integrated Rainwater Collection – System that collects and

THE CHINA GREENTECH REPORT 2009



ELECTRIC POWER INFRASTRUCTURE SOLUTIONS

Ü Ü

OPTIMIZED MATERIALS SOLUTIONS

Ü Ü Ü

CROSS-AREAS SOLUTIONS

Ü Ü Ü Ü

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76

stores rainwater from the rooftop of a building to be used locally Greywater Systems – Systems for the reuse of water generated from domestic processes such as dish washing, laundry and bathing for either indoor use or in irrigation Low-Flow Fixtures¶-H\JL[ZHUKV[OLY^H[LY\ZLZ`Z[LTZ[OH[\ZLSLZZ ^H[LY[OHUJVU]LU[PVUHSZ`Z[LTZI\[KLSP]LY[OLZHTLVYNYLH[LYILULÄ[[V[OL\ZLY Local Sourcing – Procurement and sourcing of building materials within the NLVNYHWOPJHSWYV_PTP[`VM[OLPYPU[LUKLK\ZL Low-Impact Materials – Building materials produced using less resources HUK[OH[NLULYH[LSLZZWVSS\[PVUJVTWHYLK[VJVU]LU[PVUHSI\PSKPUNTH[LYPHSZ V]LY[OLPYSPMLJ`JSL Recycled Materials – Building materials manufactured from materials that OH]LILLUYLJ`JSLK Comissioning and Efficient Operations – Assuring that all systems in a building are installed, tested, operated and maintained as originally intended Integrated Design – Approach that brings together all the stakeholders PU[OLI\PSKPUNWYVJLZZH[HULHYS`Z[HNL[VTH_PTPaLI\PSKPUNJVTMVY[HUK usability while minimizing resource use Passive Design¶)\PSKPUNKLZPNU[OH[[HRLZHK]HU[HNLVM[OLSVJHSJSPTH[L [VWYV]PKLZVTLVYHSSVM[OLOLH[PUNJVVSPUNSPNO[PUNHUK]LU[PSH[PVUULLKZ of the occupants Resource Service Companies ¶7YVMLZZPVUHSZLY]PJLJVTWHUPLZPUJS\KPUN ,ULYN`:LY]PJL*VTWHUPLZ,:*6Z[OH[WYV]PKLWYVQLJ[THUHNLTLU[ JVUZ\S[PUNLUNPULLYPUNÄUHUJPUNVWLYH[PVUHUKTHPU[LUHUJLZLY]PJLZ[OH[ reduce energy and water use in buildings Sustainable Urban Planning ¶
THE CHINA GREENTECH REPORT 2009

www.china-greentech.com

EXISTING AND EMERGING SOLUTIONS

Cleaner Transportation Solutions THE CHINA GREENTECH INITIATIVE SELECTED 18 CLEANER TRANSPORTATION SOLUTIONS for KL[HPSLKL]HS\H[PVU:VS\[PVUZ^LYLPKLU[PÄLKHJYVZZMV\YZLNTLU[Z!*SLHULY9VHK Transportation, Cleaner Rail Transportation, Cleaner Air Transportation and Clean LY>H[LY^H`;YHUZWVY[H[PVU

KEY FINDINGS FROM THE CLEANER TRANSPORTATION SOLUTIONS EVALUATION ANALYSIS INCLUDE: „ A LARGE MAJORITY OF SOLUTIONS HAVE VERY HIGH UNIT ENVIRONMENTAL IMPACT POTENTIAL AND SEVEN OF THESE ARE SIMULTANEOUSLY ATTRACTIVE TO ADOPTERS. (K]HUJLK.HZVSPULHUK+PLZLS0*,=LOPJSLZ*VTWYLZZLK5H[\YHS.HZ*5. HUK)PVL[OHUVS,HS[LYUH[P]LM\LSZ,SLJ[YPJ;^V>OLLSLYZ,>HUK(K]HUJLK+PLZLSHUK,SLJ[YPJ3VJVTV[P]LZ HSSOH]L[OLWV[LU[PHS[VHIH[L*62HUKV[OLYHPYWVSS\[PUNLTPZZPVUZYLSH[LK[V[OLJVTI\Z[PVUVMMVZZPSM\LSZI`V]LY  VUHWLY\UP[IHZPZ;OL`HYLH[[YHJ[P]L[VHKVW[LYZHZJVZ[ZHYLLP[OLYJVTWHYHISL[VVYSLZZ[OHUJVU]LU[PVUHS HS[LYUH[P]LZ*5.MVYL_HTWSLVY[OLM\LSZH]PUNZKLSP]LYLK[OYV\NOLMÄJPLUJ`NHPUQ\Z[PÄLZ[OLOPNOLY\WMYVU[JVZ[ „ ALTHOUGH HALF OF ALL SOLUTIONS ARE ATTRACTIVE TO ADOPTERS, MANY ARE STILL EMERGING OR DISADVANTAGED 0U HKKP[PVU[VZVS\[PVUZKLZJYPILKHIV]L6W[PTPaLK(PY;YHMÄJ4HUHNLTLU[HUK6W[PTPaLK>H[LY^H`6WLYH[PVUZHYL attractive-VY[OLZLZVS\[PVUZJVZ[ZH]PUNZMYVTM\LSLMÄJPLUJ`NHPUZKLSP]LYLKI`[OLPTWYV]LKTHUHNLTLU[UVYTHSS` V\[^LPNO [OL PU]LZ[TLU[ YLX\PYLK MVY P[Z VW[PTPaH[PVU ([ [OL ZHTL [PTL (K]HUJLK (PYJYHM[ (K]HUJLK :OPWZ HUK (K]HUJLK:OPW-\LSZHYLJVUZPKLYLK[VILemerging(U\TILYVMWYVTPZPUNZVS\[PVUZZ\JOHZ-\LS*LSS=LOPJSLZ -*=)H[[LY`,SLJ[YPJ=LOPJSLZ),=HUK*SLHULY(PYJYHM[-\LSZHYLZ[PSSdisadvantaged;OPZPZWYPTHYPS`K\L[V[OL LHYS`[LJOUVSVNPJHSTH[\YP[`HUKZ[PSSYLSH[P]LS`OPNOJVZ[VM[OLZLZVS\[PVUZ „ THE ADVANCED GASOLINE ICE VEHICLES AND THE THREE NEW ENERGY VEHICLE SOLUTIONS (BEV, FCV, HEV) HAVE VERY LARGE ADDRESSABLE MARKET SIZE. ;OPZPTWSPLZHKKYLZZHISLTHYRL[ZPaLVMV]LY<:IPSSPVUIPSSPVU`\HUWLY`LHYHUK PZKL[LYTPULKI`*OPUH»ZTV[VY]LOPJSLZTHYRL[^OPJOPZVULVM[OLSHYNLZ[PU[OL^VYSKI`[OLU\TILYVM\UP[ZZVSK HUKPZNYV^PUNYHWPKS`(U\TILYVMZVS\[PVUZ^LYLLZ[PTH[LK[VOH]Lmedium addressable market size in China, as ^P[O(K]HUJLK(PYJYHM[(K]HUJLK:OPWZHUKJSLHULYM\LSZZVS\[PVUZMVYHPYHUK^H[LY^H`[YHUZWVY[ „ WHILE MARKETS FOR NEARLY ALL ROAD SOLUTIONS ARE MOSTLY OPEN, IN THE CASE OF RAIL, AIR, AND WATERWAY TRANSPORTATION THE MAJORITY OF SOLUTIONS FACE LIMITED TO RESTRICTED MARKET ACCESSIBILITY. The majority of markets MVYYHPS^H`LX\PWTLU[HYLVWLU[VMVYLPNUWHY[PJPWH[PVU[OYV\NOQVPU[]LU[\YLZ^OPSLPUJHZLVM,SLJ[YPJ3VJVTV[P]LZ HUK 4\S[PWSL
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VERY LARGE

www.china-greentech.com

LARGE

MEDIUM

LIMITED MEDIUM

THE CHINA GREENTECH REPORT 2009

LIMITED

Color of the ball indicates market accessibility:

MOSTLY OPENED

LIMITED

RESTRICTED

77

CLEANER TRANSPORT SOLUTIONS

CLEANER ROAD TRANSPORTATION ADVANCED ICES

Ü

CLEANER ROAD TRANSPORTATION ALTERNATIVE FUELS

Ü

Ü

Ü

CLEANER ROAD TRANSPORTATION NEW ENERGY VEHICLE SOLUTIONS

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CLEANER RAIL TRANSPORTATION SOLUTIONS

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CLEANER AIR TRANSPORATION SOLUTIONS

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CLEANER WATERWAY TRANSPORTATION SOLUTIONS

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Advanced Diesel Internal Combustion Engine (ICE) Vehicle¶=LOPJSL ^P[OKPLZLS0*,[OH[PZTVYLM\LSLMÄJPLU[HUKWYVK\JLZSLZZLTPZZPVUZ[OHU JVU]LU[PVUHSTVKLSZ\ZLKPU*OPUH Advanced Gasoline Internal Combustion Engine (ICE) Vehicle¶=LOPJSL ^P[ONHZVSPUL0*,[OH[PZTVYLM\LSLMÄJPLU[HUKWYVK\JLZSLZZLTPZZPVUZ [OHUJVU]LU[PVUHSTVKLSZ\ZLKPU*OPUH Bioethanol (E10) ¶(TP_[\YLVMNHZVSPUL^P[OL[O`SHSJVOVSHWL[YVSL\T substitute produced from certain agricultural crops through a microbial Z\NHYMLYTLU[H[PVUWYVJLZZPUHJVTIPUH[PVU^OLYL  PZNHZVSPULHUK 10% is ethyl alcohol Compressed Natural Gas (CNG)¶-VZZPSM\LSZ\IZ[P[\[LMVYNHZVSPULKPLZLS or propane made by compressing natural gas which is then stored in special compressed gas cylinders Battery – Combination of electrochemical cells that store electric energy Battery Electric Vehicle (BEV)¶=LOPJSL[OH[JVTWSL[LS`YLSPLZVULSLJ[YPJP[` Z[VYHNLIH[[LYPLZHZHWV^LYZV\YJLHUKPZKYP]LUI`HULSLJ[YPJTV[VY Electric Two Wheelers (E2W) – Bikes and scooters equipped with a rechargeable battery and an electric motor used for propulsion Fuel Cell Vehicle (FCV)¶=LOPJSLWYVWLSSLKI`HULSLJ[YPJTV[VY\ZPUN electricity generated through a chemical process within a fuel cell, which YLX\PYLZO`KYVNLUM\LSHUKV_`NLUMYVT[OLHPYHZMLLKZ[VJR Hybrid Electric Vehicle (HEV)¶=LOPJSL[OH[JVTIPULZHUPU[LYUHS JVTI\Z[PVULUNPUL^P[OHULSLJ[YPJTV[VY[VKYP]L[OL]LOPJSLHUKYLSPLZVU gasoline or diesel and electricity storage batteries as power sources Advanced Diesel Locomotive ¶+PLZLSSVJVTV[P]L[OH[PZTVYLM\LSLMÄJPLU[ HUKWYVK\JLZSLZZLTPZZPVUZ[OHUJVU]LU[PVUHSTVKLSZ\ZLKPU*OPUH Electric Locomotive ¶3VJVTV[P]LWV^LYLKI`HULSLJ[YPJLUNPUL^OPJO \ZLZHULSLJ[YPJP[`ZV\YJLZ\JOHZHUV]LYOLHKSPUL[OPYKYHPSVYHUVU IVHYKLSLJ[YPJP[`Z[VYHNLKL]PJLYH[OLY[OHUMVZZPSM\LS[VTLL[P[ZLULYN` requirements Multiple Unit (MU) Train¶;YHPU[OH[YLSPLZUV[VUHSVJVTV[P]LI\[HZLYPLZ VMZLSMWYVWLSSPUNJHYYPHNLZJVU[YVSSLKMYVTVULJHIPUMVYP[ZWYVW\SZPVU Advanced Aircraft¶(PYJYHM[[OH[HYLTVYLM\LSLMÄJPLU[HUKWYVK\JLSLZZ LTPZZPVUZ[OHUJVU]LU[PVUHSTVKLSZ\ZLKPU*OPUH Cleaner Aircraft Fuels – Aircraft fuels that produce considerably less air LTPZZPVUZ[OHUJVU]LU[PVUHSHPYJYHM[M\LSZ^OPSLKLSP]LYPUNLX\HSVYIL[[LY performance Optimized Air Traffic Management ¶:L[VMWYVJLZZLZ[VHJOPL]L[OL OPNOLZ[WVZZPISLWYVK\J[P]P[`VM[OLHPYÅLL[HUKNYV\UKMHJPSP[PLZI` VW[PTPaPUNÅPNO[WSHUUPUNSVNPZ[PJZHUKHPY[YHMÄJTHUHNLTLU[^OPSL LUZ\YPUNZHML[`HUKJVU]LUPLUJLHUKTPUPTPaPUN[OLULNH[P]LPTWHJ[VU[OL LU]PYVUTLU[ Advanced Ships ¶:OPWZ[OH[HYLTVYLM\LSLMÄJPLU[HUKWYVK\JLSLZZ LTPZZPVUZ[OHUJVU]LU[PVUHSTVKLSZ\ZLKPU*OPUH Cleaner Ship Fuels – Ship fuels that produce less air emissions than JVU]LU[PVUHSZOPWM\LSZ^OPSLKLSP]LYPUNLX\HSVYIL[[LYWLYMVYTHUJL Optimized Wasterway Operations ¶:L[VMWYVJLZZLZ[VHJOPL]L[OL OPNOLZ[WVZZPISLWYVK\J[P]P[`VMZOPWZHUKYLSH[LKMHJPSP[PLZZ\JOHZWVY[Z I`VW[PTPaPUN^H[LY[YHMÄJWSHUUPUNSVNPZ[PJZHUK[YHMÄJTHUHNLTLU[^OPSL LUZ\YPUNZHML[`HUKJVU]LUPLUJLHUKTPUPTPaPUN[OLULNH[P]LPTWHJ[PVU[OL LU]PYVUTLU[

THE CHINA GREENTECH REPORT 2009

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EXISTING AND EMERGING SOLUTIONS

Cleaner Industry Solutions FROM THE 75 CLEANER INDUSTRY SOLUTIONS ORIGINALLY IDENTIFIED, [OL*OPUH.YLLU[LJO 0UP[PH[P]L WYPVYP[PaLK  MVY KL[HPSLK L]HS\H[PVU ;OL WYPVYP[PaLK ZVS\[PVUZ HWWS` [V T\S[PWSLPUK\Z[YPLZPUJS\KPUNOLH]`HUKSPNO[PUK\Z[YPLZHUKJHUILJH[LNVYPaLK PU[V MV\Y HYLHZ! ,ULYN` ,MÄJPLUJ` (PY  >H[LY 7VSS\[PVU 4P[PNH[PVU :VSPK >HZ[L 4HUHNLTLU[HUK*YVZZ(YLHZVS\[PVUZ

KEY FINDINGS FROM THE CLEANER INDUSTRY SOLUTIONS EVALUATION ANALYSIS INCLUDE: „ UNIT ENVIRONMENTAL IMPACT POTENTIAL VARIES GREATLY ACROSS SOLUTIONS. *VTIPULK/LH[HUK7V^LY*/7-S\L.HZ +LZ\SM\YPaH[PVU+L:6_-S\L.HZ+LUP[YH[PVU+L56_7HY[PJ\SH[L4H[[LY749LTV]HSHUK*HYIVU*HW[\YLHUK :LX\LZ[YH[PVU**:ZVS\[PVUZ^LYLPKLU[PÄLK[VOH]L[OLOPNOLZ[LU]PYVUTLU[HSPTWHJ[*/7TH`WYV]PKLHNHPUPU LULYN`LMÄJPLUJ`VMV]LY HUK[OLYLTHPUPUNZVS\[PVUZOH]L[OLWV[LU[PHS[VHIH[LV]LY VM[OLWVSS\[HU[Z[OL` [HYNL[6U[OLV[OLYOHUKZVS\[PVUZZ\JOHZ)HSHUJLVM7SHU[-\LS:^P[JOPUNHUK*VTPZZPVUPUNYLJLP]LKHUincremental mediumL]HS\H[PVUK\L[VSV^LYHS[OV\NOZ[PSSJVUZPKLYHISLLU]PYVUTLU[HSPTWHJ[PTWYV]LTLU[Z[OL`VMMLY „ MOST SOLUTIONS ARE ATTRACTIVE TO ADOPTERS. +L:6_HUK+L56_Z`Z[LTZHYLTHUKH[LK[OYV\NOYLN\SH[PVUPU OLH]`PUK\Z[YPLZHUK[OLYLMVYL^LYLHZZPUNLK[OLL]HS\H[PVUVMHK]HU[HNLK4HUHNLTLU[[LJOUPX\LZZ\JOHZ:[HUKHYK 6WLYH[PUN7YVJLK\YLZ:67Z;YHPUPUNHUK-LLKIHJRHYLZ[HUKHYKWYHJ[PJLHS[OV\NOUV[`L[HWWSPLK\UP]LYZHS`PU *OPUHHUK^LYLHSZVL]HS\H[LKHZ HK]HU[HNLK,ULYN`LMÄJPLUJ`ZVS\[PVUZZ\JOHZ*/7,ULYN`,MÄJPLU[4V[VYZ and Balance of Plant are technologically mature and economically feasible on life cycle basis, despite higher upfront JVZ[ZJVTWHYLK[VJVU]LU[PVUHSHS[LYUH[P]LZHUKHYLJVUZPKLYLKattractive „ CCS AND CHP SYSTEMS ARE ESTIMATED TO HAVE THE LARGEST ADDRESSABLE MARKET SIZE. ;OPZ PZ KYP]LU I` [OL SHYNL HTV\U[ VM UL^ PUK\Z[YPHS JVUZ[Y\J[PVU [OH[ PZ WYVQLJ[LK [V [HRL WSHJL PU *OPUH HZ ^LSS HZ [OL WV[LU[PHS [V YL[YVÄ[ L_PZ[PUNMHJPSP[PLZ;OLZL[^VZVS\[PVUZHYLMVSSV^LKI`TVZ[UV[HIS`+L:6_+L56_HUK749LTV]HSZ`Z[LTZ ^OPJOOH]LmediumHKKYLZZHISLTHYRL[ZPaL;OPZPZKL[LTPULKI`[OLTHU`PUK\Z[YPHSZP[LZ[OH[HYLYLX\PYLK[VPUZ[HSS [OLZLZVS\[PVUZHUK[OLPYJ\YYLU[YLSH[P]LS`SV^THYRL[WLUL[YH[PVU(U\TILYVMZVS\[PVUZ^LYLL]HS\H[LK[VOH]L SPTP[LK[VSPTP[LKTLKP\THKKYLZZHISLTHYRL[ZPaL „ MARKETS FOR NEARLY ALL SOLUTIONS ARE CONSIDERED TO BE MOSTLY OPEN TO PRIVATE AND FOREIGN PLAYERS. The four THYRL[ZWLYJLP]LK[VOH]LlimitedHJJLZZPIPSP[`K\L[VNYLH[LYNV]LYUTLU[JVU[YVSHYL7YVJLZZ9LKLZPNU-VZZPS-\LS :^P[JOPUN0UK\Z[YPHS>HZ[L^H[LYHUK**:0[PZUV[L^VY[O`[OH[K\L[VLHYS`TH[\YP[`VM**:[OLYLHYLML^VMÄJPHS WVSPJPLZVU^OL[OLYPU[LYUH[PVUHSJVVWLYH[PVU^PSSILLUJV\YHNLKVYYLZ[YJ[LK/V^L]LYNP]LU[OLPTWVY[HUJLHUK ZHML[`JVUJLYUZHZZVJPH[LK^P[O**:[OL[LJOUVSVN`^PSSSPRSL`YLTHPU\UKLYJSVZLNV]LYUTLU[Z\WLY]PZPVUPU*OPUH

Fig.11: CLEANER INDUSTRY SECTOR SOLUTION EVALUATION MATRIX (1-5 Years) VERY HIGH

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ATTRACTIVE

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SOLUTION ATTRACTIVENESS (1-5 YEARS) BALL SIZE AND COLOR INTERPRETATION LEGEND: Size of the ball indicates addressable market size:

VERY LARGE

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LARGE

MEDIUM

LIMITED MEDIUM

THE CHINA GREENTECH REPORT 2009

LIMITED

Color of the ball indicates market accessibility:

MOSTLY OPENED

LIMITED

RESTRICTED



CLEANER INDUSTRY SOLUTIONS

EFFICIENT ENERGY SOLUTIONS

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AIR AND WATER POLLUTION MITIGATION SOLUTIONS

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SOLID WASTE MANAGEMENT SOLUTIONS

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CROSS-AREA SOLUTIONS

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Balance of Plant 6W[PTPaH[PVUVMHWSHU[»ZLX\PWTLU[HPTLKH[TH_PTPaPUN LULYN`HUK^H[LYLMÄJPLUJ`HUKTPUPTPaPUNWVSS\[PVUHUK^HZ[L Combined Heat and Power (CHP) :`Z[LT[OH[ZPT\S[HULV\ZS`NLULYH[LZ electricity and usable heat by capturing heat that would normally be lost Energy Efficient Motors ,SLJ[YPJTV[VYZ[OH[HYLTVYLLULYN`LMÄJPLU[[OHU JVU]LU[PVUHSTVKLSZJ\YYLU[S`\ZLKPU*OPUH Carbon Capture and Sequestration (CCS) :`Z[LT[OH[JHW[\YLZJHYIVU KPV_PKLMYVTMVZZPSM\LSLP[OLYWYPVY[VVYHM[LYJVTI\Z[PVUHUKZLX\LZ[LYZP[ for long term storage underground Flue Gas Denitration (De-NOx) :`Z[LT[OH[YLTV]LZUP[YVNLUV_PKLZMYVT Å\LNHZ Flue Gas Desulferization (De-SOx) :`Z[LT[OH[YLTV]LZZ\SM\YV_PKLZ MYVTÅ\LNHZ Fuel Switching (IPSP[`[VTHRL\ZLVMHS[LYUH[P]LM\LSZLP[OLYI`\ZPUN multiple fuels simultanously or by switching between fuels Industrial Wastewater System :`Z[LTZ\ZLKH[PUK\Z[YPHSZP[LZ[V[YLH[ ^H[LYHM[LY\ZLWYPVY[VLP[OLYYL\ZLVYYLSLHZLPU[V[OLUH[\YHSLU]PYVUTLU[ Particulate Matter (PM) Removal System (:`Z[LT[OH[YLTV]LZ WHY[PJ\SH[LTH[[LY¶OHYTM\SÄULWHY[[PJSLZ¶MYVTÅ\LNHZ Incineration Energy Recovery >HZ[L[VLULYN`ZVS\[PVU[OH[NLULYH[LZ power from the combustion of solid waste Waste Separation and Off-take :VY[PUNVMZVSPK^HZ[LH[[OLPUK\Z[YPHS MHJPSP[`[VHZZPZ[P[ZL_JOHUNLYLJ`JSPUNPUJPULYH[PVUVYKPZWVZHS Commissioning 7YVJLZZVMHZZ\YPUN[OH[HSSZ`Z[LTZH[[OLPUK\Z[YPHS object are installed, tested, operated and maintained as originally intentended Environmental Management System (EMS) and IT Systems *VTWYLOLUZP]LZ`Z[LTH[PJKVJ\TLU[LKTHUHNLTLU[VMHUVYNHUPaH[PVU»Z LU]PYVUTLU[HSWYVNYHTZ[OH[YLS`VU0;ZVS\[PVUZMVYLMMLJ[P]LVWLYH[PVU Process-Redesign 9LKLZPNUVM[OLVWLYH[PVU^P[O[OLW\YWVZLVM PUJYLHZPUNYLZV\YJL\ZLLMÄJPLUJ`HUKTPUPTPaPUNWVSS\[PVU Standard Operating Procedures (SOPs), Training, Feedback - Collection VMTHUHNLTLU[[VVSZKLZPNULK[VPTWYV]L[OLLMÄJPLUJ`VMLTWSV`LLZHZ ^LSSHZ[OLLMMLJ[P]LULZZVM[OLTHUHNLU[H[HUPUK\Z[YPHSZP[L

THE CHINA GREENTECH REPORT 2009

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EXISTING AND EMERGING SOLUTIONS

Clean Water Solutions THE CHINA GREENTECH INITIATIVE PRIORITIZED 12 SOLUTIONS FOR DETAILED EVALUATION FROM AN ORIGINAL LIST OF 75. 7YPVYP[PaLK ZVS\[PVUZ MHSS PU[V MV\Y IYVHK JH[LNVYPLZ! >H[LY:\WWS`>H[LY7VSS\[PVU;YLH[TLU[>H[LY
KEY FINDINGS FROM THE CLEAN WATER SOLUTIONS EVALUATION ANALYSIS INCLUDE: „ SOLUTIONS COVER A WIDE RANGE OF UNIT ENVIRONMENTAL IMPACT POTENTIAL. 7YPTHY`;YLH[TLU[HUK0TWYV]LK0YYPNH[PVU ZVS\[PVUZ OH]L [OL OPNOLZ[ L]PYVUTLU[HS PTWHJ[ ;OPZ PZ K\L [V [OLPY YVSL PU YLTV]PUN [OL OPNOLZ[ WLYJLU[HNL VM WVSS\[PVUMYVT[OL^H[LYPU[OL[YLH[TLU[WYVJLZZ[V[OLPYHIPSP[`[VZPNUPÄJHU[S`JVUZLY]L^H[LYPUPYYPNH[PVU^OPJO WYLZLU[Z HU HYLH VM NYLH[ PTWYV]LTLU[ WV[LU[PHS PU *OPUH 0U JVTWHYPZVU ;LY[PHY` ;YLH[TLU[ ;LJOUVSVNPLZ HUK (K]HUJLK+PZ[YPI\[PVU4H[LYPHSZHUK*VTWVULU[ZZVS\[PVUZOH]LJVTWHYH[P]LS`SV^LYLU]PYVUTLU[HSPTWHJ[K\L[V [OLPYYLSH[P]LS`PUJYLTLU[HSI\[UL]LY[OLSLZZZ[PSSPTWVY[HU[YVSLPUTP[PNH[PUNULNH[P]LPTWHJ[VU[OLLU]PYVUTLU[ „ HALF OF THE ANALYZED SOLUTIONS ARE ATTRACTIVE TO ADOPTERS. ,_[YHJ[PVU :VS\[PVUZ :LJVUKHY` ;YLH[TLU[ 3V^ -SV^ -P_[\YLZ 7VPU[VMH[LY9L\ZLHYLHSSJVUZPKLYLKattractive(SSVM[OLZLZVS\[PVUZLP[OLYJVUZLY]LZ\MÄJPLU[ HTV\U[ VM ^H[LY V]LY [OL SPML J`JSL [V Q\Z[PM` [OL \WMYVU[ PU]LZ[TLU[ VY KLSP]LY ILULÄ[Z H[ YLHZVUHISL JVZ[Z MVY HKVW[LYZ[VHJ[P]LS`ZLLR[OLTV\[7YPTHY`;YLHTLU[PZJVUZPKLYLK[VILadvantaged due to its standard use in the PUK\Z[Y`PU*OPUH „ ONE THIRD OF THE SOLUTIONS HAVE LARGE ADDRESSABLE MARKET SIZE. +LZHSPUH[PVU 7YPTHY` ;YLH[TLU[ :S\KNL ;YLH[TLU[HUK+PZWVZHSHUK0UK\Z[YPHS>H[LY9L\ZLZVS\[PVUZHYLLZ[PTH[LK[VOH]LlargeHKKYLZZHISLTHYRL[Z;OL HKKYLZZHISLTHYRL[ZPaLPZKYP]LUI`[OLULLKMVYYLSPHISLZV\YJLZVM^H[LYPU[OLJHZLVM+LZHSPUH[PVUHUKI`*OPUH»Z J\YYLU[Z[YH[LN`[VKLWSV`^H[LY[YLH[TLU[MHJPSP[PLZ[OYV\NOV\[[OLJV\U[Y`PU[OLJHZLVM[OLV[OLY[OYLLZVS\[PVUZ 6U[OLV[OLYOHUK;LY[PHY`;YLH[TLU[;LJOUVSVNPLZHYLLZ[PTH[LK[VOH]LH limited addressable market size due to [OLMHJ[[OH[ML^MHJPSP[PLZYLX\PYLZ\JO[YLH[TLU[ „ COMPONENT SOLUTIONS FACE MOSTLY OPEN AND SYTEMS SOLUTIONS FACE LIMITED ACCESSIBILITY MARKETS. Component ZVS\[PVUZZ\JOHZ3V^-SV^-P_[\YLZ4VUP[VYPUNHUK4LHZ\YLTLU[:VS\[PVUZHUK(K]HUJLK+PZ[YPI\[PVU4H[LYPHSZ and Components, face markets that are considered mostly open[VWYP]H[LHUKMVYLPNUWSH`LYZ4VZ[VM[OLV[OLY ZVS\[PVUZHYLZ`Z[LTZZVS\[PVUZZ\JOHZ+LZHSPUH[PVU7YPTHY`;YLH[TLU[HUK:S\KNL;YLH[TLU[HUK+PZWVZHSMVY ^OPJOTHYRL[ZHYLJVUZPKLYLK[VOH]L limited HJJLZZPIPSP[`K\L[VZPNUPÄJHU[NV]LYUTLU[JVU[YVSHUKZ[YVUNWYLZLUJL VM :6,Z PU [OL ZLJ[VY ;OL ,_[YHJ[PVU :VS\[PVUZ THYRL[ PZ JVUZPKLYLK [V IL restricted HZ [OL NV]LYUTLU[ JSVZLS` YLN\SH[LZP[PUWHY[K\L[V[OLYPZRVMTPZTHUHNPUN\UKLYNYV\UK^H[LYYLZLY]VPYZ

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THE CHINA GREENTECH REPORT 2009



CLEAN WATER SOLUTIONS

0TWYV]LK0YYPNH[PVU

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INCREMENTAL INCREMENTAL MEDIUM HIGH MEDIUM

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Fig.12: CLEAN WATER SECTOR SOLUTION EVALUATION MATRIX (1-5 Years)

Primary Treatment

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Tertiary Treatment

UNAVAILABLE

DISADVANTAGED

EMERGING

ATTRACTIVE

ADVANTAGED

SOLUTION ATTRACTIVENESS (1-5 YEARS) BALL SIZE AND COLOR INTERPRETATION LEGEND: Size of the ball indicates addressable market size:

Color of the ball indicates market accessibility:

VERY LARGE

MOSTLY OPENED

SUPPLY SOLUTIONS

LARGE

MEDIUM

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POLLUTION TREATMENT SOLUTIONS

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WATER-USE EFFICIENCY SOLUTIONS

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LIMITED

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Extraction Solutions :VS\[PVUZ[OH[OLSWSVJH[LHJJLZZHUKL_[YHJ[^H[LYMYVT\UKLY ground sources Desalination 7YVJLZZ[OH[YLTV]LZZHS[HUKV[OLYTPULYHSZMYVTZHSPUL^H[LYZ\JOHZ sea water, in order to make it suitable for human consumption or irrigation Secondary Treatment Solutions :VS\[PVUZ[OH[Z\IZ[HU[PHSS`YLTV]L[OLIPVSVNPJHS JVU[LU[VMZL^HNLPUJS\KPUNKLYP]H[LZVMO\THU^HZ[LMVVK^HZ[LZVHWZHUKKL[LYNLU[ Sludge Treatment and Disposal :VS\[PVUZPUJS\KPUNKL^H[LYPUNSHUKÄSSZ[VYHNLHUK MLY[PSPaLYJVU]LYZPVU[OH[[YLH[ZS\KNLNLULYH[LKMYVT^HZ[L^H[LY[YLH[TLU[[VYLTV]L usable substances and properly dispose of residual wastes Tertiary Treatment Solutions:VS\[PVUZ[OH[WYV]PKLHÄUHS[YLH[TLU[[VYHPZL[OL LMÅ\LU[X\HSP[`VM[OL^H[LYILMVYLP[PZKPZJOHYNLKPU[V[OLYLJLP]PUNLU]PYVUTLU[ Improved Irrigation 0YYPNH[PVUZVS\[PVUZZ\JOHZZWYPURSLYVYKYPWPYYPNH[PVU[OH[\ZL ^H[LYTVYLLMÄJPLU[S`[OHU*OPUH»ZJVU]LU[PVUHSPYYPNH[PVUTL[OVKZ^P[OLX\HSVYNYLH[LY ILULÄ[[V[OL\ZLY Low-Flow Fixtures -H\JL[ZHUKV[OLY^H[LY\ZLZ`Z[LTZ[OH[\ZLSLZZ^H[LY[OH[ JVU]LU[PVUHSZ`Z[LTZI\[KLSP]LY[OLZHTLVYNYLH[LYILULÄ[[V[OL\ZLY

MULTI-USE SOLUTIONS Ü Advanced Distribution Materials and Components 7PWLZ]HS]LZHUKUVaaSLZ[OH[

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are used to transport water, primarily between treatment plants and usage points that HYLOPNOLYX\HSP[`HUKVYHYLTVYLZVWOPZ[PJH[LKHUKYLWYLZLU[SV^LYYPZRVMSLHRHNL[OHU JVU]LU[PVUHSTVKLSZ Industrial Water Reuse 7YVJLZZ^OLYLI`JLY[HPUWVSS\[HU[ZHYLYLTV]LKMYVTPUK\Z[YPHS wastewater so that the water can be recycled for further uses at the same site Monitoring and Measurement Solutions :VS\[PVUZ[OH[[YHJR[OLJVTWVZP[PVUVY]VS\TLZ VM^H[LYÅV^ZPUUH[\YHS^H[LYZV\YJLZ^H[LYKPZ[YPI\[PVUZ`Z[LTZ^H[LY[YLH[TLU[WSHU[ZVY \ZLYWYLTPZLZ^OPJOHYLVM[LUPU[LNYH[LK^P[O0;HUKVY.7:[LJOUVSVNPLZ Point-of-Use Solutions >H[LYTVUP[VYPUNVY[YLH[TLU[ZVS\[PVUZ[OH[HYLPUZ[HSSLKH[ the point where water is actually used, such as apartments, commercial and industrial facilities Primary Treatment Solutions :VS\[PVUZ\ZLKWYPTHYPS`H[[OLZLKPTLU[H[PVUZ[HNL where the solids are separated from the wastewater stream

THE CHINA GREENTECH REPORT 2009

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83

CHINA’S

GREENTECH DEVELOPMENT CHALLENGES

84

THE CHINA GREENTECH REPORT 2009

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CHINA’S GREENTECH DEVELOPMENT CHALLENGES

While China’s greentech market opportunities are attractive, there are still hurdles that must be addressed in order to achieve the vision of an environmentally sustainable China. THE CHINA GREENTECH INITIATIVE’S PARTNERS AND STRATEGIC ADVISORS believe that greentech markets in China represent attractive opportunities, and are optimistic that market conditions will become even more favorable over time. In the spirit VM\UJV]LYPUNNYLLU[LJOZVS\[PVUZ[OL0UP[PH[P]LPKLU[PÄLKRL`THYRL[JOHSSLUNLZ ^OPJOPMV]LYJVTL^V\SKLUHISLHUKHJJLSLYH[L[OL]PZPVUVMHULU]PYVUTLU[HSS` Z\Z[HPUHISL *OPUH 4HU` VM [OLZL HYL ZPTPSHY [V [OVZL VM V[OLY JV\U[YPLZ ^OPSL ZVTLHYL*OPUHZWLJPÄJ;OPZJOHW[LYV\[SPULZ^OH[[OLZLJOHSSLUNLZHYL^OPSL the following chapter highlights opportunities stakeholders have to accelerate greentech markets in China. In order for China to continue its rapid economic development while preserving the health of its citizens, conserving the natural environment for future generations HUK ZVSPKPM`PUN P[Z Z[H[\Z HZ HU PU[LYUH[PVUHS SLHKLY P[ OHZ [OL VWWVY[\UP[` [V LTIYHJL UL^ HWWYVHJOLZ [V JSLHU LULYN` NLULYH[PVU WVSS\[PVU TP[PNH[PVU HUK [OLLMÄJPLU[\ZLVMYLZV\YJLZ;OL0UP[PH[P]LPKLU[PÄLKJOHSSLUNLZ[OH[T\Z[IL HKKYLZZLKVYNHUPaLKPU[VMV\YTHQVYJH[LNVYPLZ¶THYRL[[LJOUVSVN`ÄUHUJPUN HUK YLN\SH[VY` ¶ HZ ZOV^U PU -PN\YL   >OLYL ZWLJPÄJ JOHSSLUNLZ JVYYLZWVUK [VT\S[PWSLJH[LNVYPLZ[OL`OH]LILLUWSHJLKPU[OLJH[LNVY`[OH[TVZ[JSVZLS` describes their impact on China’s greentech market development. (KL[HPSLKHUHS`ZPZVM[OLJOHSSLUNLZMHJPUNPUKP]PK\HSNYLLU[LJOZLJ[VYZPZPUJS\KLK in the full report.

Fig.1: CHINA’S KEY GREENTECH DEVELOPMENT CHALLENGES

MARKET

„Inadequate awareness about greentech solutions „Underdeveloped value chains „Highly-concentrated markets

TECHNOLOGY

„More expensive than conventional alternatives „Lacks adaptation to China’s specific market requirements „Intellectual property and technology transfer issues

FINANCING

„Fewer financing options „Financing practices lack synergy with greentech requirements

REGULATORY

„Complex regulatory environment „Developing policy incentives „Uneven compliance with existing policies „Limited policy visibility

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Market Challenges MARKET CHALLENGES IN CHINA CONSTRAIN THE ABILITY OF SOLUTION PROVIDERS to deliver green products and services, and limit market demand for greentech solutions.

„ INADEQUATE AWARENESS ABOUT GREENTECH SOLUTIONS 3PTP[LK RUV^SLKNL VM [OL H]HPSHIPSP[` HUK ILULÄ[Z VM NYLLU[LJO ZVS\[PVUZ JH\ZLZ HKVW[LYZHUKLUK\ZLYZPU*OPUH[VJVU[PU\L\ZPUNJVU]LU[PVUHSWYHJ[PJLZSHYNLS` K\L[VTPZJVUJLW[PVUZHIV\[NYLLU[LJOILULÄ[Z,UK\ZLYZVM[LUZ[PSSZLLNYLLU[LJO HZHUPUJYLTLU[HSJVZ[YH[OLY[OHUHWV[LU[PHSILULÄ[HUKTH`UV[\UKLYZ[HUKOV^ [OLPYJVUZ\TW[PVUVMJVU]LU[PVUHSHS[LYUH[P]LZPTWHJ[Z[OLLU]PYVUTLU[,SLJ[YPJP[` consumers, for example, do not realize the connection between their consumption HUK*OPUH»ZJVHSIHZLKLSLJ[YPJP[`NLULYH[PVUHUK[OLHZZVJPH[LKNYV^PUNSL]LSZVM air pollution, related illnesses and long-term climate change risks. 7V[LU[PHSHKVW[LYZTH`HSZVILSPL]L[OH[NYLLU[LJOUVSVNPLZJVZ[TVYL[OHU[OL` HJ[\HSS`KVHZWLYJLW[PVUZHYLIHZLK\WVUOPZ[VYPJHSYH[OLY[OHUJ\YYLU[WYPJLZ -VY L_HTWSL JVZ[Z [V HKVW[ ZVSHY WV^LY [LJOUVSVNPLZ OH]L MHSSLU ZPNUPÄJHU[S` PUYLJLU[`LHYZK\L[VPUJYLHZLKJVTWL[P[PVUTHU\MHJ[\YPUNZJHSLHUKWYVJLZZ PUUV]H[PVU"OV^L]LYI\`LYZZ[PSSWLYJLP]LWYPJLZHZWYVOPIP[P]L:VTLNYLLU[LJO ZVS\[PVUZHYLL]LUILJVTPUNJVZ[ULNH[P]LV]LY[OLPYSPMLJ`JSLZWHY[PJ\SHYS`PM[OL HZZ\TW[PVUVMYPZPUN\[PSP[`JVZ[ZPZPUJS\KLKPU[OLW\YJOHZLHUHS`ZPZ Another aspect of the awareness challenge is the limited knowledge adopters OH]L VM *OPUH»Z NYLLU[LJO KPZ[YPI\[PVU JOHUULSZ -VY L_HTWSL ^OPSL WV[LU[PHS HKVW[LYZTH`ILH^HYLVMHUKKLZPYLNYLLU[LJOZVS\[PVUZ[OL`VM[LUKVUV[RUV^ where to purchase them.

„ UNDERDEVELOPED VALUE CHAINS
„ HIGHLY-CONCENTRATED MARKETS ;OLOPNOSL]LSZVMJVUJLU[YH[PVUPUZVTLVM*OPUH»ZNYLLU[LJOTHYRL[ZYLZ\S[PU KLJYLHZLKJVTWL[P[PVU^OPJOJHUWV[LU[PHSS`KLJYLHZLLMÄJPLUJ`HUKPUUV]H[PVU HTVUNZ[ JVTWHUPLZ .YLLU[LJO THYRL[Z MYLX\LU[S` PKLU[PÄLK HZ OPNOS` concentrated or state-dominated include, for example, China’s electrical power NYPKZZVTL[`WLZVMJVU]LU[PVUHSHUKYLUL^HISLWV^LYNLULYH[PVUHUKJLY[HPU elements of the railroad transportation value chain. 1 2

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;OLYLHYLHML^NVVKYLHZVUZMVYTHPU[HPUPUNJLU[YHSPaLKJVU[YVSV]LY*OPUH»Z NYLLU[LJOTHYRL[Z:PUJLLULYN`ZLJ\YP[`PZHRL`WVSPJ`JVUJLYUWVSPJ`THRLYZ ^V\SKWYLMLY[VZLLSLZZYLSPHUJLVULULYN`PTWVY[Z)LJH\ZL*OPUHPZHSYLHK`OPNOS` KLWLUKLU[VUWL[YVSL\TPTWVY[Z[OL*OPULZLNV]LYUTLU[PZJ\YYLU[S`I\PSKPUN\W P[ZYLZLY]LZHUKKP]LYZPM`PUN[OLJV\U[Y`»ZLULYN`TP_:LJ\YP[`PZHSZVHYLHZVUMVY *OPUH[VILJVUJLYULKHIV\[^OVOHZHJJLZZ[VLULYN`Z\WWS`NLULYH[PVUHUK PUMYHZ[Y\J[\YL4HYRL[L_WLY[ZZ\NNLZ[[OH[ZVTLWVSPJ`THRLYZHSZVHYLILNPUUPUN [V X\LZ[PVU [OL ZLJ\YP[` PTWSPJH[PVUZ VM ^PKLZWYLHK MVYLPNU PU]VS]LTLU[ PU [OL operation of China’s water infrastructure. (UV[OLYMYLX\LU[S`JP[LKYH[PVUHSLMVYZ\WWVY[PUNOPNOS`JVUJLU[YH[LKTHYRL[Z PU*OPUHHUKLSZL^OLYLPZ[OLPKLH[OH[THU`NYLLU[LJOTHYRL[ZYLWYLZLU[UH[\YHS TVUVWVSPLZ ^OLYL OPNO JHWP[HS VY PU[LYVWLYHIPSP[` YLX\PYLTLU[Z YLX\PYL Z[YVUN ÄYTZVWLYH[PUNH[ULHY\UP]LYZHSZJHSLZ0UMYHZ[Y\J[\YLTHYRL[ZOH]L[YHKP[PVUHSS` ILLUPKLU[PÄLKHZUH[\YHSTVUVWVSPLZHUK[OPZYH[PVUHSLOHZILLU\ZLKPU*OPUH with respect to transportation infrastructure, electrical power grids and large-scale water diversion projects. :PTWSPÄLK YLN\SH[VY` JVTWSPHUJL TVUP[VYPUN HUK LUMVYJLTLU[ PZ HU HYN\TLU[ MVYJVUJLU[YH[LKTHYRL[Z^P[OZ[YVUN[PLZ[V[OLNV]LYUTLU[-VYL_HTWSLJSVZL YLSH[PVUZOPWZJ\YYLU[S`L_PZ[IL[^LLU[OLNV]LYUTLU[HUK*OPUH»ZYLSH[P]LS`ZTHSS U\TILY VM JVHSIHZLK WV^LY NLULYH[VYZ ;OLZL YLSH[PVUZOPWZ OLSW [OL ÄYTZ [V \UKLYZ[HUK *OPUH»Z PUJYLHZPUNS`Z[YPUNLU[ UP[YV\ZV_PKL LTPZZPVUZ YLX\PYLTLU[Z HUK KYP]L [OLT [V PU]LZ[ PU ZVS\[PVUZ [V TLL[ \WJVTPUN Z[HUKHYKZ ;OLZL YLSH[PVUZOPWZ TH` HSZV TLHU [OH[ ÄYTZ HYL HISL [V HU[PJPWH[L HUK WYLWHYL MVY YLN\SHYHUKL]LUºYHUKVT»LTPZZPVUZPUZWLJ[PVUZ4LHU^OPSLPU*OPUH»ZOPNOS` fragmented real estate development market, as is the case in other countries, LUMVYJPUN I\PSKPUN LULYN` LMÄJPLUJ` Z[HUKHYKZ PZ H KPMÄJ\S[ HUK JVZ[S` LUKLH]VY K\L[V[OLKP]LYZP[`VMVYNHUPaH[PVUZPU]VS]LK ;OLILULÄ[ZVM*OPUH»ZJVUJLU[YH[LKHUKZ[H[LKVTPUH[LKNYLLU[LJOTHYRL[Z HYL VMMZL[ I` WVVY PUJLU[P]LZ" SHJR VM JVTWL[P[PVU YLK\JLZ LMÄJPLUJPLZ HUK PUUV]H[PVU[OH[JVTLMYVTVWLUHUKJVTWL[P[P]LTHYRL[Z;OLJOHSSLUNLMVYHU` nation, including China, is to know how and when to strike a balance between these two sides. China has utilized competitive pressures to achieve balance in its [LSLJVTT\UPJH[PVUZHUKIHURPUNZLJ[VYZPU[OLWHZ[HUKUV^OHZ[OLVWWVY[\UP[` to do the same in greentech. +VTPUHU[THYRL[WSH`LYZWHY[PJ\SHYS`Z[H[LJVU[YVSSLKLU[P[PLZOH]LOPZ[VYPJHSS` LUQV`LKYLSH[P]LS`LHZ`HJJLZZ[VJHWP[HS^OPJOZVTL[PTLZKPZJV\YHNLKLMÄJPLU[ LJVUVTPJWYHJ[PJLZ*OPUH»Zº)PN»JVTTLYJPHSIHURZ(NYPJ\S[\YHS)HURVM*OPUH )HURVM*OPUH*OPUH*VUZ[Y\J[PVU)HURHUK0UK\Z[YPHSHUK*VTTLYJPHS)HURVM *OPUH OH]L VJJHZPVUHSS` ILLU Z\IQLJ[ [V WVSPJ`KPYLJ[LK SLUKPUN ,]LU [OV\NO [OL`HWWLHY[VOH]LILJVTLTVYLKPZJPWSPULKPUYLJLU[`LHYZ^P[OUVUWLYMVYTPUN SVHUYH[PVZKYVWWPUNMYVTULHYS` PU[V\UKLY PUWVSPJ`KPYLJ[LK SLUKPUNJVU[PU\LZHUKZL]LYHSTHYRL[HUHS`Z[ZZ\NNLZ[[OH[[OLZLUVUWLYMVYTPUN SVHUZHYLJ\YYLU[S`VU[OLYPZL3 ;OLYL HYL JPYJ\TZ[HUJLZ \UKLY ^OPJO WVSPJ` SLUKPUN TH` UV[ PU P[ZLSM IL IHK MVY[OLKL]LSVWTLU[VMTHYRL[Z-VYL_HTWSL*OPUH»ZKPYLJ[LKSLUKPUNZ[YH[LN` under its current economic stimulus plan is expected to be a considerable driver VM SVJHS NYLLU[LJO THYRL[Z 0[ PZ PTWVY[HU[ OV^L]LY MVY WVSPJ` JVUJLYUZ UV[ [V override commercial risk considerations in order to channel funding to the most LJVUVTPJHSS`ILULÄJPHS\ZLZ :PUJL TVZ[ NYLLU[LJO THYRL[Z YLS` VU YLSH[P]LS` UL^ HUK YHWPKS` JOHUNPUN [LJOUVSVNPLZ SPTP[PUN JVTWL[P[PVU JHU ULNH[P]LS` PTWHJ[ [OL KL]LSVWTLU[ VM LMÄJPLU[HUKPUUV]H[P]LZVS\[PVUZ-VYL_HTWSLPU*OPUH»ZLHYS`W\ZO[VWYVTV[L wind power, regulators used policies to direct China’s existing conventional LULYN` NLULYH[PUN LU[LYWYPZLZ PU[V [OL ^PUK ZLJ[VY `L[ L_JS\KLK MVYLPNU ^PUK farm developers from national concession projects and limited the extent to which MVYLPNU[\YIPULTHU\MHJ[\YLYZJV\SKZ\WWS`UH[PVUHSWYVQLJ[Z>OPSL[OPZHWWYVHJO TH`OH]LLUHISLK*OPUH[VI\PSK\WP[ZPUMYHZ[Y\J[\YLYHWPKS`^P[OH]PL^[V^HYKZ 3

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Stratfor, “China: Renewed Risk of China NPLs,” January 19, 2009, http://www.stratfor.com/

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VW[PTPaPUNP[ZVWLYH[PVUZPU[OLM\[\YLP[JVU[YPI\[LK[V*OPUH»ZLHYS`^PUKMHYTZ ILPUNSLZZLMÄJPLU[HUKYLX\PYPUNOPNOLYVUNVPUNTHPU[LUHUJLJVZ[Z[OHU[OVZLPU other countries.

Technology Challenges TECHNOLOGY CHALLENGES ARE SLOWING THE DEVELOPMENT AND APPLICATION of greentech solutions in China, hindering the widespread adoption of solutions that meet the cost and feature requirements of potential adopters.

„ MORE EXPENSIVE THAN CONVENTIONAL ALTERNATIVES >OPSLNYLLU[LJOZVS\[PVUJVZ[ZOH]LKLJYLHZLKHUKZOV\SKJVU[PU\L[VKVZV^P[O ongoing technological development, learning curves and increasing economies VMZJHSL[OL`HYLVM[LUZ[PSSTVYLL_WLUZP]L[OHUJVU]LU[PVUHSHS[LYUH[P]LZ4VZ[ YLUL^HISLLULYN`ZVS\[PVUZLN*VUJLU[YH[PUN:VSHY0UZ[HSSH[PVUZHUK6MMZOVYL >PUK-HYTZHYLPUYLSH[P]LS`LHYS`Z[HNLZVM[LJOUVSVNPJHSTH[\YP[`^P[OYLSH[P]LS` OPNO HKVW[PVU JVZ[Z K\L [V YHWPKS`L]VS]PUN KLZPNUZ Z\IVW[PTHS ZJHSL HUK incomplete manufacturing optimization. 0U*OPUHHZPUTHU`V[OLYJV\U[YPLZZ\IZPKPaLKYLZV\YJLHUK\[PSP[`JVZ[ZTH` also limit the attractiveness of greentech solutions. An example of this is diesel fuel WYPJLZ>OPSLM\LSWYPJLZJVUZ[HU[S`Å\J[\H[LHU6J[VILYZ[\K`MV\UK[OH[VUL SP[LYVMKPLZLSM\LSJVZ[`\HUWLYSP[LYPU/VUN2VUNI\[VUS`Ä]L`\HUPUULHYI` :OLUaOLU K\L [V KPMMLYLUJLZ PU Z\IZPKPaH[PVU HUK [H_LZ4 Regulators throughout *OPUHOH]LYLHSPaLK[OH[ZVTLJVZ[JVU[YVSZ^OPJOTHRLLSLJ[YPJP[`WV[HISL^H[LY cooking gas and central heating more affordable for low-income citizens, also YLK\JL PUJLU[P]LZ MVY LMÄJPLUJ` (ZPKL MYVT YLK\JPUN KLTHUKZPKL JVUZLY]H[PVU Z\IZPKPaH[PVU HSZV SPTP[Z [OL HWWLHS VM LMÄJPLUJ`LUHISPUN NYLLU[LJO ZVS\[PVUZ 9LJVNUPaPUN [OPZ JOHSSLUNL YLN\SH[VYZ HYV\UK *OPUH HYL YHPZPUN \[PSP[` WYPJLZ HUK ILNPUUPUN[VKL]LSVWUL^]VS\TL[YPJHUKPUJVTLYLSH[LKWYPJPUNZ`Z[LTZ One example of these new pricing approaches is simple block pricing for KVTLZ[PJ^H[LY\ZL0U3PQPHUN*P[`MVYPUZ[HUJL[OLIHZL^H[LYWYPJLPZ`\HU WLYJ\IPJTL[LYI\[JSPTIZ[V`\HUHUK[OLU`\HUWLYJ\IPJTL[LYHZH OV\ZLOVSK\ZLZTVYL[OHUHUK[OLUJ\IPJTL[LYZWLYTVU[OYLZWLJ[P]LS`5 >OPSL[OPZ]VS\TLIHZLKWYPJPUNWVSPJ`PZTV]PUNPU[OLYPNO[KPYLJ[PVU[OL>VYSK /LHS[O6YNHUPaH[PVUZ\NNLZ[Z[OH[HMHTPS`VMMV\Y^PSSVUS`\ZLHIV\[J\IPJ TL[LYZVM^H[LYWLYTVU[OSP[LYZWLYWLYZVUWLYKH`ZV[OL[OYLZOVSKZHYL SPRLS`Z[PSS[VVOPNO[VLUJV\YHNLZPNUPÄJHU[JVUZLY]H[PVU ;OLJ\YYLU[SV^PU[LYUH[PVUHSTHYRL[WYPJLZVMUH[\YHSYLZV\YJLZHUKJVTTVKP[PLZ also limit the attractiveness of some greentech solutions. As noted above, China OHZ ILLU YLSH_PUN P[Z Z\IZPKPaH[PVU VM JVTTVKP[` HUK \[PSP[` WYPJLZ" ^OPSL [OPZ JHUTHRLNYLLU[LJOZVS\[PVUZYLSH[P]LS`TVYLH[[YHJ[P]LP[HSZVL_WVZLZ*OPUH[V JOHUNLZPUNSVIHSJVTTVKP[`WYPJLZ-S\J[\H[PVUZPUNSVIHSVPSWYPJLZMVYL_HTWSL OH]LHKPYLJ[PTWHJ[VU[OLWYVÄ[HIPSP[`VMNYLLU[LJOZVS\[PVUZSPRLLSLJ[YPJ]LOPJSLZ IPVM\LSZHUKZVSHYLULYN` ;OL*OPUH.YLLU[LJO0UP[PH[P]LL_WLJ[Z[OH[WYPJLZMVYTHU`NYLLU[LJOZVS\[PVUZ will continue to decrease as technologies mature and solution providers exploit SLHYUPUNJ\Y]LLMMLJ[ZPUTHU\MHJ[\YPUNWYVJLZZLZ([[OLZHTL[PTLLULYN`HUK V[OLY JVTTVKP[` WYPJLZ HYL L_WLJ[LK [V HWWYLJPH[L HZ [OL ^VYSK LTLYNLZ MYVT [OL J\YYLU[ LJVUVTPJ KV^U[\YU ;OL JVZ[ VM \ZPUN MVZZPS M\LSZ PZ HSZV L_WLJ[LK [V PUJYLHZL K\L [V YLN\SH[VY` TLJOHUPZTZ ^OPJO JHW VY [H_ JHYIVU LTPZZPVUZ IV[OPU[LYUH[PVUHSS`HUKPU*OPUH>OPSLZOVY[[LYTÅ\J[\H[PVUZJV\SKZ[PSSPTWHJ[ HKVW[PVUV]LY[OLUL_[[LU`LHYZP[ZLLTZSPRLS`[OH[THU`VM[OLZVS\[PVUZ PU]LZ[PNH[LK I` [OL 0UP[PH[P]L ^PSS HJOPL]L JVZ[ WHYP[` VY IL[[LY ^P[O JVU]LU[PVUHS alternatives.

4 庞昌伟，”油价补贴： 肥水流向国际游资,” 清华大学中国与世界经济研究中心, [Pang Chang Wei, “Oil subsidies: hot money flow to international speculation,” Tsinghua University Center for China in the World Economy], October 3, 2008 The World Bank, Addressing China’s Water Scarcity: Recommendations for Selected Water Resource Management Issues, (Washington DC, U.S.: The World Bank Group, 2009), 91

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CHINA’S GREENTECH DEVELOPMENT CHALLENGES

„ LACKS ADAPTATION TO CHINA’S SPECIFIC MARKET REQUIREMENTS 4HU`NYLLU[LJOZVS\[PVUZHYLUV[J\Z[VTPaLK`L[[VTLL[*OPUH»ZLU]PYVUTLU[HS and market requirements, which in some cases differ from other countries. It is ULJLZZHY`[V\UKLYZ[HUK[OH[^OPSL*OPUHILHYZ[OLOHSSTHYRZVMIV[OKL]LSVWLK and developing nations, factors such as a large population, limited natural YLZV\YJLZOPNOWVSS\[PVUSL]LSZHUKHKL]LSVWPUNLJVUVT`^P[OJVZ[JVUZJPV\Z adopters, present unique characteristics that need to be incorporated into NYLLU[LJOZVS\[PVUZ;OLJVTWHUPLZ[OH[Z\JJLLKPU*OPUH»ZNYLLU[LJOTHYRL[Z ^PSS IL [OVZL [OH[ TVZ[ LMMLJ[P]LS` \UKLYZ[HUK [OLZL JOHYHJ[LYPZ[PJZ HUK [OLPY impact on requirements. ;OL HIPSP[` [V HKHW[ [LJOUVSVNPLZ KL]LSVWLK PU[LYUH[PVUHSS` [V [OL \UPX\L JVUKP[PVUZVM*OPUH»ZTHYRL[PZ]LY`PTWVY[HU[:\JOHKHW[H[PVULU[HPSZSVJHSPaPUN WYVK\J[ MLH[\YLZ MVY *OPUHZWLJPÄJ KLTHUKZ VY TPUPTPaPUN ZVS\[PVU WYVK\J[PVU JVZ[Z^P[OV\[ZHJYPÄJPUNM\UJ[PVUHSP[`-VYL_HTWSLLUa`TLZ[OH[HYL\ZLK[VHPK ^H[LY[YLH[TLU[WYVJLZZLZT\Z[ILZ\P[LK[V[OLWVSS\[PVUWYVÄSLZVM*OPUH»Z]HY`PUN ^H[LYYLZV\YJLZ^OPJOKPMMLYHJYVZZHUK^P[OPUYP]LYIHZPUZ;OLNYLH[LY[OLL_[LU[ [V^OPJO[OLZLJ\Z[VTPaLKLUa`TLZJHUILJVTTLYJPHSPaLKH[JVZ[ZHMMVYKHISL[V the operating budgets of Chinese municipal water and wastewater treatment plant VWLYH[VYZ[OLTVYLH[[YHJ[P]L[OL`^PSSILJVTL[V[OPZWYPJLJVUZJPV\ZTHYRL[ >OPSL *OPULZL JVTWHUPLZ HJYVZZ THU` ZLJ[VYZ OH]L Z[YVUN [YHJR YLJVYKZ PU adapting, replicating and scaling solutions for large-scale manufacturing and KPZ[YPI\[PVU^P[OPU*OPUHHUK[OYV\NOV\[[OL^VYSK[OL`HYLSLZZRUV^UMVY[OLPYHIPSP[` to innovate new solutions. Companies, either local or foreign, who best understand [OLWYVK\J[MLH[\YLZM\UJ[PVUZHUKJVZ[ZKLTHUKLKI`WV[LU[PHS*OPULZLNYLLU[LJO HKVW[LYZ^PSSSPRLS`IL[OLTVZ[Z\JJLZZM\SPU[OL*OPULZLTHYRL[

„ INTELLECTUAL PROPERTY AND TECHNOLOGY TRANSFER ISSUES 3LNHSYLN\SH[VY`HUKJ\S[\YHSIHYYPLYZJVTWSPJH[L[OL[YHUZMLYVM[LJOUVSVNPLZPU[V HUKV\[VM*OPUH>OPSL*OPUH»ZNV]LYUTLU[OHZ[HRLUUV[HISLZ[LWZPU[OLWHZ[ KLJHKL [V Z\WWVY[ [OL SLNHS WYV[LJ[PVU VM PU[LSSLJ[\HS WYVWLY[` 07 YPNO[Z [OLYL YLTHPUZ H JVTTVU WLYJLW[PVU HTVUN MVYLPNU ÄYTZ [OH[ [OLPY 07 HZZL[Z JHUUV[ ILZ\P[HIS`WYV[LJ[LKPU*OPUH;OPZWLYJLW[PVUPU[\YUSPTP[Z[OLPY^PSSPUNULZZ[V WYVK\JLVYZLSS07PU[LUZP]LWYVK\J[ZPU*OPUHJYLH[PUNHZPNUPÄJHU[VIZ[HJSLMVY China’s greentech market development. Although there are signs of improvement, there is still little question that China’s LUMVYJLTLU[VM07YPNO[ZOHZ`L[[VYLHJOKL]LSVWLK^VYSKZ[HUKHYKZ6ULTHPU PTWLKPTLU[PZ[OH[Q\KNLZV\[ZPKL[VW[PLYJP[PLZTH`OH]LSPTP[LKL_WLYPLUJL^P[O cases related to IP infringements. Moreover, when IP-related legal penalties are H^HYKLKPU*OPUH»ZJV\Y[ZJVSSLJ[PVUVMWH`TLU[ZVU[OLZLQ\KNTLU[ZJHUJH\ZL M\Y[OLYJVTWSPJH[PVUZ:VTLHUHS`Z[ZÄUK[OH[[OL]HS\LVMKHTHNLZH^HYKLKPU *OPULZL07JHZLZHYLNLULYHSS`ILSV^[OLLJVUVTPJ]HS\LVM[OLKHTHNLZYLZ\S[PUN MYVT[OL07PUMYPUNLTLU[PU[OLÄYZ[WSHJLM\Y[OLYYLK\JPUNPUJLU[P]LZMVY[OLSVJHS innovation of new solutions.6 *\S[\YHSHUKWVSPJ`IHYYPLYZHSZVSPTP[[OL\ZLVMMVYLPNU[LJOUVSVNPLZPU*OPUH( ]HYPL[`VMTPUPZ[YPLZZ\WWVY[[OLM\UKPUNVMNYLLU[LJOKLTVUZ[YH[PVUWYVQLJ[ZMVY PUZ[HUJLI\[JVTL\UKLYWYLZZ\YLPM[OL`ZPNUPÄJHU[S`WYVTV[L[OL\ZLVMMVYLPNU [LJOUVSVNPLZPUWPSV[WYVQLJ[Z(ZPUV[OLYJV\U[YPLZWYLMLYLUJLZ[V^HYKZSVJHSS` KL]LSVWLK [LJOUVSVNPLZ HYL VJJHZPVUHSS` MVYTHS HUK WVSPJ`IHZLK I\[ TVYL JVTTVUS`VWLYH[L[OYV\NOPUMVYTHSPUÅ\LUJLJOHUULSZZ\JOHZVWHX\LIPKKPUN evaluation processes for public works infrastructure projects. -PUHSS` *OPULZL ÄYTZ VM[LU OH]L SPTP[LK MHTPSPHYP[` ^P[O IV[O KVTLZ[PJ HUK PU[LYUH[PVUHS 07 YLN\SH[PVUZ HUK SPTP[LK JHWHJP[` [V THUHNL [OLPY V^U 07 HZZL[Z LMMLJ[P]LS`;OPZJHUYLZ\S[PU*OPULZL07ILPUNTPZHWWYVWYPH[LKI`V[OLY*OPULZL ÄYTZ VY SPTP[ [OL HTIP[PVUZ VM *OPULZL ÄYTZ [V L_WVY[ NYLLU[LJO ZVS\[PVUZ [V V[OLY countries.

6 NERA Economic Consulting, “Intellectual Property Rights Protection in China: Trends in Litigation and Economic Damages,” (National Economic Research Associates, 2009), 2

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Financing Challenges DESPITE STRONG POLICY SUPPORT AND GOVERNMENT FUNDING,NYLLU[LJOÄUHUJPUNPU *OPUHPZSPTP[LKI`[OLYLSH[P]LPTTH[\YP[`VMÄUHUJPHSTHYRL[Z4VYLZWLJPÄJHSS` [OPZ PUJS\KLZ ML^LY ÄUHUJPUN VW[PVUZ [OHU KL]LSVWLK THYRL[Z HUK VM[LU TVYL IHZPJÄUHUJPUNWYHJ[PJLZ[OH[HYLUV[^LSSZ\P[LK[VNYLLU[LJOYLX\PYLTLU[Z

„ FEWER FINANCING OPTIONS *VTWHYLK[VKL]LSVWLKTHYRL[Z[OLYLHYLNLULYHSS`ML^LYVW[PVUZPU*OPUHMVY YHPZPUNKLI[VYLX\P[`JHWP[HSHJYVZZ[OLSPMLJ`JSLVMNYLLU[LJOZVS\[PVUZ *OPUHKVLZUV[OH]LHTH[\YLW\ISPJIVUKZ`Z[LT[VÄUHUJLW\ISPJPUMYHZ[Y\J[\YL WYVQLJ[ZZ\JOHZ^H[LY[YLH[TLU[VYT\UPJPWHSYHPS^H`Z`Z[LTZSPRL[OVZL[OH[L_PZ[ PUTHU`V[OLYJV\U[YPLZ(ZHYLZ\S[*OPUH»ZWYV]PUJPHSHUKT\UPJPWHSNV]LYUTLU[Z T\Z[ YLS` VU [H_ PUJVTL VY [YHUZMLYZ MYVT [OL JLU[YHS NV]LYUTLU[ [V M\UK [OL L_WHUZPVUVYTVKLYUPaH[PVUVMT\UPJPWHSZ`Z[LTZ Another aspect of the public funding gap relates to the fact that while environmental HZZL[L_JOHUNLZOH]LILLULZ[HISPZOLKPU)LPQPUN:OHUNOHPHUK;PHUQPU[OLYLHYL UVJHWHUK[YHKLZ`Z[LTZJ\YYLU[S`PUWSHJL[VMHJPSP[H[L[YHKPUNVU[OVZLTHYRL[Z ;OPZSLH]LZJVTWHUPLZ[OH[LUNHNLPUWVSS\[PVUHUKNYLLUOV\ZLNHZYLK\J[PVU^P[O no domestic opportunities to monetize their emissions reductions. ([[OLTVTLU[*OPUH»ZZ[H[LV^ULKJVTTLYJPHSIHURZHUKWYP]H[LÄUHUJPLYZ KVUV[WYV]PKLZ\MÄJPLU[ÄUHUJPUN[VZTHSSZJHSLNYLLU[LJOTHYRL[WHY[PJPWHU[Z *VTTLYJPHS IHURZ NLULYHSS` PU]LZ[ PU SHYNLZJHSL WYVQLJ[Z HUK WYLMLY M\SS` JVSSH[LYHSPaLKSVHUZJYLH[PUNRL`JOHSSLUNLZMVYLTLYNPUNWYV]PKLYZ[OH[TH`^HU[ to participate in greentech projects like renewable power plants and smaller scale adopters of greentech solutions. *OPUH»ZIHURZHYLJVTTVUS`NP]LU[HYNL[ZMVYPU]LZ[TLU[ZPUJLY[HPUZLJ[VYZ ^OPJO TH` YLZ\S[ PU H W\ZO [V TLL[ [OLZL THYRLYZ KPZ[VY[PUN [OL VW[PTHS YPZR HKQ\Z[LKHSSVJH[PVUVMJHWP[HS>OPSL*OPUH»ZKVTLZ[PJ]LU[\YLJHWP[HSHUKWYP]H[L LX\P[` THYRL[Z OH]L ILLU NYV^PUN YHWPKS` PU YLJLU[ `LHYZ P[ PZ PTWVY[HU[ [V YLTLTILY[OH[[OL`HYLZ[PSSH[HULHYS`Z[HNLVMKL]LSVWTLU[HUK[OLYLMVYLUV[HZ LMÄJPLU[PUTVIPSPaPUNJHWP[HS -PUHSS` MVYLPNU ÄUHUJPUN PU *OPUH»Z NYLLU[LJO THYRL[Z PZ VM[LU YLZ[YPJ[LK -VY L_HTWSLTHU`LSLTLU[ZVMLSLJ[YPJHSWV^LYYHPSHUKT\UPJPWHSOLH[PUNZLJ[VYZHYLHSS YLSH[P]LS`PUHJJLZZPISL[VMVYLPNUPU]LZ[VYZ;OLNSVIHSJHYIVUTHYRL[PZVM[LU\ZLKHZ L]PKLUJL[OH[MVYLPNUJHWP[HSPZLMMLJ[P]LS`ILPUNJOHUULSLK[VNYLLU[LJOPU]LZ[TLU[Z ]PH [OL LTPZZPVUZ THYRL[ >OPSL *OPUH OHZ NLULYH[LK [OL TVZ[ LTPZZPVUZ [YHKPUN JYLKP[Z\UKLY[OL2`V[VWYV[VJVS[OLHJ[\HSZP[\H[PVUPZT\JOTVYLJVTWSL_ *OPUH»ZJ\YYLU[WVSPJ`LU]PYVUTLU[HSSV^ZWYVQLJ[Z[VHWWS`MVYJLY[PÄJH[PVU[V IL[YHKLK\UKLY[OL2`V[V7YV[VJVSPM[OL`HYLH[SLHZ[ JVU[YVSSLKI`*OPULZL entities.7>OPSL[OLYLHYLZPNUZ[OH[[OPZWVSPJ`TH`ILZVM[LUPUN[VHSSV^/VUN 2VUN JVTWHUPLZ H NYLH[LY *SLHU +L]LSVWTLU[ 4LJOHUPZT YVSL PU *OPUH [OPZ restriction has nevertheless limited the willingness of foreign participants to make large-scale contributions to Chinese greentech projects that were hoping to use JHYIVU THYRL[ JHWP[HS HZ H ÄUHUJPUN [VVS
„ FINANCING PRACTICES LACK SYNERGY WITH GREENTECH REQUIREMENTS .YLLU[LJOPU]LZ[TLU[ZVM[LUOH]L\UPX\LJOHYHJ[LYPZ[PJZ[OH[JVTWSPJH[LÄUHUJPUN Z\JO HZ OPNO MYVU[LUK JHWP[HS ULLKZ HUK SVUN WH`IHJR WLYPVKZ -\Y[OLYTVYL ZVS\[PVUZHYLUV[^LSSKL]LSVWLKVY\UKLYZ[VVKI`*OPUH»ZTHYRL[ZHUKWYLZLU[ JVTWSL_ I\ZPULZZ TVKLSZ HZ PSS\Z[YH[LK I` YLUL^HISL LULYN` WV^LYW\YJOHZL HNYLLTLU[ZVYLULYN`WYVJ\YLTLU[JVU[YHJ[ZMVYI\PSKPUNZ3LUKLYZ^OVNLULYHSS` OH]LSPTP[LKL_WLYPLUJL^P[O[OLZLUL^ZVS\[PVUZHUKI\ZPULZZTVKLSZÄUK[OL evaluation of these investments challenging.

National Development and Reform Commission, “Measures for Operation and Management of Clean Development Mechanism Projects in China,” November 21, 2005, http://www.cdm.ccchina.gov.cn/

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CHINA’S GREENTECH DEVELOPMENT CHALLENGES

Investments required at different stages of product development and JVTTLYJPHSPaH[PVU HYL JVTWSPJH[LK I` [OL J\YYLU[ Z[H[L VM *OPUH»Z ÄUHUJPHS THYRL[Z-VYPUZ[HUJL[OLYLHYLML^PUZ[Y\TLU[ZH]HPSHISLMVYPU]LZ[PUNPU[OLLHYS` Z[HNLZVMYLZLHYJOHUKKL]LSVWTLU[>OLUNYLLU[LJOZVS\[PVUZHYLYLHK`[VIL KLWSV`LK [OL YHUNL HUK ZVWOPZ[PJH[PVU VM WYVQLJ[ ÄUHUJPUN PU]VS]LK PZ SPTP[LK JVTWHYLK[VV[OLYJV\U[YPLZ(ZPNUPÄJHU[\UKLYZ[HUKPUNVM[OL[LJOUPJHSHZWLJ[Z of environmental issues is required for investments in a range of greentech sectors. ;OLWYVÄ[HIPSP[`VMZVSHYWV^LYNLULYH[PVUMVYL_HTWSLWHY[PHSS`KLWLUKZVU[OL HIPSP[`[VMVYLJHZ[HUKTLHZ\YLSVJHSZVSHYYLZV\YJLZ^OPJOHYLHYLHZPU^OPJOTVZ[ ÄUHUJPHSPU]LZ[VYZPU*OPUHOH]LSP[[SLL_WLYPLUJL[VKH[L4VYLIYVHKS`*OPUH»Z PU]LZ[VYZHYLVM[LUSPTP[LKPU[OLPYHIPSP[`[VHZZLZZ[OLLU]PYVUTLU[HSOLHS[OHUK ZHML[`YPZRZVMNYLLU[LJOPU]LZ[TLU[Z^OPJOPU[\YUPUOPIP[[OLPYHIPSP[`[VWYV]PKL ZV\UKHUHS`ZPZMVYWYVQLJ[]HS\H[PVUZHUKJHZOÅV^WYVQLJ[PVUZ

Regulatory Challenges BASED ON THE PACE OF REGULATORY CHANGES,*OPUH»ZYLN\SH[VY`LU]PYVUTLU[PZHJSLHY HUKWVZP[P]LKYP]LY[V[OLHJJLSLYH[PVUVM[OLJV\U[Y`»ZNYLLU[LJOTHYRL[Z*LY[HPU JOHSSLUNLZYLTHPUOV^L]LYPUJS\KPUNJVTWSL_P[`VM[OLYLN\SH[VY`LU]PYVUTLU[ KL]LSVWPUNWVSPJ`PUJLU[P]LZ\UL]LUJVTWSPHUJL^P[OL_PZ[PUNWVSPJPLZHUKSPTP[LK WVSPJ`]PZPIPSP[`

„ COMPLEX REGULATORY ENVIRONMENT .YLLU[LJO THYRL[Z I` [OLPY UH[\YL IYVHK HUK LTLYNPUN HYL V]LYZLLU I` H ^PKL YHUNL VM *OPULZL YLN\SH[VY` LU[P[PLZ ^OPJO HYL PUJYLHZPUNS` PUÅ\LUJLK I` PU[LYUH[PVUHS NV]LYUTLU[Z HUK PU[LYNV]LYUTLU[HS VYNHUPaH[PVUZ ;OPZ JYLH[LZ H JVTWSL_ YLN\SH[VY` LU]PYVUTLU[ [OH[ PZ KPMÄJ\S[ [V UH]PNH[L ,ULYN` PZZ\LZ MVY L_HTWSL HYL YLN\SH[LK I` ZL]LYHS HNLUJPLZ H[ [OL JLU[YHS SL]LS LN 5H[PVUHS ,ULYN` (KTPUPZ[YH[PVU HUK [OL 4PUPZ[Y` VM 0UK\Z[Y` HUK 0UMVYTH[PVU ;LJOUVSVN` HZ^LSSHZV[OLYIVKPLZH[SVJHSHUKWYV]PUJPHSSL]LSZ0UYLJLU[`LHYZWYVNYLZZOHZ ILLUTHKL[VWYV]PKLNYLH[LYJSHYP[`-VYL_HTWSL[OL5H[PVUHS+L]LSVWTLU[HUK 9LMVYT *VTTPZZPVU HUK 5H[PVUHS ,ULYN` (KTPUPZ[YH[PVU JVVYKPUH[L [V WYV]PKL JVOLZP]L WSHUUPUN VM LULYN` HJ[P]P[PLZ HJYVZZ YLSH[LK HNLUJPLZ 0U V[OLY HYLHZ Z\JOHZ^H[LYWVSPJ`U\TLYV\ZYLN\SH[VY`HNLUJPLZHYL^VYRPUN[VWYV]PKLIL[[LY management with increased coordination and cooperation. Coordination between national and local departments and their respective WVSPJPLZ PZ HS^H`Z JOHSSLUNPUN *OPUH»Z JLU[YHS WVSPJPLZ ZOV\SK IL JYLKP[LK MVY providing clear targets, guidelines and direction for the development of the NYLLU[LJO THYRL[ >OLU PTWSLTLU[H[PVU VJJ\YZ H[ [OL SVJHS SL]LS OV^L]LY ]HYPH[PVUZPUSVJHSWVSPJPLZJYLH[LUVU\UPMVYTLU]PYVUTLU[Z-VYL_HTWSL^OPSL )LPQPUN ZOV\SK IL HWWSH\KLK MVY HKVW[PUN HPY WVSS\[PVU Z[HUKHYKZ OPNOLY [OHU UH[PVUHSSL]LSZWHY[PJ\SHYS`K\YPUN[OL6S`TWPJ.HTLZ[OPZWVSPJ`]HYPH[PVUJYLH[LZ VWLYH[PVUHS JOHSSLUNLZ MVY PUK\Z[YPHS JVTWHUPLZ ^P[O VWLYH[PVUZ PU IV[O )LPQPUN and other provinces. 8 :PUJLTHU`PUK\Z[YPLZHYLYLN\SH[LKI`PUK\Z[Y`ZWLJPÄJNV]LYUTLU[HNLUJPLZ [OPZZVTL[PTLZSLHKZ[VJVUÅPJ[PUN[YLH[TLU[ZMVYJVTTVULU]PYVUTLU[HSPZZ\LZ 5H[PVUHSPUP[PH[P]LZZ\JOHZ[OL;VW,ULYN`*VUZ\TPUN,U[LYWYPZLZ7YVNYHT WYVTV[LZJOHUNLHJYVZZT\S[PWSLPUK\Z[YPLZ/V^L]LYTHU`NYLLU[LJOVWWVY[\UP[` areas, such as rail transportation and electric power infrastructure, are regulated PUKLWLUKLU[S`HUKHYLWLYTP[[LK[VOH]LKPMMLYPUN[HYNL[Z^P[OYLZWLJ[[VHPY^H[LY and other emissions compared to other industries. -PUHSS` PU[LYUH[PVUHS JVU]LU[PVUZ HUK [YLH[PLZ Z\JO HZ [OVZL NV]LYUPUN international shipping and air travel, impact standards and other greentech PZZ\LZ^P[OPU*OPUHL]LU^OLUUVL_WSPJP[KVTLZ[PJWVSPJPLZL_PZ[-VYL_HTWSL [OL :[HUKHYKZ HUK 9LJVTTLUKLK 7YHJ[PJLZ VM [OL 0U[LYUH[PVUHS *P]PS (]PH[PVU 6YNHUPaH[PVU^OPJOHYLPUJVYWVYH[LKHZ(UUL_LZ[V[OL*VU]LU[PVUVU0U[LYUH[PVUHS Civil Aviation) contain provisions on aircraft operations that impact emissions from China’s air transportation. As China becomes further integrated into the world LJVUVT`P[PZL_WLJ[LK[OH[PU[LYUH[PVUHSLU[P[PLZ^PSSL_LYJPZLL]LUTVYLPUÅ\LUJL on China’s greentech markets. 8 中国环境科学研究院，“中国区域大气污染控制，”2008年11月6日 [Chinese Research Academy of Environment and Science, “For Regional Air Pollution Control in China,” November 6, 2008]

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REGULATORY CHALLENGES

„ DEVELOPING POLICY INCENTIVES Most market participants acknowledge that the overall direction of China’s Z\IZPKPLZMVYNYLLU[LJOZVS\[PVUZKL]LSVWTLU[HUKHKVW[PVUPZL_[YLTLS`WVZP[P]L *OPUH»ZNV]LYUTLU[OHZJVTTP[[LKZPNUPÄJHU[M\UKZ[V[OLJVTTLYJPHSPaH[PVUVM NYLLU[LJOZVS\[PVUZHJYVZZHYHUNLVMHYLHZ;OLMV\Y[YPSSPVU`\HU<:IPSSPVU stimulus package puts in place notable support for electric power infrastructure, JSLHULYJVU]LU[PVUHSLULYN`JSLHULYYVHKZHUKJSLHULYYHPS[YHUZWVY[H[PVU9 >OPSL[OPZ[YLUKPZLUJV\YHNPUN[OLYLPZSPTP[LKW\ISPZOLKL]PKLUJL[OH[Z\IZPKPLZ [HRL PU[V HJJV\U[ KL[HPSLK HUHS`ZLZ VM JVZ[ [YLUKZ MVY NYLLU[LJO ZVS\[PVUZ :\IZPKPLZ [OH[ HYL JYLH[LK ^P[OV\[ HU \UKLYZ[HUKPUN VM H ZVS\[PVU»Z JVZ[Z YPZR UV[ ILPUN ZPaLHISL LUV\NO [V Z[PT\SH[L ZPNUPÄJHU[ KLTHUK VY ILPUN [VV SHYNL HUK KPZJV\YHNPUN PUUV]H[PVU  :VTL PUK\Z[Y` L_WLY[Z OH]L WVPU[LK [V [OL   )\PSKPUN0U[LNYH[LK :VSHY 7OV[V]VS[HPJ Z\IZPK` HZ VUL [OH[ SHJRLK [YHUZWHYLUJ` in its development. 7VSP[PJHSJVUZPKLYH[PVUZPUÅ\LUJLZ\IZPKPLZI`HMMLJ[PUN[OLPYZPaLI\[HSZV[OL timing of their announcement. In greentech sectors where multiple regulators OH]LWV[LU[PHSS`V]LYSHWWPUNH\[OVYP[`ZVTLTHYRL[WHY[PJPWHU[ZOH]LZWVRLUVM incentive competition, where multiple government agencies compete with each V[OLY[VZ\IZPKPaLNYV^[OPUK\Z[YPLZLP[OLYÄYZ[VYTVYLLMMLJ[P]LS`0[PZPTWVY[HU[ [V UV[L [OH[ PUÅ\LUJLZ L_LY[LK ILOPUK [OL ZJLULZ HYL UV[ HS^H`Z UV[ ]PZPISL [V [OLTHYRL[HZZVTLTHYRL[VIZLY]LYZUV[LKILMVYL[OL5+9*ZVSHYZ\IZPK`PU   :\IZPKPLZ MVY ZWLJPÄJ [LJOUVSVNPLZ H]HPSHISL MYVT T\S[PWSL HNLUJPLZ HSZV HYLUV[\Z\HSS`JVVYKPUH[LK:\IZPK`HWWSPJHU[ZULLK[V\UKLYZ[HUKHUKM\SÄSS[OL VISPNH[PVUZVMKPMMLYLU[HNLUJPLZ[VX\HSPM`MVYM\UKPUN\UKLYZLWHYH[LWYVNYHTZ -PUHSS`L]LU^OLUZ\IZPKPLZOH]LILLUHUUV\UJLKP[PZUV[HS^H`ZJSLHY^OH[ JVUKP[PVUZHWWSPJHU[ZT\Z[TLL[[VX\HSPM`MVYHUKYLJLP]L[OLT-VYL_HTWSLPU HZ\Y]L`VM*OPUHIHZLKI\PSKPUNKLZPNULYZHUKLUNPULLYZJVUK\J[LKQVPU[S` I`[OL*OPUH.YLLU[LJO0UP[PH[P]L^P[O[OLJVUZ[Y\J[PVUTHYRL[YLZLHYJOÄYT9** *OPUH   VM YLZWVUKLU[Z PUKPJH[LK [OL` OHK WHY[PJPWH[LK PU NYLLU I\PSKPUN WYVQLJ[Z[OH[[HYNL[LKNV]LYUTLU[Z\IZPKPLZI\[ULHYS` VM[OPZNYV\WJSHPTLK [VOH]LUV[YLJLP]LKL]LU[\HSILULÄ[>OPSL[OLYLHZVUZMVY[OPZMHPS\YL^LYLUV[ X\HU[PÄLKPU[OLZ\Y]L`[OLZLYLZWVUKLU[ZPUKPJH[LK[OL`^LYLVM[LU\UJSLHYVU [OLJVUKP[PVUZ[OL`^LYLYLX\PYLK[VTLL[[VX\HSPM`MVYM\UKPUNZ\IZPKPLZ

„ UNEVEN COMPLIANCE WITH EXISTING POLICIES 0U THU` JHZLZ L]LU ^OLU *OPUH OHZ [OL HWWYVWYPH[L LU]PYVUTLU[HS WVSPJPLZ PU place at the national level, monitoring and enforcing compliance at local levels YLTHPUZHZPNUPÄJHU[JOHSSLUNLL_HJLYIH[LKI`*OPUH»ZZPaLYLNPVUHS]HYPH[PVUZ HUKK`UHTPJHSS`JOHUNPUNLJVUVT`6ULHZWLJ[VM[OPZJOHSSLUNLPZPKLU[PM`PUN[OL HWWYVWYPH[LSL]LSVMZ\WLY]PZPVUMVYLHJOWVSPJ`-VYL_HTWSLSVJHSNV]LYUTLU[Z TH`L_WLYPLUJLHJVUÅPJ[VMPU[LYLZ[PM[OL`HYLYLZWVUZPISLIV[OMVY[OLNYV^[O of local state-owned companies and for compliance with national environmental YLN\SH[PVUZ ;OPZ JYLH[LZ H WSH\ZPISL PUJLU[P]L MVY HSSV^PUN SH_ JVTWSPHUJL K\L [V [OL ILULÄ[Z [OLZL JVTWHUPLZ IYPUN [V [OL SVJHS LJVUVT` *OPUH OHZ UV[ [YHKP[PVUHSS`YLSPLKVUPUKLWLUKLU[[OPYKWHY[`JVTWSPHUJLTVUP[VYPUNVM[OL[`WL \ZLK PU V[OLY JV\U[YPLZ ZV ÄUKPUN [OL YPNO[ IHSHUJL IL[^LLU UH[PVUHS SVJHS JP]PJHUK[OPYKWHY[`JVTWSPHUJLTVUP[VYPUNPZHJOHSSLUNL[OH[HMMLJ[ZHSTVZ[HSS NYLLU[LJOZLJ[VYZ([[OLZHTL[PTLP[TH`UV[ILLMÄJPLU[MVYUH[PVUHSHNLUJPLZ to create large compliance monitoring bureaucracies for environmental issues. +L]LSVWPUNHUHWWYVHJOMVYLU]PYVUTLU[HSWVSPJ`JVTWSPHUJLVM[OLTHNUP[\KLHUK ZJVWLYLX\PYLKI`HJV\U[Y`[OLZPaLVM*OPUHOHZUL]LYILLUH[[LTW[LKILMVYL ;OPZJYLH[LZHUVWWVY[\UP[`MVY*OPUH[VKLÄULHUL^TVKLSVMLU]PYVUTLU[HSS` sustainable development. 4P_LK PUJLU[P]LZ MVY SVJHS JVTWSPHUJL TVUP[VYPUN TH` HSZV SLHK [V KPMMLYPUN KLNYLLZ VM WVSPJ` LUMVYJLTLU[ HJYVZZ YLNPVUZ -PYZ[[PLY JP[PLZ SPRL )LPQPUN HUK :OHUNOHPHYLJVTTVUS`YLJVNUPaLKHZOH]PUNTVYLLMMLJ[P]LWVSPJ`LUMVYJLTLU[ JHWHIPSP[PLZ [OHU ZTHSSLY JP[PLZ ;OLYL TH` HSZV IL YLNPVUHS KPMMLYLUJLZ -VY

International Civil Aviation Organization, “Making an ICAO standard,” http://www.icao.int/ (accessed on May 10, 2009) Hinge, Adam, “Compliance with Building Energy Standards: One Perspective from the U.S.” (presentation given at the Workshop on Energy Efficiency Compliance, Monitoring & Evaluation, Paris, France, February 9-28, 2009)

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L_HTWSL H KLZPNU YL]PL^ VM V]LY  I\PSKPUNZ [OL 4PUPZ[Y` VM *VUZ[Y\J[PVU UV^[OL4PUPZ[Y`VM/V\ZPUNHUK
„ LIMITED POLICY VISIBILITY .YLLU[LJO THYRL[ WHY[PJPWHU[Z VM[LU OH]L SPTP[LK RUV^SLKNL VM TLKP\T HUK SVUN[LYTWVSPJ`WSHUZ;OPZSHJRVM\UKLYZ[HUKPUNVMWHJLZWLJPÄJZHUK[PTPUN JVTWSPJH[LZI\ZPULZZKLJPZPVUTHRPUN(S[OV\NOTHYRL[WHY[PJPWHU[ZHYLYLSH[P]LS` well informed of the broad direction of China’s greentech policies, knowledge VM [OL ZWLJPÄJ [PTPUN HUK KL[HPS VM PUKP]PK\HS WVSPJ` TLHZ\YLZ YLTHPUZ SPTP[LK Companies and investors in China’s greentech markets are sometimes surprised I`ZWLJPÄJNYLLU[LJOYLSH[LKWVSPJ`HUUV\UJLTLU[Z One example of these uncertainties are policies related to the construction and VWLYH[PVU VM SVJHS PUMYHZ[Y\J[\YL WYVQLJ[Z ^OPJO HYL OPNOS` KLWLUKLU[ VU SVJHS administrations. Private companies entering into long-term concessions with SVJHSNV]LYUTLU[ZMVYJVUZ[Y\J[PVUVYVWLYH[PVUVMPUMYHZ[Y\J[\YLHZZL[ZTH`ÄUK that while some public servants are willing to grant assurances or protections at [OLLHYS`Z[HNL[OLPYYLWSHJLTLU[ZTH`UV[YLZWLJ[HNYLLTLU[ZLU[LYLKPU[VI` MVYTLYHKTPUPZ[YH[PVUZ-VYL_HTWSL^H[LY[YLH[TLU[WSHU[JVUJLZZPVUZPU*OPUH JHUILPUL_JLZZVMVYL]LU`LHYZ>OPSL[OLHKTPUPZ[YH[PVUZ[HMMNYHU[PUN JVUJLZZPVUZ [V WYP]H[L THYRL[ WHY[PJPWHU[Z TH` THRL JVTTP[TLU[Z [V M\[\YL ^H[LYWYPJLPUJYLHZLZZ\IZLX\LU[Z[HMMTH`UV[HIPKLI`[OLZLJVTTP[TLU[Z

Overcoming challenges will accelerate China’s greentech market growth THE FOUR CATEGORIES OF CHALLENGESKPZJ\ZZLK¶THYRL[[LJOUVSVN`ÄUHUJPUNHUK YLN\SH[VY` ¶ WYLZLU[S` JVUZ[YHPU [OL ZWLLK H[ ^OPJO *OPUH»Z NYLLU[LJO THYRL[Z HYLKL]LSVWPUN/V^L]LY[OL*OPUH.YLLU[LJO0UP[PH[P]LILSPL]LZ[OH[HSSVM[OLZL JOHSSLUNLZ JHU IL SHYNLS` V]LYJVTL I` [OL YHUNL VM Z[HRLOVSKLYZ JVTTP[[LK [V OLSWPUN *OPUH HJOPL]L P[Z NVHS VM LU]PYVUTLU[HS Z\Z[HPUHIPSP[` :\JJLZZM\SS` HKKYLZZPUN [OLZL JOHSSLUNLZ ^PSS NYLH[S` HJJLSLYH[L [OL KL]LSVWTLU[ VM *OPUH»Z NYLLU[LJOTHYRL[ZOLSWPUN[OLJV\U[Y`[HWYLUL^HISLLULYN`ZV\YJLZJSLHU[OL air, curtail growth in greenhouse gas emissions, decrease water consumption and pollution and address solid waste problems – all the while supporting continued LJVUVTPJ NYV^[O :WLJPÄJ VWWVY[\UP[PLZ [V HKKYLZZ [OLZL JOHSSLUNLZ HYL discussed in the next chapter.

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Clear opportunities exist for solution adopters, solution providers, financial investors, goverment regulators and other stakeholders to address challenges, accelerate the growh of greentech market and help China transform into an environmentally sustainable economy.

What can stakeholders do to overcome the challenges facing the commercialization of greentech solutions in China in order to accelerate the development of these markets?

THE CHINA GREENTECH INITIATIVE POSED THIS QUESTION to its partners and advisors, who helped develop the set of opportunities outlined in this chapter. These opportunities are not meant to be explicit recommendations, but rather suggestions of concrete steps different stakeholder groups may take to accelerate greentech markets and enable China’s further evolution to a sustainable economy. While each of the greentech sectors analyzed in this report has its own JOHYHJ[LYPZ[PJZ HUK JOHSSLUNLZ [OL 0UP[PH[P]L PKLU[PÄLK Ä]L V]LYHSS VWWVY[\UP[PLZ J\[[PUNHJYVZZZLJ[VYZ^OPJO^V\SKOH]LHZPNUPÄJHU[WVZP[P]LPTWHJ[VU*OPUH»Z greentech market development, as shown in Figure 1.

Fig. 1: OVERALL OPPORTUNITIES TO ACCELERATE CHINA’S GREENTECH MARKETS OVERALL OPPORTUNITY

DESCRIPTION

RAISE DECISION-MAKER AWARENESS

„/LSWKLJPZPVUTHRLYZ\UKLYZ[HUK[OLILULÄ[ZJVZ[ZHUK risks of green technologies

DRIVE THE MATURITY OF STANDARDS-BASED SOLUTIONS

„ Support evolution of standards-based technologies to enable widespread adoption

SUPPORT FAIR MARKET PLAYING FIELDS

„ Include costs into regulatory and market frameworks which properly value impacts of pollution and resource use

ENHANCE CAPABILITIES

„ Build greentech skills necessary to design, develop, market, ÄUHUJLPTWSLTLU[TVUP[VYHUKYLN\SH[LNYLLU[LJO solutions

PROMOTE COLLABORATION

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„ Strengthen collaboration between public and private sectors and throughout value chains, at all stages of greentech solution life cycles

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OVERALL OPPORTUNITIES

Fig. 2: KEY STAKEHOLDERS IN CHINA’S GREENTECH MARKETS

STAKEHOLDERS

DESCRIPTION

SOLUTION ADOPTERS

„ Organizations and individuals purchasing or using green technologies

SOLUTION PROVIDERS

„ Businesses who develop and provide green technologies and services

FINANCIAL INVESTORS

„ Commercial banks, private equity, venture capital, investment banks and other ÄUHUJPHSZLY]PJLZWYV]PKLYZ

GOVERNMENT REGULATORS

„ China’s central, provincial and local regulators, as well as relevant international policy makers

OTHER STAKEHOLDERS

„ Academia, non-governmental organizations, international organizations and other stakeholders

;OL 0UP[PH[P]L HSZV PKLU[PÄLK Ä]L V]LYHYJOPUN VWWVY[\UP[PLZ YLSL]HU[ HJYVZZ HSS sectors and every stakeholder group. These opportunities, shown in Figure 2, present clear actions all stakeholders can take to expedite the development of H Z\Z[HPUHISL *OPUH :LJ[VYZWLJPÄJ VWWVY[\UP[PLZ ^LYL HSZV L_WSVYLK HUK HYL discussed in the respective sector chapters of the full version of this report. ;OLÄ]LJYVZZZLJ[VYVWWVY[\UP[PLZHYL! „ RAISE DECISION-MAKER AWARENESS ,K\JH[L KLJPZPVU THRLYZ HIV\[ [OL ILULÄ[Z VM NYLLU [LJOUVSVNPLZ UV[ VUS` PU terms of reducing negative environmental impact and risks, but also in terms VM WV[LU[PHS JVZ[ ZH]PUNZ HUK V[OLY ILULÄ[Z MYVT HKVW[PUN NYLLU[LJO ZVS\[PVUZ Raising awareness will help adopters overcome misconceptions and make informed decisions when evaluating greentech solutions. „ DRIVE THE MATURITY OF STANDARDS-BASED SOLUTIONS Drive and support the evolution of greentech solutions from the early research

Fig. 3: KEY STAKEHOLDER OPPORTUNITIES TO ACCELERATE CHINA’S GREENTECH DEVELOPMENT

96

STAKEHOLDERS

KEY OPPORTUNITIES

SOLUTION ADOPTERS

„ Promote sustainability „ Buy green „ Improve compliance

SOLUTION PROVIDERS

„ Match solutions to local market requirements „,K\JH[LHKVW[LYZ[VNYLLU[LJOILULÄ[Z „ Supply products with minimized life cycle environmental impact „ Leverage commercial partnerships

FINANCIAL INVESTORS

„ Enhance capabilities „<[PSPaLUL^ÄUHUJPUNTLJOHUPZTZ

GOVERNMENT REGULATORS

„9LÄULWVSPJPLZHUKVW[PTPaLZ[HUKHYKZ „ Enforce compliance „-HJPSP[H[LÄUHUJPUN „ Liberalize markets „ Support environmental exchange

OTHER STAKEHOLDERS

„ Drive greentech training „ Engage other stakeholders „ Sponsor research „ Monitor compliance

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phase to maturity. Standards-based solutions (i.e. those based on broadlyaccepted industry standards) should achieve suitable pricing and provide adequate YPZRWYVÄSLZ[VLUHISL^PKLZWYLHKHKVW[PVU „ SUPPORT FAIR MARKET PLAYING FIELDS Promote regulatory regimes and market mechanisms that incorporate environmental costs into the price of conventional solutions, such as mandatory caps, pollution ÄULZ[H_LZHUKV[OLYTLJOHUPZTZ-VYL_HTWSL[OL<:,U]PYVUTLU[HS7YV[LJ[PVU Agency’s Acid Rain Program used cap-and-trade systems to increase the costs of polluting sulfur dioxide (SO2), thereby driving the market for SO2 removal solutions. ;OLWYVNYHTSLK[VV]LYHSSZPNUPÄJHU[KLJSPULPU:62 emissions, which by 2008 were 56 percent below 1980 levels.1 „ ENHANCE CAPABILITIES Build leadership skills and staff capabilities across stakeholder groups to enable [OL KLZPNU KL]LSVWTLU[ THYRL[PUN ÄUHUJPUN PTWSLTLU[H[PVU TVUP[VYPUN HUK regulation of China’s greentech markets. This includes providing specialized [YHPUPUN[VTHUHNLYZ[LJOUPJPHUZÄUHUJPLYZI\`LYZYLN\SH[VYZHUKV[OLYZHJYVZZ a broad range of greentech-related knowledge and skill areas. „ PROMOTE COLLABORATION Encourage collaboration between commercial, government and non-government stakeholders across all sectors and at all stages of greentech solutions’ development cycles. As demonstrated by the China Greentech Initiative, JVSSHIVYH[P]LWSH[MVYTZWYVTV[LHYHUNLVMILULÄ[ZPUJS\KPUNPUJYLHZLKTHYRL[ understanding, relationship building, business model development, commercial venture expansion and improved dialogue between public and private entities. ;OL Ä]L V]LYHSS VWWVY[\UP[PLZ PKLU[PÄLK HIV]L OLSW MYHTL [OL TVYL ZWLJPÄJ opportunities available to each stakeholder group. Based on the input of partners and strategic advisors, the China Greentech Initiative focused its efforts on identifying and describing particular opportunities available to each major stakeholder group. These are summarized in Figure 3, and explored in the following pages.

Solution Adopters ADOPTERS AND END USERS HAVE MUCH TO GAIN FROM THE DEVELOPMENT of China’s green technology markets. In China and elsewhere, corporations are increasingly aware VM[OLWV[LU[PHSILULÄ[Z[OH[JVTLMYVTILPUNLU]PYVUTLU[HSS`TPUKLK7YVTV[PUN sustainability may enable stronger relationships with customers, suppliers and LTWSV`LLZ;OL\ZLVMNYLLU[LJOUVSVNPLZ^P[OKPYLJ[HUKPUKPYLJ[JVZ[ILULÄ[ZJHU KYP]LNYLH[LYSVUN[LYTWYVÄ[HIPSP[`*VTTP[TLU[Z[VLU]PYVUTLU[HSZ\Z[HPUHIPSP[` also can help minimize negative impacts before being required by regulators.

PROMOTE SUSTAINABILITY An organization that promotes sustainability internally with employees, and externally with local communities, is likely to gain the advantage of a good corporate reputation as its brand becomes associated with sustainability. With YLZWLJ[ [V LU]PYVUTLU[HS ILULÄ[Z WPVULLYPUN ZVS\[PVU HKVW[LYZ JHU LZ[HISPZO H ZPNUPÄJHU[ T\S[PWSPLY LMMLJ[ HZ [OLPY PU[LYHJ[PVUZ ^P[O Z\WWSPLYZ J\Z[VTLYZ HUK business partners become more sustainability-oriented. One way companies can minimize their environmental impact and create cultures VM LMÄJPLUJ` PZ I` [YHPUPUN Z[HMM PU LU]PYVUTLU[HS H^HYLULZZ ^OPJO JHU SLHK [V improved employee satisfaction, controlled costs and improved relationships with regulators and other stakeholders. Chinese consumers are paying increasing attention to sustainability issues. Notably, the number of Corporate Social Responsibility reports issued by Chinese companies has seen a strong increase, from as few as four companies in 2004 to more than 121 by 2008.2 1 United States Environmental Protection Agency, “Acid Rain Program 2008 Progress Reports: Emissions, Compliance and Market Data,” http://www. epa.gov/ (accessed on August 13, 2009) 2 SynTao, A Journey to Discover Values 2008: Study of Sustainability Reporting in China (Beijing, China: SynTao, December 2008), 8

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PROMOTING SUSTAINABILITY IN THE ALUMINUM INDUSTRY One company frequently cited for its endorsement of sustainability and support of greentech solutions is Alcoa, the global aluminum production and management company. „ Alcoa’s sustainability strategy includes investing in green technology areas such as Carbon Capture and Sequestration and renewable energy-powered aluminum smelting facilities „ The company has adopted an internal strategic framework for sustainability through 2020, including targets for sustainable performance metrics in areas such as Safe and Sustainable Products and Processes and Respect and Protect Employees and Communities3 „ As a result, Alcoa has received significant reputational benefits, including a listing in the Dow Jones Sustainability Index over the last seven years and being named one of the World’s Top 100 Sustainable Corporations at the World Economic Forum in Davos, Switzerland4 Potential greentech adopters in China can strive to attain similar benefits by studying the approaches that Alcoa and other companies have taken to support sustainability, and adapting them to their own businesses. The promotion of sustainability should go beyond an organization’s internal practices and extend to the broader role of supporting long-term, ecologicallyconscious economic growth in the local community. Helping to create an environmentally sustainable China is a key opportunity for greentech solution adopters and the local regulators who support them.

BUY GREEN The most direct way solution adopters can promote China’s greentech markets is by buying green, rather than conventional, products and services whenever feasible. ;OLÄYZ[WHY[VMºI\`PUNNYLLU»PZPKLU[PM`PUN^OH[PZºNYLLU»7V[LU[PHSHKVW[LYZ can investigate the environmental impacts of their purchases and urge suppliers to participate in labeling programs or other transparent performance data. Sharing KH[HMVYL_HTWSLOLSWZ[LUHU[ZSLHZLLULYN`LMÄJPLU[VMÄJLZWHJLVYM\Y[OLY\W [OLZ\WWS`JOHPUHZZPZ[ZI\PSKPUNKL]LSVWLYZI\`LULYN`LMÄJPLU[SPNO[PUNZ`Z[LTZ (UV[OLY HZWLJ[ VM ºI\`PUN NYLLU» PZ M\SS` L]HS\H[PUN [OL SPML J`JSL JHWP[HS expenditure and operating expenditure implications of solutions. Many greentech ZVS\[PVUZOH]LOPNOLY\WMYVU[JHWP[HSJVZ[ZI\[^PSSZ[PSSOH]LUL[SPMLJ`JSLILULÄ[Z K\L[VKLJYLHZLKVWLYH[PUNJVZ[ZVYSVUN[LYTLU]PYVUTLU[HSILULÄ[Z º)\`PUN NYLLU» JHU HSZV LU[HPS W\[[PUN PU WSHJL NYLLU[LJO Z`Z[LTZ [V Z\WWVY[ effective environmental management. Regular energy audits, for example, help inform energy consumers about which parts of their operations may be able to HJOPL]L PTWYV]LK LMÄJPLUJPLZ /V^L]LY THU\HS H\KP[Z HYL VM[LU PTWYLJPZL The implementation of greentech systems to support accurate audits can help TVUP[VY[OLLMÄJPLUJ`VMKL]PJLZ\ZLKPUOVTLZLNHPYJVUKP[PVUPUN\UP[ZHUK refrigerators), large commercial buildings (e.g. water heaters and elevators) and industrial facilities (e.g. processing equipment and cooling systems).

IMPROVE COMPLIANCE Solution adopters who comply with existing environmental policies can realize ILULÄ[Z ^OPSL TPUPTPaPUN YPZR >OPSL JVTWSPHUJL ^P[O YLN\SH[VY` WVSPJPLZ VM[LU ULJLZZP[H[LZ PUJYLHZLK JVZ[Z [OLYL HYL THU` WV[LU[PHS ILULÄ[Z -VY L_HTWSL procuring and operating the solutions necessary to remove nitrous oxide from industrial smokestacks or to remove toxic contaminants from industrial wastewater can result in better relations with monitoring bodies, regulatory enforcers and other government entities. *VTWS`PUN ^P[O WVSPJPLZ YLK\JLZ [OL YPZR VM PUJ\YYPUN ÄUHUJPHS WLUHS[PLZ VY even being shut down, for non-compliance. As illustrated in the YiXing example, meeting regulatory requirements, especially when compliance is independently

3 4

Alcoa, “2020 Framework for Sustainability,” http://www.alcoa.com/, (accessed on August 18, 2009) Alcoa, “Alcoa Again Named One of the World’s Most Sustainable Corporations at Davos,” January 29, 2009, http://www.alcoa.com/

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Benefits of Compliance 5,6,7 YiXing-Union Cogeneration Co., Ltd. is a coal-fired cogeneration power plant located in YiXing, Jiangsu province, a historic city famous for its teapots. Yixing teapots have a long and colorful history dating back to the Song Dynasty (960 1279) when purple clay was first mined around the YiXing area. „ Being located in the center of a historic city creates challenges for an industrial facility like the YiXing-Union Cogeneration plan „ To maintain good relationships within the local community, the company is an early adopter of advanced emission reduction technologies, including their spring 2009 project to lower nitrous oxide emissions „ Working with LP Amina, an environmental and energy solution provider, the facility upgraded their steam generator to become one of the first plants in China to perform an in-furnace de-NOx modification „ The modification improved the plant’s overall efficiency and lowered its NOX emissions to 40% below China’s existing standard, in-line with current U.S. and European standards „ As a direct result of meeting mandates ahead of schedule, YiXing-Union Cogeneration is building a positive relationship with local and provincial governments „ In turn, regulators are now promoting YiXing-Union Cogeneration’s results as a showcase of what they want other local power generators to accomplish Being a good corporate citizen brings benefits both to YiXing-Union Cogeneration and to the broader YiXing community. As cities like YiXing continue to grow, companies like YiXing-Union Cogeneration can meet rising energy needs while protecting local environments and building strong reputations.

HUK[YHUZWHYLU[S`]LYPÄLKJHUOLSWJVTWHUPLZI\PSKYLW\[H[PVUZHZYLZWVUZPISL corporate citizens and contribute to strong market positioning. Policy compliance can also facilitate a company’s ability to engage with regulators on multiple topics, including the evolution of policies and the optimization of standards. Firms with poor government relations may be less likely to be invited to such high-level forums of discussion.

Solution Providers SIMILAR TO SOLUTION ADOPTERS, SOLUTION PROVIDERS have tremendous opportunities to accelerate greentech markets in China. These include better matching greentech ZVS\[PVUZ [V SVJHS THYRL[ YLX\PYLTLU[Z LK\JH[PUN HKVW[LYZ VU NYLLU[LJO ILULÄ[Z minimizing life cycle environmental impact of products and leveraging commercial partnerships.

MATCH SOLUTIONS TO LOCAL MARKET REQUIREMENTS Many existing green technologies, developed for use in other countries, have yet to ILJ\Z[VTPaLK[V*OPUH»ZZWLJPÄJTHYRL[ULLKZ6ULWV[LU[PHSKPMMLYLUJLIL[^LLU China and other markets, for example, is that Chinese adopters are often more cost-sensitive. More economically-priced solutions or new long-term contract structures can support the widespread adoption of already proven solutions. Aside from pricing, unique market features, such as the type of pollutants in China’s water bodies or the associated regulatory requirements, may also necessitate different greentech solutions than those required elsewhere. Once

China Greentech Initiative interview with Mr. Hu Zhijie, Deputy General Manager at YiXing-Union Cogeneration Co., Ltd. on August 14th, 2009 China Greentech Initiative interview with Will Latta, Managing Director at LP Amina on August 14th, 2009 Jiangsu Frontier Electric Technologies, “Boiler Performance Test Report after Combustion System Retrofit for Yixing Xielian Cogeneration Plant Boiler Unit #8, DL-BG-2009-767,” 2009 5 6 7

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PROMOTING GREENER CHINESE CITIES GENERAL ELECTRIC (GE) PARTNERED WITH BEIJING’S QINGHE WASTEWATER TREATMENT PLANT TO RECYCLE WASTEWATER BEFORE THE BEIJING OLYMPICS.8 „ Beijing is one of China’s most water-scarce cities due to rapid urbanization and economic development, and exacerbated by limited water resources and strong upstream water consumption „ To address this problem, GE put in place wastewater treatment membranes and other technologies to treat LMÅ\LU[MYVT8PUNOL>HZ[L^H[LY;YLH[TLU[7SHU[»ZJSHYPÄJH[PVUWVVS „ Aside from increased municipal water supply for the residents of Haidian and Zhouyang districts, BeijingYLZPKLU[ZHUK]PZP[VYZK\YPUN[OL6S`TWPJMLZ[P]P[PLZILULÄ[[LKIYVHKS`MYVT[OLU\TLYV\ZWSHU[Z [YLLZHUKÅV^LYZ^OPJO^LYLPYYPNH[LKI`[OPZYLJ`JSLK^HZ[L^H[LY

solutions are adapted to these market needs and regulatory requirements, solution providers can market improved regulatory compliance as an additional driver for adoption. )`KL]LSVWPUNPUUV]H[P]LTHYRL[ZWLJPÄJZVS\[PVUZMVYLPNUZVS\[PVUWYV]PKLYZ have the potential to improve their market share in China. Forging partnerships with local providers that help develop a better understanding of local needs may IYPUNNYLLU[LJOZVS\[PVUZ[VTHYRL[TVYLLMÄJPLU[S` Partnerships with local universities are also a productive way of working to adapt solutions to China’s market needs. The Tsinghua-BP Clean Energy Research and Education Center in Beijing, with its numerous collaborative projects on a range of clean energy issues, is a prime example of this type of approach.

EDUCATE ADOPTERS ON GREENTECH BENEFITS Given the current lack of recognition and understanding of greentech solution ILULÄ[ZWYV]PKLYZOH]LHUVWWVY[\UP[`[VLK\JH[LWV[LU[PHSHKVW[LYZOLSWPUN[V establish demand for greentech products and services. Collaboration with other solution providers, adopters, NGOs or government agencies provides solution providers the opportunity to raise awareness and promote the diffusion of green technologies they represent. This type of engagement often allows enterprises to enhance their corporate reputations as environmentally-minded companies. As industrialized countries have developed, reputation building and brand enrichment have grown in importance, and there are few reasons to believe that China’s experience will be substantially different. Solution providers across China are also able to build consumer awareness about the advantages of adopting green technologies by working to improve environmental, health and safety conditions in the communities in which they are involved.

SUPPLY PRODUCTS WITH MINIMIZED LIFE CYCLE ENVIRONMENTAL IMPACT :VS\[PVUWYV]PKLYZOH]LZPNUPÄJHU[VWWVY[\UP[PLZ[VKL]LSVWHUKJVTTLYJPHSPaL solutions that minimize life cycle environmental impact.
General Electric, “Water reuse project of Qinghe Wastewater Treatment Plant,” 2008

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to develop or own. As China’s greentech markets mature, providers with solutions that minimize life cycle environmental impact will be able to differentiate their WYVK\J[ZMYVT[OLJVTWL[P[PVU;OLZLILULÄ[ZJHUILM\Y[OLYWYVTV[LKI`NYLH[LY [YHUZWHYLUJ`HUKLK\JH[PVUHIV\[SPMLJ`JSLLU]PYVUTLU[HSJVZ[ZHUKILULÄ[Z

LEVERAGE COMMERCIAL PARTNERSHIPS Solution providers can address challenges associated with geographic diversity and JVZ[ILULÄ[KPZJVUULJ[ZI`WHY[ULYPUN^P[OJVTWHUPLZ[OH[VMMLYJVTWSPTLU[HY` geographical footprints or operate in different parts of the value chain. One good example of such partnerships is the new biofuel relationship between China National Cereals, Oil & Foodstuff Corporation (COFCO), Novozymes and Sinopec, ^OPJOPZWYVÄSLKILSV^

Financial Investors THERE ARE A NUMBER OF OPPORTUNITITESMVYÄUHUJPHSPU]LZ[VYZ[VPUJYLHZL[OLPY HIPSP[`[VLMMLJ[P]LS`ÄUHUJLHUKPU]LZ[PU*OPUH»ZNYLLU[LJOTHYRL[Z2L` VWWVY[\UP[PLZL_PZ[PU[OLKL]LSVWTLU[VMNYLLU[LJOYLSL]HU[ÄUHUJPUNZRPSS ZL[ZHUK[OLLTWSV`TLU[VMUL^ÄUHUJPUNTLJOHUPZTZ[VZ\WWVY[THYRL[ development.

BIOFUEL VALUE CHAIN INTEGRATION OPPORTUNITY9 „ As a leading grain, oils and foodstuffs import and export group in China, COFCO has access to biomass supply chains necessary for largescale biofuel production „ The Danish company Novozymes has the technical expertise to optimize the enzymes necessary to convert the biomass resources from COFCO’s supply chains into usable ethanol supplies „ On the distribution side, Sinopec owns roughly a third of China’s gas stations, providing the infrastructure required to distribute ethanol produced by the partnership

BENEFITS: None of these companies individually had the capacity to collect, process and distribute bioenergy supplies to commercial consumers in China. Without a formal partnership, each company would have had to enter into complex contractual relationships to guarantee that revenue generated from commercial customers could be passed through the supply chain for the benefit of all participants. A collaborative approach was required, so that the costs of bioethanol commercialization could be integrated with revenue, stimulating investment and creating a more profitable long-term partnership for all three companies.

ENHANCE CAPABILITIES *OPUHIHZLK ÄUHUJPHS PU]LZ[VYZ OH]L [OL WV[LU[PHS [V LUOHUJL [OLPY JHWHIPSP[PLZ in areas such as the assessment and monitoring of clients’ environmental, health and safety (EHS) risks. Another is mastering the use of new approaches to value investments in greentech sectors. Improving EHS risk evaluation and assessment will likely allow for greater WHY[PJPWH[PVU I` ÄUHUJPHS PU]LZ[VYZ PU *OPUH»Z NYLLU[LJO THYRL[Z ,/: YPZRZ include direct risks such as liabilities for environmental damages or more indirect market, credit or reputational risks as greentech businesses interact with the market. Similarly, revenue streams for solar or wind power generation are highly KLWLUKLU[ VU YLZV\YJL H]HPSHIPSP[` HUK ÄUHUJPLYZ OH]L [V [HRL PU [V HJJV\U[ ZPNUPÄJHU[WV[LU[PHSKPZY\W[PVUZ[VJHZOÅV^HZHYLZ\S[;OLNYLH[LY[OLHIPSP[`MVY *OPUH»ZÄUHUJPLYZ[VHZZLZZ[OLWV[LU[PHSPTWHJ[VMKPYLJ[HUKPUKPYLJ[,/:YPZRZ [OLNYLH[LY[OLHIPSP[`[OL`^PSSOH]L[VPU]LZ[WYVÄ[HIS`PU*OPUH»ZNYLLU[LJOTHYRL[Z At a global level, 69 banks have adopted the Equator Principles, which include a voluntary set of benchmarks for managing environmental issues in development ÄUHUJL10 ;OLZL IHURZ OV^L]LY HYL UV[ HJ[P]LS` ÄUHUJPUN *OPUH»Z NYLLU[LJO sectors. As of August 2009, only one medium-sized Chinese bank, Industrial Bank Co., had adopted the Equator Principles. Widespread adoption could help China’s banks demonstrate a commitment to environmental principles and give them tools to enhance their project capabilities. Novozymes, “Novozymes and Sinopec,” http://www.novozymes.com/, February 2, 2009 (accessed on 12 August 2009) The Equator Principles, “A Benchmark for the Financial Industry to Manage Social and Environmental Issues in Project Financing,” http://www. equator-principles.com/ (accessed on August 12, 2009)

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OUTSOURCING ENVIRONMENTAL EXPERTISE Investors can enhance their capabilities to evaluate greentech-related investments opportunities by collaborating with companies with established environmental expertise. One option is outsourcing environmental help desks to third-party specialists. For example, PricewaterhouseCoopers has provided help desk services to assist financial investors with: „Integrating environmental criteria in credit processing, procedures and instructions „Training credit officers, back-offices, sales offices and recovery managers „Developing instructions, training documents and train-the-trainer concepts „Ensuring compliance with environmental credit risk instructions „Conducting environmental due diligences for various types of financial transactions

The second opportunity is to increase the sophistication of the valuation HWWYVHJOLZHZ\ZLK[VHZZLZZ[OLPTWHJ[ZVMZ\Z[HPUHIPSP[`VUJSPLU[Z»ÄUHUJPHS WLYMVYTHUJL0U*OPUHSPRLLSZL^OLYLÄUHUJPLYZ[LUK[V\ZLTVKLSPUNMYHTL^VYRZ and tools with which they are most comfortable. While traditional tools can support NYLLU[LJOÄUHUJPUNKLJPZPVUZ[OL`VM[LUULLK[VILJVTIPULK^P[OV[OLY[`WLZVM analysis that incorporate diverse perspectives (e.g. regulatory risk modeling of potential M\[\YLWVSS\[PVU[H_LZPUVYKLY[VM\SS`JHW[\YLNYLLU[LJOÄUHUJPUNK`UHTPJZ11 *OPULZL ÄUHUJPLYZ JV\SK LUOHUJL [OLPY NYLLU[LJO JHWHIPSP[PLZ HZ KLZJYPILK above in a number of ways. The most common would be to partner with foreign banks and learn from their experiences. A second way would be to recruit specialized staff and develop training programs targeting the necessary skill sets. Alternatively, partnering with companies who can provide the necessary expertise ondemand can avoid the costs associated with building up new capabilities in house.

UTILIZE NEW FINANCING MECHANISMS 5L^ ÄUHUJPUN TLJOHUPZTZ HWWSPJHISL [V NYLLU[LJO PU]LZ[TLU[Z JV\SK WYLZLU[ additional opportunities for accelerating the development of China’s greentech THYRL[9LSL]HU[ÄUHUJPHS[VVSZL_PZ[HJYVZZNYLLU[LJOWYVK\J[J`JSLZMYVTLHYS`Z[HNL R&D through demonstration, deployment and diffusion of greentech solutions. The earliest stages of greentech R&D in China and elsewhere are commonly funded by the public sector. However, there are opportunities for angel investors HUK[LJOUVSVN`PUJ\IH[VYZ[VNL[PU]VS]LKPULHYS`Z[HNLZVMÄUHUJPUN[LJOUVSVN` development. Many venture capital funds also have capital that they distribute in YLSH[P]LS`ZTHSSHTV\U[Z[VLHYS`Z[HNLJVTWHUPLZ;OPZ[`WLVMÄUHUJPUNZOV\SK present an area of opportunity as it becomes more common in China. Venture capital and private equity funds can play a more important role at the demonstration stage. China’s central government is supportive of channeling ]LU[\YL PU]LZ[TLU[ PU[V NYLLU[LJO WYVQLJ[Z HUK JVTWHUPLZ WYV]PKPUN ÄUHUJPHS investors with opportunities to build relationships with local regulators in order to facilitate their access to China’s greentech markets. +LI[ HUK LX\P[` ÄUHUJPUN MVY KLTVUZ[YH[PUN HUK KLWSV`PUN ZVS\[PVUZ PZ HSZV an important tool in advancing greentech opportunities. In asset-light greentech investment environments such as the pre-construction stages of solar power plant development, Chinese banks typically require full corporate guarantees on greentech investments and rarely offer non-recourse debt. Credit lines and loan guarantees between banks have been used in other regions to diversify credit risks and facilitate debt investment in this type of environment, suggesting there ZOV\SKILVWWVY[\UP[PLZ[VM\Y[OLYTHRL\ZLVM[OPZ[`WLVMÄUHUJPUNPU*OPUH

CFO Research Services and Jones Lang LaSalle, The Role of Finance in Environmental Sustainability Efforts (Boston, MA, U.S.: CFO Publishing Corp., March 2008), 11 International Finance Corporation, IFC CHUEE Program to Finance Two Energy Efficiency Projects in Western China (Washington DC, U.S.: The World Bank, 2007) 13 Xu, Calvin Q., “China Utility-based Energy Efficiency Finance (CHUEE) Program: One Finance Solution to Climate Change” (presentation given at Financing Cambodia’s Sustainable Energies, Phnom Penh, Cambodia, September 3, 2007) 14 MacLean, John, “New Developments in Energy Efficiency Finance in China” (presentation given at Asia Development Bank’s Asia Clean Energy Week, Manila, Philippines, June 4, 2008) 11

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DEVELOPING MULTI-PARTY APPROACHES 12,13,14 The International Finance Corporation (IFC) has a China Utility-based Energy Efficiency Finance Program (CHUEE), which addresses three key opportunities to enhance greentech financing in China: „ Promote financing through guarantees – The IFC provides partial guarantees to local banks for their investments in power utility energy efficiency projects or equipment purchases „ Use partners to identify opportunities - Utility companies, energy management companies and energy efficiency suppliers act as commercial banks’ channel partners to recommend projects to bank loan officers „ Build capabilities – The CHUEE program contains a training element whereby banks can improve their skills in evaluating and monitoring environmental investments While the CHUEE program has benefits, investors have also identified drawbacks to the program. Firstly, a relatively small number of banks are currently participating in the CHUEE program, and secondly, financing amounts may not be sufficient for the energy efficiency projects China’s utilities would like to undertake. Despite its drawbacks, the CHUEE program is a good starting point for effective greentech financing in China. The Chinese government and banking sector could build on the CHUEE experience to launch a program that can both scale guarantee financing instruments as well as mobilize financing partners’ technical expertise to more effectively evaluate potential greentech investments. 7YVQLJ[ ÄUHUJL YLX\PYLK H[ [OL KLTVUZ[YH[PVU HUK KLWSV`TLU[ Z[HNLZ VM greentech commercial solution development, may require more complex and ZVWOPZ[PJH[LK ÄUHUJPHS PUZ[Y\TLU[Z HUK Z[Y\J[\YLZ 0U HKKP[PVU [V T\S[PWSL KLI[ and equity components, these can also include syndicated loans provided by a U\TILYVMÄUHUJPHSPU]LZ[VYZ[VZOHYLWYVQLJ[YPZRZ:[HUKHYK*OHY[LYLK)HURMVY example, offers both project structuring advice as well as genuine non-recourse lending to well-structured renewable energy projects in China. This may be able to serve as a model for other banks in China seeking to do the same. Several of China’s greentech sectors are seeing the increasing use of equity investments as a way of raising capital. In China’s water sector, for example, where ÄUHUJPUN H ML^ `LHYZ HNV ^HZ VI[HPULK TVYL JVTTVUS` [OYV\NO ,UNPULLYPUN Procurement and Construction (EPC), build-operate-transfer (BOT) or other project ÄUHUJPUNHWWYVHJOLZ^H[LYJVTWHUPLZHYLUV^[HRPUNLX\P[`Z[HRLZPUU\TLYV\Z water infrastructure projects. Capital markets, both inside and outside China, also provide an opportunity for China’s greentech companies to raise capital. Financiers can work with local NYLLU[LJOJVTWHUPLZ[VZ\WWVY[[OLPYÅV[H[PVUVU[OL:OLUaOLU:OHUNOHP/VUN 2VUNVYV[OLYTHYRL[Z7HJRHNPUNT\S[PWSLYPZRKP]LYZPÄLKNYLLU[LJOPU]LZ[TLU[Z into a common portfolio and securitizing the portfolio to raise public capital is a TL[OVK[OH[JHUIL\ZLKI`ÄUHUJPLYZ:PUNHWVYL»Z/`Å\_>H[LY;Y\Z[PZHULHYS` innovator in this area with its Singapore-listed public security representing multiple water projects in both China and other countries. +PMMLYLU[NYLLU[LJOZLJ[VYZOH]LKP]LYZLULLKZHUKYLX\PYLJ\Z[VTPaLKÄUHUJPHS WYVK\J[Z(ZÄUHUJPHSZLY]PJLWYV]PKLYZPUUV]H[LWYVK\J[Z[VTLL[[OLZLULLKZPU China there will be opportunities to uncover attractive greentech investments. Energy service companies (ESCOs), for example, commonly carry out energy LMÄJPLUJ`YL[YVÄ[ZVMI\PSKPUNZHUKPUK\Z[YPHSMHJPSP[PLZHUKHYLYLPTI\YZLKMYVT[OL YLZ\S[PUNLSLJ[YPJP[`JVZ[ZH]PUNZ-VYHUPUKP]PK\HSI\PSKPUNLULYN`YL[YVÄ[NLULYHSS`

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H YLSH[P]LS` ZTHSS HTV\U[ VM JHWP[HS PZ ULLKLK \WMYVU[ [V ÄUHUJL LX\PWTLU[ purchase and installation. In China however, where large-scale loans are the norm, THU`,:*6ZÄUKP[KPMÄJ\S[[VZLJ\YLÄUHUJPUN Industry experts suggest that Chinese banks have an opportunity to launch UL^ KLI[ WYVK\J[Z ZWLJPÄJHSS` J\Z[VTPaLK MVY ,:*6Z HUK PUKP]PK\HS LULYN` LMÄJPLUJ` YL[YVÄ[Z :PTPSHYS` [OPYKWHY[` PU[LYTLKPHYPLZ JV\SK HNNYLNH[L ZTHSSLY LULYN` LMÄJPLUJ` WYVQLJ[Z HJYVZZ T\S[PWSL LU[P[PLZ HUK ZLLR ÄUHUJPUN MVY [OLZL projects on a joined basis. In the U.S., where public buildings have been avid ESCO adopters and banks more willing to lend to small projects, the ESCO industry grew around 20% each year between 1990 and 2006, reaching over US$3.5 billion annually by 2006.15 6ULV[OLYYPZRYLSH[LKÄUHUJLVWWVY[\UP[`MVY*OPUH»ZNYLLU[LJOÄUHUJPHSZLY]PJL providers is insurance. Environmental insurance products are used frequently both inside and outside China, most commonly to protect farmers from weather disturbances, but also to protect wind farms against wind resource disturbances. China-based insurers may also have the opportunity to insure assets and income Z[YLHTZVMNYLLU[LJOÄUHUJPLYZZVS\[PVUWYV]PKLYZHUKHKVW[LYZ16

Government Regulators AS STRESSED THROUGHOUT THIS REPORT, China’s policy makers have already made substantial progress in creating and implementing policies that protect the environment and enable the development of the greentech market. Given the pace desired and magnitude of the challenges faced, policy makers still have a number of opportunities to support China’s efforts to become an environmentally sustainable economy.

REFINE POLICIES AND OPTIMIZE STANDARDS To address the challenges of China’s complex greentech policy environment, China’s policy makers can continue to support relevant medium and long-term policy planning efforts, placing emphasis on coordinating plans across multiple regulatory agencies. As outlined previously, China’s greentech markets are overseen by a wide range of regulatory entities using a diverse set of policy instruments. This has resulted in a complex and at times confusing regulatory environment. One approach used in other countries to manage the complexity of environmental issues is to introduce new cross-sector regulatory agencies. To manage the complex policy environment surrounding water issues, for example, Singapore’s government created the Ministry of Environment and Water Resources, which has overall responsibility for water resources and coordinates the water policy activity of other regulators. While the NDRC is putting in place some measures for national harmonization of energy policy, many of China’s renewable energy market observers have pointed to feed-in electricity tariffs as an area where substantial policy divergence has occurred at local levels across China. Greater interprovincial coordination on this and other issues should improve the attractiveness of national markets. (KKYLZZPUNWVSPJ`NHWZPUZWLJPÄJNYLLU[LJOZLJ[VYZHSZVWYLZLU[ZYLN\SH[VYZ with methods to strengthen target greentech markets in China. The country’s NV]LYUTLU[PZTV]PUNYHWPKS`[VKLWSV`H^PKLYHUNLVMZ\IZPKPLZ[H_ILULÄ[Z and other industry promotion policies to drive the development of China’s NYLLU[LJOTHYRL[Z*VU[PU\PUN[VYLÄUL[OLZLWVSPJ`[VVSZ[VLUOHUJL[OLPYPTWHJ[ JHUVUS`M\Y[OLYILULÄ[[OLKL]LSVWTLU[VM*OPUH»ZNYLLU[LJOZLJ[VYZ;OL*OPUH Greentech Report sector chapters identify policy circumstances in each of the ZL]LU NYLLU[LJO ZLJ[VYZ PU]LZ[PNH[LK I` [OL 0UP[PH[P]L HUK OPNOSPNO[ ZWLJPÄJ opportunities to accelerate market development.

Hopper, Nicole et al., “A Survey of the US ESCO Industry: Market Growth and Development from 2000 to 2006,” (Berkeley, CA, U.S.: Lawrence Berkeley National Laboratory, May 2007), 11 United Nations Environment Programme and Global Environment Facility, “UNEP Feasibility Studies for the Development of Insurance Solutions for Renewable Energy Projects: Project Status Note Number Three,” September 2008, http://www.uneptie.org/

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Also at the individual sector level, opportunities exist to improve environmental and greentech solution standards above today’s levels. China’s government has made dramatic steps to upgrade many environmental standards, in areas including H\[VTVIPSL LTPZZPVUZ I\PSKPUN LULYN` LMÄJPLUJ` HUK WV[HISL ^H[LY X\HSP[` [V levels equal to or even superior to international levels. However, standardization represents a complex and fast-changing landscape, providing the government additional opportunities to further develop China’s policy environment. Emerging greentech areas, such as coal mining land recovery and collapse provisions or interconnection of vehicles to China’s electric power infrastructure, currently lack relevant standards, contributing to market uncertainty. China has well-established standards development processes, but may accelerate greentech market development by enhancing collaboration with China’s industry associations in order to incorporate greater diversity of technical expertise into the development process. In addition, as global trade increasingly links China’s greentech markets with markets in other parts of the word, participating in the development of international standards and building domestic standards that are in line with international norms may enable China to more effectively import advanced technologies and export Chinese solutions to the world.

ENFORCE COMPLIANCE China has taken dramatic steps in recent years to bring its policies and standards in line with international norms and best practices. Compliance, however, remains uneven across different regions and across different sized market players. While central policy makers usually draft the laws and standards with which market participants are required to comply, it is commonly provincial and municipal regulators who have enforcement responsibility. Central agencies may address this challenge by supporting centralized training programs for local regulators or highlighting strong cases of effective local enforcement as best practices to be replicated. The scale and speed at which China is trying to address its environmental issues in the absence of a single best-in-class model to follow make this effort more challenging, but also more rewarding as China has an opportunity [VKLÄULHUL^TVKLSVMZ\Z[HPUHISLKL]LSVWTLU[ Regulators can also increase policy compliance by supporting the development VMYVI\Z[H\KP[PUNVY]LYPÄJH[PVUWYHJ[PJLZMVYWVSPJ`JVTWSPHUJL(ZHUL_HTWSL companies under China’s Top-1000 Energy-Consuming Enterprises program are required to submit annual energy audits to the government, but there are few standards for the methodologies or controls to be used in these auditing processes. Outside China, governments sometimes outsource policy compliance monitoring to non-governmental entities. For example, Seattle, Washington, in the U.S., requires public buildings larger than 5,000 square feet to achieve LEED (a thirdWHY[`NYLLUI\PSKPUNZ[HUKHYKJLY[PÄJH[PVU17
Stephenson, Janet, “Case Study: Seattle Sets the Standard for U.S. Green Buildings” (paper presented at the C40 Large Cities Climate Summit, New York, May 25, 2007)

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FACILITATING GREENTECH DEVELOPMENT AND DEPLOYMENT The economic development agency of the Republic of Chile has instituted programs to help power generating companies assess financial viability of renewable energy projects and to assist commercial banks in lending to the renewable energy sector.19 FOR RENEWABLE ENERGY PROJECT OWNERS: „ Project preparation matching funds for natural resource assessment, feasibility and environmental studies, and CDM documentation „ Cost-sharing on other areas of advanced project preparation FOR RENEWABLE ENERGY INVESTORS: „ Credit lines for lending to renewable energy projects offering 30-month grace periods and repayment terms of up to 12 years allowing them to invest as much as US$13 million in individual projects

conduit for government outreach efforts to inform potential greentech adopters HIV\[ LJVUVTPJ HUK LU]PYVUTLU[HS JVZ[Z HUK ILULÄ[Z VM [OLPY WYVJ\YLTLU[ decisions.

FACILITATE FINANCING As noted above, in the early stages of greentech solution development, companies in China and elsewhere often rely heavily on public funding, either in collaboration with academia or through direct government support. With more than 20 subordinate institutes in its “Science and Technology for Resources and the Environment” research area, the Chinese Academy of Sciences (CAS) PZVULVM*OPUH»ZTVZ[PUÅ\LU[PHSJOHUULSZMVYZ[H[LZWVUZVYLKYLZLHYJO*OPUH»Z NV]LYUTLU[PZHSYLHK`THRPUNZPNUPÄJHU[PU]LZ[TLU[ZPUNYLLU[LJOYLZLHYJOI\[ might have yet more opportunity to further use grants, prizes and other public funding mechanisms to support greentech innovation. Directly funding greentech development through research institutes or grant WYVNYHTZ PZ UV[ [OL VUS` ^H` [OH[ *OPUH»Z NV]LYUTLU[ JHU ÄUHUJPHSS` Z\WWVY[ [OL KL]LSVWTLU[ VM NYLLU[LJO PU *OPUH 6I[HPUPUN KLI[ ÄUHUJPUN PZ VM[LU H KPMÄJ\S[JOHSSLUNLMVYNYLLU[LJOWYV]PKLYZHUKHKVW[LYZ^OVHYLOVWPUN[VKLWSV` greentech solutions in China. In the same way that many of these projects are VM[LULSPNPISLMVYJVUJLZZPVUHY`ÄUHUJPUNMYVTPU[LYUH[PVUHSVYNHUPaH[PVUZSPRL[OL Asian Development Bank, China can and already does make use of its policy banks to provide reduced-interest or otherwise favorable lending. There is potential for China’s government to utilize a loan softening program (which often includes either an interest subsidy or a partial guarantee) to enable commercial banks to make risk assessment-based investments in greentech sectors on concessionary terms. The Indian Ministry of New and Renewable Energy, for example, has successfully used such an approach to help Indian banks offer loans for the adoption of solar water heaters.18 (ZHM\Y[OLYVWWVY[\UP[`[V\ZLWVSPJ`[VVSZ[VMHJPSP[H[L[OLÅV^VMWYP]H[LJHWP[HS into greentech sectors, China’s government can also support greentech market KL]LSVWTLU[I`[HRPUNZ[LWZ[VOLSW*OPUH»ZÄUHUJPLYZPTWYV]L[OLPYNYLLU[LJO relevant capabilities. China’s government is already helping to stimulate the expansion of these skills. As noted in the Regulatory Response chapter, China’s government rolled out a so-called Green Credit program in July of 2007 whereby banks were required to put in place environmental impact assessment and risk management controls for investments to environmentally damaging industries.20 (Z [OL NV]LYUTLU[ KPYLJ[S` Z\WWVY[Z HUK SL]LYHNLZ *OPUH»Z ÄUHUJPHS ZLJ[VY to support the development of greentech solutions, another area where China’s government can play a key enabling role is in the formation of a commercial

MaClean, John et al., “Public Finance Mechanisms to Mobilise Investment in Climate Change Mitigation,” (United Nations Environment Programme, 2008), 35 Ibid., 15 20 Ministry of Environmental Protection, “Calendar in July 2007,” http://english.mep.gov.cn/, November 27, 2007 (accessed on August 12, 2009) 18

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environment conducive to greentech industries and solutions. The U.S.-China Clean Energy Forum, a dialogue on clean energy issues facing the two countries, has called for the creation of “Strategic Energy Zones” to facilitate innovation in new [LJOUVSVNPLZWHY[PHSS`[OYV\NO[OL\ZLVMUL^ÄUHUJPUNTLJOHUPZTZ21 Creating special industrial zones to promote the development of selected industries is an area in which China has extensive experience and national and local policymakers should be able to leverage this to further enable the development of substantial greentech industries.

LIBERALIZE MARKETS As discussed in the previous chapter, some of China’s greentech markets are highly-concentrated or controlled primarily by state-owned enterprises. While [OLYLHYLPTWVY[HU[ILULÄ[Z[VOH]PUNJLY[HPUPUK\Z[YPLZ\UKLYJSVZLYNV]LYUTLU[ control at critical stages in their development, more open markets also have clear ILULÄ[ZWHY[PJ\SHYS`YLSH[LK[VLUHISPUNLMÄJPLUJ`HUKPUUV]H[PVU-PUKPUN[OLYPNO[ balance will provide China an opportunity to effectively utilize foreign and private sector expertise and technologies to address its environmental issues, while also supporting the development of healthy domestic greentech industries. One path is to create mechanisms for private and foreign participation in statedominated markets. For instance, in the coal sector, regulators could accelerate market development by lowering tariffs on the importation of mining solutions and by encouraging foreign investment in coal mining and infrastructure development. Capitalization requirements and opaque public works bidding processes constitute barriers to private involvement in some greentech markets such as wind power. 6UL HWWYVHJO YLN\SH[VYZ TPNO[ [HRL [V WYVTV[L LMÄJPLUJ` HUK PUUV]H[PVU PU China’s greentech sectors could be a relaxation of restrictions on private and foreign market participation where appropriate. A further step regulators could take would be a continued gradual relaxation of currency exchange restrictions, which could help provide Chinese greentech companies easier access to foreign capital as an additional source of funding. (UV[OLY WH[O YLN\SH[VYZ JV\SK W\YZ\L [V Z\WWVY[ [OL ÄUHUJPUN VM NYLLU[LJO solutions would be to establish special technology-focused or even greentechMVJ\ZLKJHWP[HSTHYRL[ZHRPU[V5(:+(8PU[OL<:[VLUHISLZPTWSPÄLKÅV[H[PVU MVYNYLLU[LJOJVTWHUPLZ;OLILULÄ[ZVMZ\JOHTV]LJV\SKILJVTWV\UKLKPM UL^JS\Z[LYZVMÄUHUJPHSPUZ[P[\[PVUZJV\SKILKL]LSVWLKWV[LU[PHSS`PU[OLZHTL HYLHZHZ[OLZLTHYRL[Z[VWYV]PKLZWLJPHSPaLKÄUHUJLVWWVY[\UP[PLZ 4VYL NLULYHSS` THU` VM [OL ÄUHUJPUN VWWVY[\UP[PLZ OPNOSPNO[LK HIV]L JHU be fully realized only with strong regulatory support. This support could include best-practice guidelines for greentech public-private partnerships or other effective investment arrangements, such as power purchase agreements. Additionally, regulatory support could entail incentives for domestic commercial banks to issue concessionary loans through guarantee programs.

SUPPORT ENVIRONMENTAL EXCHANGES Another opportunity regulators have for further promoting China’s greentech markets relates to supporting increased use of national and international LU]PYVUTLU[HSL_JOHUNLZ;OLZLL_JOHUNLZHSSV^JVTWHUPLZ[VYLZWVUKÅL_PIS` [V LU]PYVUTLU[HS WVSPJPLZ I` NP]PUN [OLT VW[PVUZ [V W\YJOHZL ºLU]PYVUTLU[HS assets’22 from other companies rather than invest in the greentech solutions needed to create them themselves. This would allow market forces to allocate capital to projects that most effectively reduce emissions or achieve other environmental ILULÄ[Z It seems likely that environmental exchanges will continue to be a part of environmental issue management for some time to come. No matter where these M\[\YLTHYRL[ZKL]LSVW*OPULZLNYLLU[LJOJVTWHUPLZHYL^LSSWSHJLK[VILULÄ[ China’s greentech adopters will be able to monetize their environmental assets and [OLYLI`NHPUHKKP[PVUHSJOHUULSZMVYÄUHUJPUN[OLPYJHWP[HSPU]LZ[TLU[Z*OPUH»Z

US-China Clean Energy Forum, “Initiatives,” http://cleanenergyforum.net/ (accessed on August 11, 2009) While carbon emissions reductions are the most well-known environmental assets, other examples include emissions reductions of other air, water, or solid waste pollutants, or improvements in energy, water, or raw material efficiency.

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greentech solution providers will meanwhile have opportunities to sell solutions to companies participating in relevant environmental markets. Therefore, the question for China’s regulators is how to most effectively support [OLKL]LSVWTLU[VMLU]PYVUTLU[HSL_JOHUNLZ[VIYPUNYLZ\S[PUNILULÄ[Z[V*OPUH»Z greentech providers and adopters. One approach would be to enable further WHY[PJPWH[PVU PU [OL 2`V[V 7YV[VJVS»Z *SLHU +L]LSVWTLU[ 4LJOHUPZT *+4 (Z noted in the previous chapter, there are limitations in place on foreign investments in CDM projects in China. Creating mechanisms for increased foreign involvement could facilitate greater deployment of advanced foreign CDM-applicable NYLLUOV\ZL NHZ LTPZZPVUZ YLK\J[PVU ZVS\[PVUZ Z\JO HZ SHUKÄSS NHZ[VLULYN` technologies. Encouraging international environmental exchanges could also extend to supporting the creation of other international environmental exchanges, as successors to the CDM or otherwise. Irrespective of developments at the international level, China has already established domestic environmental exchanges in Beijing, Shanghai and Tianjin. These exchanges are discussing future potential trading of sulfur oxide (SOX), nitrous oxide (NOXHUKJOLTPJHSV_`NLUKLTHUK*6+LTPZZPVUZYLK\J[PVUJLY[PÄJH[LZ in addition to wider trading of carbon or other environmental assets. China’s government could drive the development of China’s greentech markets by further supporting the development of such exchanges. As noted in the Regulatory Response chapter, China’s government has gained experience with allocation of environmental targets to individual companies through the Top-1000 Energy-Consuming Enterprises Program. This experience should be useful if the government makes a move towards requiring companylevel reductions of other types of emissions related to its national environmental targets. Once individual companies have targets for environmental performance, using exchanges to minimize the costs of reaching these targets is a logical next step, and one to which regulatory support could lend further momentum. Like many opportunities to promote the development of greentech in China, building strong environmental exchanges is not something any one group of market stakeholders can do alone. Whether in relation to international or domestic environmental asset trading, China’s greentech adopters will have to work with ÄUHUJPLYZ[VKL]LSVWLMMLJ[P]LZ[YH[LNPLZMVYTVUL[PaPUNLU]PYVUTLU[HSHZZL[ZHUK using them to support capital investments. Greentech providers will also have to ^VYRTVYLJSVZLS`^P[OHKVW[LYZ[VOLSW[OLT\UKLYZ[HUKOV^HKVW[PVUVMZWLJPÄJ ZVS\[PVUZ JHU IL WHY[PHSS` ÄUHUJLK I` JHWP[HS TVIPSPaLK [OYV\NO LU]PYVUTLU[HS exchange transactions. Other market stakeholders also have important roles to play in creating the environments necessary for vibrant environmental exchanges and spreading information about them to encourage companies to participate.

Other Stakeholders A NUMBER OF OTHER STAKEHOLDERS, including academic institutions, nongovernmental organizations (NGOs) and international organizations, also have interest PUHUKWV[LU[PHSHIPSP[`[VPUÅ\LUJL[OLKL]LSVWTLU[VM*OPUH»ZNYLLU[LJOTHYRL[Z

DRIVE GREENTECH TRAINING A core opportunity is to develop and support environmental education and greentech training initiatives in China. Academic, non-governmental and international organizations often have considerable technical expertise in environmental issues, ^OPJOX\HSPÄLZ[OLT[VZ\WWVY[YLN\SH[VY`JHWHJP[`I\PSKPUNH[UH[PVUHSHUKSVJHS levels. One example of this support is the Joint U.S.-China Cooperation on Clean Energy (JUCCCE) Mayoral Training Program, which together with China’s Ministry of Housing and Urban-Rural Development, trained over 50 mayors from China’s largest cities on sustainability issues in 2008.23 Like regulators, solution providers and adopters also require training in the economic and environmental values of greentech solutions in China. This TreeHugger.com, “Greening China’s Mayors: A Q&A with Dr Steve Hammer of the Mayoral Training Program on Energy Smart Cities,” http://www. treehugger.com/ (accessed on August 11, 2009)

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knowledge can directly contribute to more effective investment decisions by solution providers and increased adoption by solution adopters. General public training initiatives and campaigns also support the development of the greentech market. Many NGOs, such as the Jane Goodall Institute, organize public awareness campaigns on environmental issues within China. These campaigns effectively raise the environmental awareness of the Chinese consumer, who is encouraged to support environmentally-friendly products and services, thus accelerating China’s greentech market development.

ENGAGE OTHER STAKEHOLDERS Another opportunity for academic, NGO and international organizations is to leverage their independent status to build links and communications channels IL[^LLUZVS\[PVUWYV]PKLYZZVS\[PVUHKVW[LYZÄUHUJPHSPU]LZ[VYZHUKYLN\SH[VYZ For example, by hosting forums, conferences and other industry meetings they provide a range of market participants with platforms to exchange information and build relationships, as well as address policy issues with regulators. Activities can develop beyond bringing stakeholder groups together. There are already a wide range of greentech conferences in China, but academic, nongovernmental or international organizations should have further opportunity to move beyond conferences to action-oriented meetings and ongoing dialogues YH[OLY[OHUVULVMML]LU[Z;OLZL\UHMÄSPH[LKVYNHUPaH[PVUZJHUL]LU[HRLKPYLJ[ action to support China’s greentech market development. For example, Econet China, coordinated by the German Industry and Commerce Greater China, hosts an extensive directory of Chinese and foreign greentech companies on their website as a tool for companies to locate and contact each other.24 Other organizations such as China Sustainable Energy Program (CSEP), funded I` ;OL ,ULYN` -V\UKH[PVU WYV]PKL NYHU[Z [V NV]LYUTLU[HMÄSPH[LK YLZLHYJO institutes that aid in shaping the Chinese government’s energy policies to reduce carbon dioxide emissions. The research institutes along with international policy experts advise the government on new energy policies.25

SPONSOR RESEARCH Academic, non-governmental and international organizations can also support the development of China’s greentech markets by conducting and disseminating research in greentech basic science and greentech solutions. For example, research institutes at China’s top universities typically have strong relationships with regulators, and are consequently in a good position to advise the government on issues as diverse as resource pricing policies and technical solution standards. Outside of academia, other groups such as China’s Energy Management Company Association (EMCA), an industry association with more than 200 company members HJ[P]LPU[OL,:*6ÄLSKHSZVJVUK\J[HUKKPZZLTPUH[LNYLLU[LJOYLZLHYJO,4*( grew from 59 organizations in 2003 to 212 ESCOs in 2007 and assisted the NDRC in the management of a World Bank/Global Environment Fund project to build ESCO capacity in China. Much of its focus is on disseminating information on new policies HUKYLN\SH[PVUZYLSH[LK[VLULYN`LMÄJPLUJ`HUKOLSWPUNI\PSK,:*6JHWHIPSP[PLZ26

MONITOR COMPLIANCE Third-party stakeholders can play a role in creating and supporting mechanisms for tracking compliance with existing policies. The use of independent regulatory compliance monitoring is somewhat limited in China compared to other countries. While many smaller, more local NGOs in China have transparency issues and unclear agendas, larger international NGOs have opportunities to investigate whether or not market participants are in compliance with policies and promote information transparency.

Econet China, “Company Directory,” http://www.econet-china.com/ (accessed on August 11, 2009) The China Sustainable Energy Program, “Approach,” http://www.efchina.org/ (accessed on August 13, 2009) Zhu, Lin, “ Enhanced Stakeholder’s Involvement in Energy Efficiency Action at Municipal Level” (presentation given at the International Seminar on Energy Efficiency Action at Municipal Level, Ulanbataar, Mongolia, May 9-10, 2006)

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Opportunities Are a Starting Point THE OPPORTUNITIES DISCUSSED IN THIS CHAPTER represent steps that China’s NYLLU[LJOTHYRL[Z[HRLOVSKLYZ¶ZVS\[PVUHKVW[LYZZVS\[PVUWYV]PKLYZÄUHUJPHS investors, government regulators and others – can take to address existing challenges, accelerate the development of greentech markets and contribute to China’s environmental sustainability. Developed with the input of the Initiative’s partners and strategic advisors, [OLZL VWWVY[\UP[PLZ HYL PU[LUKLK [V WYV]PKL N\PKHUJL YH[OLY [OHU ZWLJPÄJ recommendations, which can be customized and used in the decision-making processes of individual organizations. As such, these opportunities represent a starting point for the innovative steps that organizations will take over the next ZL]LYHS`LHYZPU*OPUH4VYLKL[HPSLKZLJ[VYZWLJPÄJVWWVY[\UP[PLZHYLPUJS\KLKPU the individual sector chapters of the full report. With thousands of organizations and millions of people involved in the ongoing development of China’s greentech markets, the China Greentech Initiative is optimistic that development challenges will be largely overcome, greentech THYRL[Z^PSSNLULYHSS`ÅV\YPZOHUK[OLJV\U[Y`^PSSHJJLSLYH[LP[Z[YHUZMVYTH[PVU[V an environmentally sustainable future.

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CLEANER CONVENTIONAL ENERGY RENEWABLE ENERGY ELECTRIC POWER INFRASTRUCTURE GREEN BUILDING CLEANER TRANSPORTATION CLEANER INDUSTRY CLEAN WATER

The full version of The China Greentech ReportTM contains detailed chapters that cover the Definition, Market Context, Regulatory Response, Solutions, Challenges and Opportunities for each sector. The full report is available at www.china-greentech.com.

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SECTOR SNAPSHOT

CLEANER CONVENTIONAL ENERGY DEFINITION

Cleaner Conventional Energy is defined as energy derived from nonrenewable fossil (e.g., coal, oil, natural gas) or nuclear fuel sources in ways which minimize the negative impact on the natural environment. „Cleaner coal includes solutions such as Coal Screening and Scrubbing, 0U[LNYH[LK .HZPÄJH[PVU *VTIPULK *`JSL 0.** HUK *HYIVU *HW[\YL HUK :LX\LZ[YH[PVU**:1 „*SLHULYNHZJVUZPZ[ZVMZVS\[PVUZSPRL*HW[\YLHUKH[LY 9LPUQLJ[PVUHUK6W[PTPaLK9LZLY]VPY4HUHNLTLU[[OH[HSSV^VPS[VILL_[YHJ[LK PU^H`Z^OPJOTPUPTPaLULNH[P]LPTWHJ[VU[OLUH[\YHSLU]PYVUTLU[ „5\JSLHY WV^LY PZ LULYN` KLYP]LK ]PH JVU[YVSSLK U\JSLHY ÄZZPVU VM YHKPVHJ[P]L TH[LYPHSZH[U\JSLHYWV^LYWSHU[Z

MARKET CONTEXT

114

*OPUHPZ[OL^VYSK»ZSHYNLZ[LULYN`JVUZ\TLYHM[LY[OL<:HUKP[ZLULYN`KLTHUK PZMVYLJHZ[LK[VNYV^HZT\JOHZ HUU\HSS`[VYLHJO TPSSPVU[VUZVMVPS LX\P]HSLU[4[VLI`2+LZWP[L*OPUH»ZJVTTP[TLU[[V[OLKL]LSVWTLU[VM YLUL^HISLLULYN`HZHUHS[LYUH[P]LZV\YJLMVYP[ZLULYN`KLTHUKHUHS`Z[ZWYLKPJ[ [OH[ *OPUH»Z KLWLUKLUJL VU JVU]LU[PVUHS LULYN` ^PSS JVU[PU\L PU [OL JVTPUN KLJHKLZ*VHSPZWYLKPJ[LK[VYLTHPU[OLKVTPUHU[LULYN`ZV\YJLPU[OLJV\U[Y`»Z M\LSTP_[OYV\NO[VH[SLHZ[3

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SECTOR SNAPSHOT: CLEANER CONVENTIONAL ENERGY

*OPUH»Z YLSPHUJL VU JVU]LU[PVUHS LULYN` OHZ OHK H Z\IZ[HU[PHS LU]PYVUTLU[HS PTWHJ[^P[O*OPUH»ZJVHSJVTI\Z[PVUHSVULJVU[YPI\[PUNTVYL[OHU VMNSVIHS *62 LTPZZPVUZ PU 4 0U HKKP[PVU [V *62 V[OLY JVU]LU[PVUHS WVSS\[HU[Z WYVK\JLKK\YPUNJVU]LU[PVUHSLULYN`NLULYH[PVUZ\JOHZUP[YVNLUV_PKLZHUKZ\SM\Y V_PKLZHYLHSZVVM[LUYLSLHZLKPU[V[OLH[TVZWOLYL\U[YLH[LK*OPUH»ZVPSPUK\Z[Y` HZHYLZ\S[VML_WSVP[H[PVUWYVK\J[PVUHUKYLÄUPUNWYVJLZZLZWYVK\JLZZ\IZ[HU[PHSHTV\U[ZVMWVSS\[PVUPU^H[LYNHZHUKZVSPKMVYT 0UVYKLY[VTHUHNLYLSPHUJLVUJVU]LU[PVUHSLULYN`HUK[OLWVSS\[PVU[OH[YLZ\S[Z MYVTP[Z\[PSPaH[PVU*OPUH»ZNV]LYUTLU[OHZPZZ\LKHU\TILYVMZLNTLU[ZWLJPÄJ KL]LSVWTLU[WSHUZ

CHINA’S REGULATORY RESPONSE

In the 11th-P]L@LHY7SHUMVY*VHS0UK\Z[Y`+L]LSVWTLU[*OPUH»Z NV]LYUTLU[JHSSLKMVYJVHSPUK\Z[Y`PU[LNYH[PVU[VILHJOPL]LK[OYV\NO[OLJSVZPUN VMZTHSSHUKPULMÄJPLU[JVHSTPULZHUKWV^LYWSHU[Z5 ;OL4LKP\THUK3VUN;LYT +L]LSVWTLU[7SHUMVY[OL6PS9LÄUPUN0UK\Z[Y`WYV]PKLZHZPTPSHYNVHS MVY JSVZPUN ZTHSS HUK TLKP\TZPaLK YLÄULYPLZ ^P[O SPTP[LK JHWHJP[PLZ V\[KH[LK [LJOUVSVNPLZ HUK OPNO WVSS\[PVU PU[LUZP[PLZ YLWSHJPUN [OLT ^P[O SHYNLY TVYL LMÄJPLU[YLÄULYPLZ 0U*OPUH»Z4LKP\THUK3VUN;LYT+L]LSVWTLU[7SHUMVY5\JSLHY7V^LY  [OL NV]LYUTLU[ JHSSLK MVY [OL HJJLSLYH[PVU VM U\JSLHY KL]LSVWTLU[ [V HJOPL]L SV^JHYIVU WYVNYLZZ >OPSL U\JSLHY WV^LY HJJV\U[LK MVY VUS`   VM *OPUH»Z [V[HS WV^LY TP_ PU  *OPUH WSHUZ [V PUJYLHZL [V[HS U\JSLHY JHWHJP[` MYVT .>PU[V.>I` (ZKLZJYPILKPU[OL,_PZ[PUNHUK,TLYNPUN:VS\[PVUZJOHW[LY[OL*OPUH.YLLU[LJO 0UP[PH[P]LL]HS\H[LKNYLLU[LJOZVS\[PVUZHJYVZZ[^VRL`KPTLUZPVUZLU]PYVUTLU[HS PTWHJ[WV[LU[PHSHUKJVTTLYJPHSPaH[PVUWV[LU[PHSHUHNNYLNH[PVUVMHKKYLZZHISL THYRL[ZPaLZVS\[PVUH[[YHJ[P]LULZZHUKTHYRL[HJJLZZPIPSP[`:LL[OL:VS\[PVUZ JOHW[LYMVYHTVYLJVTWSL[LKLZJYPW[PVUVM[OLTL[OVKVSVN`\ZLK

EXISTING AND EMERGING GREENTECH SOLUTIONS

CLEANER CONVENTIONAL ENERGY SOLUTIONS EVALUATION SUMMARY UNIT ENVIRONMENTAL IMPACT POTENTIAL



5 1 5

CLEANER COAL: CONVERSION AND COMBUSTION *VHS3PX\LMHJ[PVU    F-Class Gas Turbine 0U[LNYH[LK.HZPÄJH[PVU*VTIPULK*`JSL  <S[YH:\WLYJYP[PJHS7V^LY.LULYH[PVU 
1 2 3 2 3

CLEANER COAL: POST-COMBUSTION *HYIVU*HW[\YLHUK:LX\LZ[YH[PVU -S\L.HZ+LZ\SM\YPaH[PVU   Flue Gas Denitration 7HY[PJ\SH[L4H[[LY9LTV]HS 

  

5 5 5 5

COMMERCIALIZATION POTENTIAL

(K]HUJLK*VHS4PUPUN,X\PWTLU[  Coal Blending Coal Screening and Scrubbing

HIGHEST

CLEANER COAL: PRE-COMBUSTION

COMMERCIALIZATION POTENTIAL OVER TIME

Commercialization potential is a product of average addressable market size, solution attractiveness and market accessibility for all solutions within each displayed category. More detail on solutions is included in the Existing and Emerging Solutions chapter and the Cleaner Conventional Energy chapter of the full report.

LOWEST

SOLUTION

0 - 1 YEARS

CLEANER GAS *HW[\YLHUK
5 3 4







5 - 10 YEARS

Cleaner coal: Pre-combustion Cleaner coal: Conversion and combustion Cleaner coal: Post-combustion Cleaner gas Cleaner oil Nuclear power

CLEANER OIL >H[LY9LPUQLJ[PVU

1 - 5 YEARS

5

NUCLEAR POWER -HZ[5L\[YVU9LHJ[VY    4VK\SHY/PNO;LTWLYH[\YL.HZ*VVSLK9LHJ[VY

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5 5

LEGEND Unit environmental impact potential of solutions: 5!=!More than 40%!!1!=!Less than 10% 115

SECTOR SNAPSHOT: CLEANER CONVENTIONAL ENERGY

;OL PUKP]PK\HS*SLHULY*VU]LU[PVUHS,ULYN`ZVS\[PVUZPULHJOVM[OLHUHS`aLK ZVS\[PVUHYLHZ^LYLNLULYHSS`MV\UK[VOH]LZPaLHISL\UP[LU]PYVUTLU[HSPTWHJ[Z WYV]PKPUN WV^LY WSHU[ VWLYH[VYZ ^P[O H ]HYPL[` VM ZVS\[PVUZ [OL` JHU PTWSLTLU[ [VPTWYV]L[OLPYLU]PYVUTLU[HSWLYMVYTHUJL,U]PYVUTLU[HSPTWHJ[ZKPMMLY^P[OPU VWWVY[\UP[`HYLHZZ\JOHZHTVUN[OLKPMMLYLU[[`WLZVMJVHSJVU]LYZPVUHUKJVTI\Z[PVU ZVS\[PVUZ HUK HYL L_WSVYLK PU TVYL KL[HPS PU [OL *SLHULY *VU]LU[PVUHS ,ULYN`ZLJ[VYJOHW[LYVM[OLM\SSYLWVY[ >P[OYLZWLJ[[VJVTTLYJPHSPaH[PVUWV[LU[PHS^OPSLTHU`HUHS`ZLZOH]LMVJ\ZLK VUJVHSJVTI\Z[PVUHUKJVU]LYZPVU[LJOUVSVNPLZ[OL0UP[PH[P]L»ZHUHS`ZPZPUKPJH[LZ [OH[ JSLHULY JVHS WYLJVTI\Z[PVU HUK WVZ[JVTI\Z[PVU ZVS\[PVUZ TH` OH]L H Z[YVUNLY JVTTLYJPHS WV[LU[PHS PU *OPUH V]LY [OL UL_[  `LHYZ >P[OPU [OL NHZ ZLNTLU[*VTIPULK/LH[HUK7V^LYHSVUN^P[O*HW[\YLHUK
GREENTECH DEVELOPMENT CHALLENGES

A number of challenges complicate the development of China’s Cleaner Conventional Energy, including:

CATEGORY

CHALLENGES

MARKET

„4HYRL[MYHNTLU[H[PVUPUZVTL]HS\LJOHPUZ[HNLZLNTPULZHUKYLÄULYPLZ HUKJVUJLU[YH[PVUPUV[OLYZLNVPSL_WSVYH[PVUHUKNHZVSPULKPZ[YPI\[PVU SLHKPUN[VLMÄJPLUJ`JOHSSLUNLZHUKOPNOWVSS\[PVUSL]LSZ

TECHNOLOGY

„>OPSLZVTLJSLHULYJVU]LU[PVUHSLULYN`ZVS\[PVUZHYLHSYLHK`ILPUNKLWSV`LK V[OLYZHYLUV[`L[[LJOUVSVNPJHSS`TH[\YLLUV\NO[VZ\WWVY[^PKLZWYLHK JVTTLYJPHSPaH[PVU

FINANCING

„:[H[LÄUHUJPUNVMJVU]LU[PVUHSLULYN`ZLJ[VYSPTP[PUNWYP]H[LHUKMVYLPNU PU]LZ[TLU[HUKWV[LU[PHSKP]LYZPÄJH[PVUVMPU]LZ[TLU[YPZRZ

REGULATORY

„*VTWSPHUJL^P[OZVTLJVU]LU[PVUHSLULYN`Z[HUKHYKZPTWYV]PUNT\JOTVYL X\PJRS`[OHUJVTWSPHUJL^P[OV[OLYZ

OPPORTUNITIES TO ACCELERATE MARKET DEVELOPMENT

Cleaner Conventional Energy sector opportunities include: „ 7HY[PJPWH[PUN PU *OPULZL HUK PU[LYUH[PVUHS YLZLHYJO HUK KL]LSVWTLU[ LMMVY[Z [V LU OHUJLPUUV]H[PVUHUKKVTLZ[PJWYVK\J[PVUVMZVS\[PVUZ „ ,UJV\YHNPUN [OL KL]LSVWTLU[ VM Z[HUKHYKPaH[PVU ZHML[` TVUP[VYPUN Z`Z[LTZ HUK ^HZ[LTHUHNLTLU[WVSPJPLZ]PHJVSSHIVYH[PVUZIL[^LLUWYV]PKLYZHKVW[LYZHUK[OL NV]LYUTLU[ „ +L]LSVWPUNÄUHUJPUNTLJOHUPZTZ\[PSPaPUNIV[OW\ISPJHUKWYP]H[LPU]LZ[TLU[[V Z[PT\SH[L[OLKL]LSVWTLU[VMPUUV]H[P]L[LJOUVSVNPLZ „)\PSKPUNHKVW[LYJHWHJP[`[VPU[LNYH[LT\S[PWSLJSLHULYJVU]LU[PVUHSLULYN`ZVS\[PVUZ PU[VLULYN`VW[PTPaLKNLULYH[PVUZ`Z[LTZ A breakdown of opportunities for different stakeholder groups is available in the full version of the report.

Also often referred to as Carbon Capture and Storage (CCS) International Energy Agency, World Energy Outlook 2007: China and India Insights (Paris, France: International Energy Agency, 2007), 109 3 Ibid., 122 4 Ibid., 199 5 中华人民共和国国家发展和改革委员会, “煤炭工业发展”‘十一五’规划,”2007年1月, [NDRC, “11th Five Year Plan for Coal Industry Development,” January 2007] 6 中华人民共和国国务院,“炼油工业中长期发展专项规划, ”2006年1月[The State Council, People’s Republic of China, Medium and Long Term Development Plan of Oil Refining Industry, January, 2006] 7 World Nuclear Association, “Nuclear Power in China,” August 21, 2009, http://www.world-nuclear.org/ 8 中华人民共和国国家发展和改革委员会,核电中长期发展规划, [NDRC,Middle and Long Term Development Plan of Nuclear Power(2005-2020)] 1 2



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SECTOR SNAPSHOT

RENEWABLE ENERGY SECTOR SNAPSHOTS

CHINA’S RENEWABLE ENERGY SECTOR Renewable Energy is produced from sources that are naturally replenishing, such as solar light, wind, waves, underground heat, surface water flows and biomass. The China Greentech Initiative focused on China’s solar, wind and bioenergy markets.

DEFINITION

SOLAR ENERGY CONSISTS OF THERMAL OR ELECTRIC ENERGY DERIVED FROM SOLAR LIGHT \ZPUN 7OV[V]VS[HPJ JLSSZ *VUJLU[YH[PUN :VSHY PUZ[HSSH[PVUZ VY :VSHY >H[LY /LH[LYZ >PUK WV^LY PZ KLÄULK HZ LSLJ[YPJ LULYN` NLULYH[LK MYVT ^PUK \ZPUN WV^LY NLULYH[PVU [\YIPULZ )PVLULYN` PZ [OLYTHS VY LSLJ[YPJ LULYN` WYVK\JLK MYVTIPVTHZZHUKPUJS\KLZZVS\[PVUZZ\JOHZIPVL[OHUVSIPVKPLZLSIPVNHZHUK IPVTHZZJVTI\Z[PVU ;OL*OPUH.YLLU[LJO0UP[PH[P]L»ZMVJ\ZVUZVSHY^PUKHUKIPVLULYN`ZVS\[PVUZ^HZ IHZLKVUMLLKIHJRMYVTWHY[ULYZHUKHK]PZVYZHU\UKLYZ[HUKPUNVMJ\YYLU[THYRL[ VWWVY[\UP[PLZHUKJVUZPKLYH[PVUVM[OL0UP[PH[P]L»ZH]HPSHISL[PTLHUKYLZV\YJLZ;OPZ MVJ\ZI`UVTLHUZPTWSPLZHQ\KNTLU[VU[OLLU]PYVUTLU[HSVYJVTTLYJPHSWV[LU[PHS VMV[OLYYLUL^HISLLULYN`THYRL[ZLNTLU[Z

MARKET CONTEXT

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*OPUH»ZKYHTH[PJPUK\Z[YPHSPaH[PVUOHZSLK[VZ\IZ[HU[PHSNYV^[OPULULYN`KLTHUK ;V[HSLSLJ[YPJP[`JVUZ\TW[PVUNYL^TVYL[OHUÄ]L[PTLZMYVT [V^OPSL NYV^PUN WL[YVS JVUZ\TW[PVU OHZ THKL *OPUH [OL ^VYSK»Z ZLJVUK SHYNLZ[ VPS JVUZ\TLYHM[LY[OL<:1-HZ[LYNYV^[OPUKLTHUK[OHUZ\WWS`OHZSLK[VHOLH]` YLSPHUJLVUPTWVY[ZVMMVYLPNUVPSJYLH[PUNUH[PVUHSZLJ\YP[`JVUJLYUZ

THE CHINA GREENTECH REPORT 2009



SECTOR SNAPSHOT: RENEWABLE ENERGY

;OLLULYN`WYVK\JLKMYVTJVHSZLY]LZTVZ[VM*OPUH»ZLULYN`KLTHUK·  ]LYZ\Z H NSVIHS H]LYHNL VM   PU 2 >OPSL [OPZ PZ UV[ Z\YWYPZPUN HZ JVHS PZJOLHWHUKHI\UKHU[PU*OPUHP[JYLH[LZLU]PYVUTLU[HSJOHSSLUNLZZPUJLJVHS WV^LYNLULYH[PVUPZZPNUPÄJHU[S`TVYL*62PU[LUZP]L[OHUWV^LYWYVK\J[PVUMYVT V[OLYLULYN`ZV\YJLZ3 @L[PUHKKP[PVU[VP[ZHI\UKHUJLVMJVHS*OPUHPZMVY[\UH[L[VOH]LYLUL^HISL resources in abundance: „SOLAR: ;^V[OPYKZ VM *OPUH»Z SHUK HYLH LUQV`Z V]LY  YHKPH[PVU OV\YZ HUU\HSS`HUKOHZZVSHYYLZV\YJLZPUL_JLZZVM21JT`LHYI`JVTWHYPZVU .LYTHU` HUK 1HWHU H]LYHNL VUS`  21JT`LHY HUK  21JT2`LHY YLZWLJ[P]LS`4,5 „WIND: *OPUHHSZVOHZHI\UKHU[^PUKLULYN`YLZV\YJLZ^OPJOPMM\SS`[HWWLK JV\SKNLULYH[LH[SLHZ[HZT\JOLSLJ[YPJP[`HZ[OLJV\U[Y`»ZJ\YYLU[[V[HSPUZ[HSSLK LSLJ[YPJHSJHWHJP[` „BIOENERGY: 0U  *OPUH OHK  TPSSPVU [VUZ VM JVHS LX\P]HSLU[ 4[JL IPVTHZZZ\WWS`

CHINA’S REGULATORY RESPONSE

*OPUHPZMVJ\ZLKVUTP[PNH[PUN[OLPTWHJ[VMJSPTH[LJOHUNL0[Z5H[PVUHS*SPTH[L *OHUNL7YVNYHT1\ULV\[SPULZ*OPUH»ZZ[YH[LNPJWYPVYP[PLZMVYHKKYLZZPUN JSPTH[L JOHUNL PUJS\KPUN RL` WVSPJPLZ [V IL KL]LSVWLK ;OPZ ^HZ [OL ÄYZ[ Z\JO WSHUI`HKL]LSVWPUNJV\U[Y`[VTVKLYH[LNYLLUOV\ZLNHZLTPZZPVUZHUKHKHW[ [VJOHUNPUNLU]PYVUTLU[HSJVUKP[PVUZ 9LJVNUPaPUN[OLK\HSULLK[VIV[OHKKYLZZJSPTH[LJOHUNLHUKPTWYV]LLULYN` ZLJ\YP[` *OPUH OHZ \UKLY P[Z 9LUL^HISL ,ULYN` 3H^  HUK Z\IZLX\LU[ WVSPJPLZW\[PUWSHJLU\TLYV\ZYLN\SH[PVUZPUJLU[P]LZHUKZ\IZPKPLZ[VZ\WWVY[ [OL\[PSPaH[PVUVMYLUL^HISLLULYN`(ZKPYLJ[LKI`*OPUH»Z4LKP\THUK3VUN;LYT +L]LSVWTLU[7SHUMVY9LUL^HISL,ULYN`*OPUH»ZWV^LYWYVK\JLYZ HYL ^VYRPUN [V I\PSK UVUO`KYV YLUL^HISL LULYN` NLULYH[PVU JHWHJP[` [V   VM [OLPY[V[HSLULYN`TP_I`HUK I` *OPUH»Z  KLZPYL [V PUJYLHZL  [OL \ZL VM YLUL^HISL LULYN` OHZ Z\WWVY[LK [OL KL]LSVWTLU[ VM KVTLZ[PJ YLUL^HISL LULYN` PUK\Z[YPLZ ;OL NV]LYUTLU[ OHZ PTWSLTLU[LK H ^PKL YHUNL VM Z\IZPKPLZ [V LUJV\YHNL PU]LZ[TLU[ PU [OL ZLJ[VY Z\JO HZ PU]LZ[TLU[Z Z\WWVY[PUN HJJLZZ YVHKZ HUK LSLJ[YPJP[` [YHUZTPZZPVU PUMYHZ[Y\J[\YL [HYPMM HUK =(; YLIH[L WYVNYHTZ MVY PTWVY[Z VM WHY[Z HUK YH^ TH[LYPHSZHUKKPYLJ[WH`TLU[Z[VYLUL^HISLLULYN`WSHU[V^ULYZ[VJVTWLUZH[L MVYSVZZLZ;OLZLWVSPJPLZ^OPJOOH]LZ\WWVY[LK[OLNYV^[OVMKVTLZ[PJYLUL^HISL LULYN`JVTWHUPLZOH]LWYVTW[LKZVTLMVYLPNUJVTWHUPLZ[VX\LZ[PVU^OL[OLY [OLL]VS\[PVUVMSVJHSJVUKP[PVUZ^PSSHSSV^[OLT[VJVU[PU\LWHY[PJPWH[LPU[OLZL THYRL[Z

EXISTING AND EMERGING GREENTECH SOLUTIONS

(ZKLZJYPILKPU[OL,_PZ[PUNHUK,TLYNPUN:VS\[PVUZJOHW[LY[OL*OPUH.YLLU[LJO 0UP[PH[P]LL]HS\H[LKNYLLU[LJOZVS\[PVUZHJYVZZ[^VRL`KPTLUZPVUZLU]PYVUTLU[HS PTWHJ[WV[LU[PHSHUKJVTTLYJPHSPaH[PVUWV[LU[PHSHUHNNYLNH[PVUVMHKKYLZZHISL THYRL[ZPaLZVS\[PVUH[[YHJ[P]LULZZHUKTHYRL[HJJLZZPIPSP[`:LL[OL:VS\[PVUZ JOHW[LYMVYHTVYLJVTWSL[LKLZJYPW[PVUVM[OLTL[OVKVSVN`\ZLK 4VZ[YLUL^HISLLULYN`ZVS\[PVUZZJVYLOPNOMVYLU]PYVUTLU[HSPTWHJ[WV[LU[PHS ZPUJL YLUL^HISL LULYN` NLULYH[PVU WYVK\JLZ aLYV VY TPUPTHS NYLLUOV\ZL NHZ LTPZZPVUZHZ\IZ[HU[PHSHK]HU[HNLV]LYJVU]LU[PVUHSNLULYH[PVU>P[OPUJLY[HPU YLUL^HISL LULYN` THYRL[ ZLNTLU[Z OV^L]LY [OLYL HYL LU]PYVUTLU[HS PTWHJ[ KPMMLYLUJLZ Z\JO HZ [OL NYLH[LY *62 HIH[LTLU[ WV[LU[PHS VM JLSS\SVZPJ IPVM\LSZ JVTWHYLK [V ÄYZ[ NLULYH[PVU IPVM\LSZ 0U HKKP[PVU [OLYL HYL ZL]LYHS PUKP]PK\HS 1 Bureau of East Asian and Pacific Affairs, Fact Sheet: Economic Relations Between the United States and China (Washington, DC, U.S.: United States Department of State, 2006), 2 2 Li, Junfeng and Wang, Sicheng, 2007 China Solar PV Report (China: China Environmental Science Press, 2008), 6 3 Energy Information Administration, International Energy Outlook 2009 (Washington, DC, U.S.: United States Department of Energy, 2009), 109 4 Bai, Charles, Solar Energy Demand in China (Zhejiang, China: ReneSola), 2 5 Chinagate, “Medium and Long-Term Development Plan for Renewable Energy in China,” September 4, 2007, http://en.chinagate.cn/ 6 Li, Junfeng et al., 2007 China Wind Power Report (China: China Environmental Science Press, 2008); World Nuclear Association, “Nuclear Power in China,” August 21, 2009, http://www.world-nuclear.org/; The China Greentech Initiative Analysis 7 National Devleopment and Reform Commission, China Renewable Energy Development Overview (Beijing, China: Energy Bureau of the NDRC and Energy ,Research Institute of the NDRC, 2008), 14 8 National Devleopment and Reform Commission, China’s National Climate Change Program (Beijing, China: NDRC, 2007) 9 中华人民共和国国家发展和改革委员会,可再生能源中长期发展规划,2007年8月, [China Climate Change Info-Net, Medium and Long-Term Plan for Renewable Energy Development (2007-2020)], (Beijing, China: National Development and Reform Commission, August, 2007), 30



THE CHINA GREENTECH REPORT 2009

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SECTOR SNAPSHOT : RENEWABLE ENERGY

RENEWABLE ENERGY SOLUTIONS EVALUATION SUMMARY UNIT ENVIRONMENTAL IMPACT POTENTIAL

WIND SOLUTION WIND - TURBINES

SOLAR SOLUTION

UNIT ENVIRONMENTAL IMPACT POTENTIAL

SOLAR PHOTOVOLTAICS

BIOENERGY SOLUTION

UNIT ENVIRONMENTAL IMPACT POTENTIAL

BIO - ELECTRICITY

Offgrid / <1MW / Horizontal

5

Crystalline Silicon PV

5

Biomass Combustion

5

Offgrid / <1MW / Vertical

5

Thin Film PV - Amorphous Silicon

5

Biomass Co-Firing

3

Ongrid / 1-3 MW / Onshore

5

Thin Film PV - Cadmium Telluride

5

BIO - HEAT

Ongrid / >3 MW / Onshore

5 5

Thin Film PV - CIGS

5 5

Industrial Heat

Ongrid / >3 MW / Offshore WIND - DEVELOPMENT

Building-Intergrated PV SOLAR CONCENTRATING

Civil Heat

5 5

BIO - FUELS

Micrositing

3

Parabolic Trough

5

Sweet Sorghum (ethanol)

5

Wind Assessment

3

Fresnel Mirror

5

Cassava (ethanol)

5

Power Towers

5

Cellulose (ethanol)

5

WIND - MAINTENANCE Control Systems

2

Parabolic Dish -Stirling Engine

5

Waste Vegetable Oil (diesel)

5

Maintenance

2

Concentrating PV

5

Jatropha (diesel)

5

Standard Operating Procedures (SOPs)

2

Microalgae (diesel)

5

Conversion Technology

4

WIND - ENERGY STORAGE Compressed Air Storage Battery Storage Pumped Hydro Storage

SOLAR WATER HEATERS

5 5 5

Solar Water Heater

5 LEGEND Unit environmental impact potential of solutions: 5!=!More than 40%!!1!=!Less than 10%

YLUL^HISLLULYN`ZVS\[PVUZ^OPJOOH]LSPMLJ`JSLLU]PYVUTLU[HSJVUJLYUZK\L[V [OL YLZV\YJLZ \ZLK VY ^HZ[L NLULYH[LK PU [OLPY THU\MHJ[\YPUN THPU[LUHUJL VY KPZWVZHS;OLZLJVUJLYUZHYLL_WSVYLKPUNYLH[LYKL[HPSPU[OL9LUL^HISL,ULYN` ZLJ[VYJOHW[LYVM[OLM\SS*OPUH.YLLU[LJO9LWVY[ >P[OYLZWLJ[[VJVTTLYJPHSWV[LU[PHS:VSHY>H[LY/LH[LYZ>PUK,ULYN`:[VYHNL ZVS\[PVUZ HUK )PVM\LS ZVS\[PVUZ ^LYL MV\UK [V OH]L [OL OPNOLZ[ H]LYHNL `LHY JVTTLYJPHSPaH[PVUWV[LU[PHSPU[OLPYYLZWLJ[P]LZLNTLU[ZVM*OPUH»ZYLUL^HISLLULYN` SHUKZJHWL (JYVZZ YLUL^HISL LULYN` ZLNTLU[Z THU` ^PUK ZVS\[PVUZ WHY[PJ\SHYS` [OVZLYLSH[LK[V[OLKL]LSVWTLU[HUKVWLYH[PVUZHUKTHPU[LUHUJLVM^PUKMHYTZ^LYL MV\UK[VILTVYLH[[YHJ[P]L[VHKVW[LYZ[OHUTHU`IPVLULYN`VYZVSHYZVS\[PVUZ;OPZ PZWHY[PHSS`K\L[V[OLYLSH[P]L[LJOUVSVNPJHSTH[\YP[`HUKH[[YHJ[P]LLJVUVTPJZKYP]LU I`WV[LU[PHS[VPTWYV]LVWLYH[PUNLMÄJPLUJ`VM[OLZL^PUKZVS\[PVUZ([[OLZHTL[PTL [OL IPVLULYN` HUK ZVSHY ZVS\[PVUZ HUHS`aLK ^LYL MV\UK [V OH]L ZPNUPÄJHU[S` SHYNLY HKKYLZZHISLTHYRL[ZPaLZK\L[V[OL[`WLVMZVS\[PVUZZLSLJ[LK^OPJOPUHNNYLNH[L YLZ\S[LKPUOPNOLYL]HS\H[PVUZVMV]LYHSSJVTTLYJPHSWV[LU[PHSMVY[OLZL[^VZLNTLU[Z +PYLJ[ JVTWHYPZVUZ VM [OL ZVS\[PVU H[[YHJ[P]LULZZ HKKYLZZHISL THYRL[ ZPaL HUK THYRL[HJJLZZPIPSP[`KPTLUZPVUZ[OL[OYLLJVTWVULU[ZVMºJVTTLYJPHSWV[LU[PHS»HYL PUJS\KLKPU[OL9LUL^HISL,ULYN`:LJ[VYJOHW[LY

GREENTECH DEVELOPMENT CHALLENGES

www.china-greentech.com

=HYPV\ZJOHSSLUNLZOPUKLY[OLM\SSKL]LSVWTLU[VM*OPUH»ZYLUL^HISLLULYN`ZLJ[VY ( OPNOSL]LS ZHTWSL VM [OLZL JOHSSLUNLZ PZ PUJS\KLK ILSV^ HUK TVYL ZWLJPÄJ JOHSSLUNLZ HYL PU]LZ[PNH[LK IV[O PU [OL *OHSSLUNLZ JOHW[LY HUK [OL 9LUL^HISL ,ULYN`:LJ[VYJOHW[LYVM[OLM\SSYLWVY[

THE CHINA GREENTECH REPORT 2009



SECTOR SNAPSHOT: RENEWABLE ENERGY

Commercialization potential is a product of average addressable market size, solution attractiveness and market accessibility for all solutions within each displayed category. More detail on solutions is included in the Existing and Emerging Solutions chapter and the Renewable Energy chapter of the full report.

CATEGORY MARKET

CHALLENGES „ (YLUL^HISLLULYN`PZSHYNLS`HIV\[WV^LYNLULYH[PVUHUK[O\ZLULYN`ZLJ\YP[`*OPUH»ZSH^Z PUJLU[P]LZHUKSVJHSWYVJ\YLTLU[WYHJ[PJLZVM[LUMH]VYSVJHSV]LYMVYLPNUWHY[PJPWHU[ZHZPZ [OLJHZLPUTHU`V[OLYUH[PVUZWV[LU[PHSS`KPZJV\YHNPUNJVTWL[P[PVUHUKPU]LZ[TLU[

„ *OPULZLYLUL^HISLLULYN`[LJOUVSVNPLZZVTL[PTLZHYLSLZZLMÄJPLU[[OHUMVYLPNULX\P]H TECHNOLOGY

SLU[ZK\L[V[OLJVTWHYH[P]L[LJOUVSVNPJHSTH[\YP[`VMMVYLPNUZVS\[PVUZHUKNYLH[LYL_WLYP LUJLVMMVYLPNUJVTWHUPLZPU[OLZLHYLHZ

„ +VTLZ[PJWYV]PKLYZVM[LUOH]LSLZZL_WLYPLUJLPUTHUHNPUNPU[LSSLJ[\HSWYVWLY[`HZZL[Z[OHU MVYLPNUJVTWHUPLZ

„ *VTWSPJH[LKÄUHUJPUNWVSPJPLZHUKWYVQLJ[HWWYV]HSWYHJ[PJLZTHRLP[KPMÄJ\S[MVYSHYNLZJHSL FINANCING

YLUL^HISLLULYN`WYVQLJ[Z[VZLJ\YLÄUHUJPUN^P[OV\[M\SSJVYWVYH[LZWVUZVYN\HYHU[LLZ WHY[PJ\SHYS`PU[OLOPNOJVZ[WYLVWLYH[PVUHSWOHZL^OLUWYVQLJ[ZOH]LTPUPTHSHZZL[Z

„ 3HJRVM[YHUZWHYLUJ`HUKZWLJPÄJP[`PUYLUL^HISLLULYN`YLN\SH[PVUJVTIPULK^P[OSPTP[LK REGULATORY

OPPORTUNITIES TO ACCELERATE MARKET DEVELOPMENT

JVTT\UPJH[PVUVU[OLZWLJPÄJZHUK[PTPUNVMWVSPJPLZHUKKPYLJ[PVUTHRLZP[KPMÄJ\S[MVY JVTWHUPLZ[VWYLKPJ[YPZRZHZ^LSSHZSL]LSHUK[PTPUNVMWV[LU[PHSYL[\YUZ[O\ZZSV^PUNPU]LZ[TLU[

Renewable Energy opportunities sector include: „,UJV\YHNL[OLKL]LSVWTLU[VM\UPÄLKHUKL]LUS`LUMVYJLKZ[HUKHYKZZ\JO HZZ[HUKHYKZMVYPU[LYMHJPUN[LJOUVSVNPLZHUKJVZ[PUNTL[OVKVSVNPLZMVY JVUULJ[PUNYLUL^HISLLULYN`NLULYH[PVU[V*OPUH»ZLSLJ[YPJWV^LY PUMYHZ[Y\J[\YLI`JVSSHIVYH[PUN^P[OWYV]PKLYZHKVW[LYZHUK[OLNV]LYUTLU[ „0U[YVK\JLPUUV]H[P]LÄUHUJPUNTLJOHUPZTZZ\JOHZWYLJVUZ[Y\J[PVUWV^LY W\YJOHZLHNYLLTLU[Z[VLUJV\YHNLPU]LZ[TLU[ZPU*OPUH»ZYLUL^HISLLULYN`PUK\Z[Y` „,Z[HISPZOMYHTL^VYRZMVYW\ISPJWYP]H[LHUK:PUVMVYLPNUJVSSHIVYH[PVUZ\JOHZ QVPU[ZVS\[PVUZKL]LSVWTLU[VYYLUL^HISLLULYN`WSHU[VWLYH[PVUZ[VLUJV\YHNL ILZ[WYHJ[PJLZVS\[PVUZHUKVWLYH[PVUHSWYVJLZZLZ[VZJHSLX\PJRS`[VTLL[ *OPUH»ZYPZPUNLULYN`KLTHUK A breakdown of opportunities for different classes of stakeholders is available in the full version of the China Greentech Report.



THE CHINA GREENTECH REPORT 2009

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SECTOR SNAPSHOT

ELECTRIC POWER INFRASTRUCTURE DEFINITION

Electric Power Infrastructure refers to “smart” electric grids and networks, supported by IT applications, which deliver power to users on demand in an efficient and reliable way, from a broad range of generating sources. THE ELECTRIC POWER INFRASTRUCTURE VALUE CHAIN INCLUDES CONVENTIONAL GRID COMPONENTS Z\JO HZ WV^LY NLULYH[PVU [YHUZTPZZPVU HUK KPZ[YPI\[PVU HUK ZLY]PJLSVJH[PVUHZ^LSSHZZ[VYHNLHUKPUMVYTH[PVUJVTT\UPJH[PVUZ[LJOUVSVN` JVTWVULU[ZJLU[YHS[VZTHY[NYPKZ

MARKET CONTEXT

*OPUH»ZLSLJ[YPJP[`JVUZ\TW[PVUOHZNYV^UYHWPKS`V]LY[OLWHZ[`LHYZSLHKPUN [VH[V[HSKLTHUKVMNPNH^H[[OV\YZPUZLJVUKVUS`[V[OL<:1,2 >P[O ULHYS`   VM [OL JV\U[Y`»Z JVHS YLZV\YJLZ SVJH[LK PU >LZ[LYU *OPUH NYV^[O PU KLTHUK OHZ WSHJLK WYLZZ\YL VU *OPUH»Z LSLJ[YPJ WV^LY PUMYHZ[Y\J[\YL [VJVUULJ[WV^LYYLZV\YJLZ[V[OLMHZ[NYV^PUNPUK\Z[YPHSSVHKJLU[LYZPU,HZ[LYU HUK:V\[OLYU*OPUH3 *OPUH»Z PUJYLHZLK MVJ\Z VU YLUL^HISL LULYN` L_LY[Z `L[ NYLH[LY KLTHUKZ VU *OPUH»Z LSLJ[YPJ WV^LY PUMYHZ[Y\J[\YL 7V^LY NLULYH[PVU IHZLK VU YLUL^HISL LULYN`ZV\YJLZLN^PUKVYZVSHYLULYN`ULJLZZP[H[LZNYLH[LY\ZLVMPU[LYTP[[LU[ NLULYH[PVU THUHNLTLU[ HUK Z[VYHNL ZVS\[PVUZ JVTWHYLK [V WV^LY NLULYH[LK MYVTJVU]LU[PVUHSLULYN`ZV\YJLZ+\LPUWHY[[V[OLZLJOHSSLUNLZ\W[V VM

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THE CHINA GREENTECH REPORT 2009

121

SECTOR SNAPSHOT : ELECTRIC POWER INFRASTRUCTURE

*OPUH»ZPUZ[HSSLK^PUKJHWHJP[`^HZUV[JVUULJ[LK[V[OLNYPKPUHUKHTVUN [OLJHWHJP[`[OH[^HZJVUULJ[LKT\JO^HZ\UKLY\[PSPaLK4 +LTHUK NYV^[O OHZ YLPUMVYJLK [OL ULLK [V PUJYLHZL LMÄJPLUJ` H[ HSS Z[HNLZ VM [OL LSLJ[YPJP[` ]HS\L JOHPU PUJS\KPUN NLULYH[PVU [YHUZTPZZPVU KPZ[YPI\[PVU HUK KLTHUKZPKLLSLJ[YPJP[`\ZHNL*OPUH»Z:[H[L.YPKOHZHUUV\UJLKWSHUZ[VI\PSKH ¸Z[YVUNHUKZTHY[NYPK¹[VTLL[[OLZLJOHSSLUNLZI`5

CHINA’S REGULATORY RESPONSE

;VYLZWVUK[V[OLKYHTH[PJNYV^[OPULSLJ[YPJP[`KLTHUK*OPUH»ZYLN\SH[VYZOH]L [HRLU H U\TILY VM JVUJYL[L Z[LWZ [V WYVTV[L M\Y[OLY KL]LSVWTLU[ VM *OPUH»Z LSLJ[YPJWV^LYPUMYHZ[Y\J[\YL 6ULVM[OLRL`JVTWVULU[ZVM*OPUH»ZYLN\SH[VY`YLZWVUZLOHZILLUZ\WWVY[ HUK M\UKPUN MVY [OL KL]LSVWTLU[ HUK PU[LYJVUULJ[PVU VM YLNPVUHS NYPKZ ;OL  [YPSSPVU`\HU<:IPSSPVUHSSVJH[LK[VPUMYHZ[Y\J[\YLKL]LSVWTLU[PU*OPUH»Z [YPSSPVU`\HU<:IPSSPVULJVUVTPJZ[PT\S\ZWSHUPZVUS`VULVMZL]LYHSZ\JO PUMYHZ[Y\J[\YLM\UKPUNWYVNYHTZ ;V YLZWVUK [V LMÄJPLUJ` WYLZZ\YLZ YLN\SH[VYZ OH]L Z\WWVY[LK LMÄJPLU[ \S[YH OPNO]VS[HNL
EXISTING AND EMERGING GREENTECH SOLUTIONS

(ZKLZJYPILKPU[OL,_PZ[PUNHUK,TLYNPUN:VS\[PVUZJOHW[LY[OL*OPUH.YLLU[LJO 0UP[PH[P]LL]HS\H[LKNYLLU[LJOZVS\[PVUZHJYVZZ[^VRL`KPTLUZPVUZLU]PYVUTLU[HS PTWHJ[WV[LU[PHSHUKJVTTLYJPHSPaH[PVUWV[LU[PHSHUHNNYLNH[PVUVMHKKYLZZHISL THYRL[ZPaLZVS\[PVUH[[YHJ[P]LULZZHUKTHYRL[HJJLZZPIPSP[`:LL[OL:VS\[PVUZ JOHW[LYMVYHKLZJYPW[PVUVM[OLTL[OVKVSVN`\ZLK ;OL[^VLULYN`Z[VYHNLZVS\[PVUZL]HS\H[LK=HUHKP\T9LKV_HUK5H:IH[[LYPLZ ^LYLMV\UK[VOH]L[OLOPNOLZ[YH[PUNZIV[OMVY\UP[LU]PYVUTLU[HSPTWHJ[WV[LU[PHS HUKJVTTLYJPHSPaH[PVUWV[LU[PHS>OPSLNYPKHJJLZZZVS\[PVUZ^LYLHSZVMV\UK[V OH]L OPNO WV[LU[PHS MVY \UP[ LU]PYVUTLU[HS PTWHJ[ K\L [V [OLPY HIPSP[` [V \USVJR LU]PYVUTLU[HSWV[LU[PHSPUHYLHZZ\JOHZUL^LULYN`]LOPJSL[YHUZWVY[H[PVUHUK YLUL^HISL WV^LY NLULYH[PVU [OLPY JVTTLYJPHSPaH[PVU WV[LU[PHS HWWLHYZ ZTHSSLY [OHUV[OLYLSLJ[YPJWV^LYPUMYHZ[Y\J[\YLZVS\[PVUZV]LY[OLJVTPUN`LHYZ 4HU`KPMMLYLU[JVTWVULU[ZJVU[YPI\[L[V[YHUZTPZZPVUHUKKPZ[YPI\[PVULSLJ[YPJP[` SVZZ HUK VU HU PUKP]PK\HS \UP[ IHZPZ UVUL VM [OL ZVS\[PVUZ PU [OPZ JH[LNVY` PU]LZ[PNH[LK I` [OL *OPUH .YLLU[LJO 0UP[PH[P]L ^LYL MV\UK [V OH]L H ZPNUPÄJHU[ PUKLWLUKLU[LU]PYVUTLU[HSPTWHJ[;OLHUHS`ZPZKPKUV[PUJVYWVYH[LV[OLYILULÄ[Z Z\JOHZPTWYV]LKYLSPHIPSP[`HUK[OLWV[LU[PHS[VLUHISLV[OLYM\[\YLZVS\[PVUZUVY KPK P[ PUJVYWVYH[L [OL HNNYLNH[L LU]PYVUTLU[HS ILULÄ[Z [OH[ JV\SK IL HJOPL]LK ^LYL*OPUH»ZL_PZ[PUNLSLJ[YPJHSWV^LYPUMYHZ[Y\J[\YLILZPNUPÄJHU[S`[YHUZMVYTLK

National Bureau of Statistics of China, “China Statistical Yearbook 2008” “BP,” BP Statistical Review of World Energy June 2009” “中国电力科学研究院, ”“中国电力 ” [China Electricity Research Institute, “China Electric Power ‘Highway’”] http://www.epri.ac.cn/ (accessed on July 18, 2009)” 4 中国电力企业联合会,“统计与分析:全国电力工业统计快报 (2005 - 2008)” [China Electricity Council, National Power Industry Statistical Reports 2005-2008] 5 People’s Daily, “China’s Strong Smart Grid Leads the Way,” August 11, 2009, http://english.people.com.cn/ 6 中央政府门户网站, “投资数据尽显亮色“4万亿”投资计划初见成效”, 2009年3月29日 [Central Government Website, “4 Trillion Investment Has Achieved Preliminary Results”, March 29, 2009], http://www.gov.cn 1 2 3

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SECTOR SNAPSHOT : ELECTRIC POWER INFRASTRUCTURE

ELECTRIC POWER INFRASTRUCTURE SOLUTIONS EVALUATION SUMMARY SOLUTION

UNIT ENVIRONMENTAL IMPACT POTENTIAL

1 1 1

SMART GRID COMPONENTS (K]HUJLK4L[LYPUN0UMYHZ[Y\J[\YL Digital Substation 07)HZLK(\[VTH[PJ4L[LY9LHKPUN 9LHS;PTL0UMVYTH[PVU7YVJLZZPUN >PKL(YLH4HUHNLTLU[:`Z[LT

2

ENERGY STORAGE SOLUTIONS 5H:)H[[LY` =HUHKP\T9LKV_)H[[LY`

 

5 5

0 - 1 YEARS

,SLJ[YPJ(\[V=LOPJSL*OHYNPUN:`Z[LT 9LUL^HISL,ULYN`(JJLZZ-SL_PISL (S[LYUH[PUN*\YYLU[;YHUZTPZZPVU :`Z[LT-(*;:

5 5

1 - 5 YEARS

5 - 10 YEARS

Efficiency improvement and loss reduction technologies Smart grid components Energy storage solutions Grid access solutions

GRID ACCESS SOLUTIONS

GREENTECH DEVELOPMENT CHALLENGES

Commercialization potential is a product of average addressable market size, solution attractiveness and market accessibility for all solutions within each displayed category. More detail on solutions is included in the Existing and Emerging Solutions chapter and the Electric Power Infrastructure chapter of the full report.

LOWEST

1 1 1 1

COMMERCIALIZATION POTENTIAL

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HIGHEST

EFFICIENCY IMPROVEMENT AND LOSS REDUCTION TECHNOLOGIES

COMMERCIALIZATION POTENTIAL OVER TIME

LEGEND Unit environmental impact potential of solutions: 5!=!More than 40%!1!=!Less than 10%

A number of challenges complicate the development of China’s Electric Power Infrastructure, including:

CATEGORY

CHALLENGES

MARKET

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TECHNOLOGY

„/PNO\UP[JVZ[ZHUKZHML[`PZZ\LZJVU[YPI\[PUN[VYLSH[P]LJVTTLYJPHS PTTH[\YP[`VMTHU`LSLJ[YPJWV^LYPUMYHZ[Y\J[\YLNYLLU[LJOZVS\[PVUZ

FINANCING

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REGULATORY

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OPPORTUNITIES TO ACCELERATE MARKET DEVELOPMENT

Electric Power Infrastructure sector opportunities include: „0TWYV]PUN[OLJHWHIPSP[PLZVMZVS\[PVUWYV]PKLYZHUKHKVW[LYZ[VPUUV]H[L  L]HS\H[LHUKTHUHNLHK]HUJLKLSLJ[YPJWV^LYPUMYHZ[Y\J[\YLZVS\[PVUZ ULJLZZHY`[VPTWYV]LNYPKLMÄJPLUJ`YLSPHIPSP[`ZLJ\YP[`HUKTHUHNLHIPSP[` „:\WWVY[PUNLMMLJ[P]LW\ISPJWYP]H[LWHY[ULYZOPWZPUIV[O[OLÄUHUJPUNHUK  VWLYH[PVUZVM*OPUH»Z,SLJ[YPJ7V^LY0UMYHZ[Y\J[\YLWHY[PJ\SHYS`PUHYLHZYLSH[LK[V TVKLYUPaPUNKPZ[YPI\[PVUPUMYHZ[Y\J[\YL „ 0UJYLHZPUN [OL PTWHJ[ VM THYRL[ MVYJLZ VU LSLJ[YPJP[` WYPJL JVUZPKLYH[PVUZ H[ [OLZ\WWS`HUKKLTHUKZPKLZVM*OPUH»Z,SLJ[YPJ7V^LY0UMYHZ[Y\J[\YLZVHZ[V OLSWWV^LYNLULYH[VYZNYPKVWLYH[VYZHUK\ZLYZTHRLLMMLJ[P]LKLJPZPVUZVU UL^JHWP[HSWYVQLJ[Z A detailed description of opportunities for different stakeholders is in the full version of the report.

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123

SECTOR SNAPSHOT

GREEN BUILDING

DEFINITION

Green Building covers planning, building and operating solutions that are more sustainable, efficient and healthy than conventional solutions for an equivalent level of comfort and service. Green Building includes solutions such as integrated design, sustainable materials, energy efficient appliances and building automation.

MARKET CONTEXT

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SECTOR SNAPSHOT : GREEN BUILDING

LTPZZPVUZ4,5/V^L]LYK\LWHY[PHSS`[VWVVYJVUZ[Y\J[PVUWYHJ[PJLZZVTLI\PSKPUN [`WLZ PU *OPUH LN THU` VMÄJL I\PSKPUNZ PU ÄYZ[HUK ZLJVUK[PLY JP[PLZ OH]L MHY ^VYZLOLH[HUKLULYN`LMÄJPLUJ`[OHUMVYLPNUJV\U[LYWHY[Z0YYLZWLJ[P]LVMJ\YYLU[ YLZV\YJL\ZLPM*OPUH»ZJVUZ\TW[PVUWH[[LYUZMVSSV^[OLKL]LSVWLK^VYSK»ZHUU\HS I\PSKPUNLTPZZPVUZ^PSSPUJYLHZLJVUZPKLYHIS`PU[OLM\[\YL *OPUH»ZNV]LYUTLU[OHZZL[HTIP[PV\Z[HYNL[ZHUKN\PKLSPULZMVYNYLLUI\PSKPUN ,ULYN`LMÄJPLUJ`PZVULVM*OPUH»ZRL`LU]PYVUTLU[HSWVSPJ`NVHSZHUKI\PSKPUNZ HYLL_WLJ[LK[VJVU[YPI\[L VM*OPUH»Z[V[HSLULYN`LMÄJPLUJ`PTWYV]LTLU[Z in the 11th -P]L@LHY .\PKLSPULZ WLYPVK  >H[LY JVUZLY]H[PVU PZ HSZV NYV^PUN PU WVSP[PJHS PTWVY[HUJL HUK *OPUH»Z KVTLZ[PJ NYLLU I\PSKPUN Z[HUKHYK HSYLHK` MVJ\ZLZ TVYL VU ^H[LY PZZ\LZ [OHU V[OLY NYLLU I\PSKPUN Z[HUKHYKZ [OYV\NOV\[[OL^VYSK

CHINA’S REGULATORY RESPONSE

>OPSLU\TLYV\ZNYLLUI\PSKPUNWVSPJPLZN\PKLSPULZHUKZ[HUKHYKZOH]LILLUW\[ MVY^HYKI`[OL5H[PVUHS+L]LSVWTLU[HUK9LMVYT*VTTPZZPVU5+9*4PUPZ[Y` VM/V\ZPUNHUK
EXISTING AND EMERGING GREENTECH SOLUTIONS

(ZKLZJYPILKPU[OL,_PZ[PUNHUK,TLYNPUN:VS\[PVUZJOHW[LY[OL*OPUH.YLLU[LJO 0UP[PH[P]LL]HS\H[LKNYLLU[LJOZVS\[PVUZHJYVZZ[^VRL`KPTLUZPVUZLU]PYVUTLU[HS PTWHJ[ HUK JVTTLYJPHSPaH[PVU WV[LU[PHS HU HNNYLNH[PVU VM HKKYLZZHISL THYRL[ ZPaL ZVS\[PVU H[[YHJ[P]LULZZ HUK THYRL[ HJJLZZPIPSP[` :LL [OL ,_PZ[PUN HUK ,TLYNPUN:VS\[PVUZJOHW[LYMVYHTVYLJVTWSL[LKLZJYPW[PVUVM[OLTL[OVKVSVN` \ZLK

GREEN BUILDING SOLUTIONS EVALUATION SUMMARY UNIT ENVIRONMENTAL IMPACT POTENTIAL

5 5 3 2

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4 2 3

OPTIMIZED MATERIALS SOLUTIONS 3VJHS:V\YJPUN 3V^0TWHJ[4H[LYPHSZ 9LJ`JSLK4H[LYPHSZ

2 4 4

CROSS-AREA SOLUTIONS *VTTPZZPVUPUNHUK,MÄJPLU[6WLYH[PVUZ Integrated Design 7HZZP]L+LZPNU 9LZV\YJL:LY]PJL*VTWHUPLZ :\Z[HPUHISL
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THE CHINA GREENTECH REPORT 2009

3 5 5 3 5

COMMERCIALIZATION POTENTIAL

(K]HUJLK,U]LSVWL )\PSKPUN0U[LNYH[LK/LH[HUK7V^LY .YLLU+L]PJLZ :THY[)\PSKPUNZ

HIGHEST

ENERGY EFFICIENCY SOLUTIONS

COMMERCIALIZATION POTENTIAL OVER TIME

Commercialization potential is a product of average addressable market size, solution attractiveness and market accessibility for all solutions within each displayed category. More detail on solutions is included in the Existing and Emerging Solutions chapter and the Green Building chapter of the full report.

LOWEST

SOLUTION

0 - 1 YEARS

1 - 5 YEARS

5 - 10 YEARS

Energy efficiency solutions Water efficiency solutions Optimized materials solutions Cross-area solutions

LEGEND Unit environmental impact potential of solutions: 5!=!More than 40%!1!=!Less than 10%

125

SECTOR SNAPSHOT: GREEN BUILDING

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GREENTECH DEVELOPMENT CHALLENGES

A number of challenges complicate the ongoing development of China’s Green Building sector:

CATEGORIES

DESCRIPTION

MARKET

„3V^HKVW[LYH^HYLULZZHUKPUHKLX\H[LKVTLZ[PJKLZPNUHUKJVUZ[Y\J[PVU ZRPSSZHYLOHTWLYPUNJVTTLYJPHSPaH[PVU

TECHNOLOGY

„(KVW[PVUVMNYLLUI\PSKPUNZVS\[PVUZHUK[LJOUPX\LZZSV^LKI`SPTP[LKZ\WWS` and distribution

FINANCING

„+LJV\WSPUNVMJVZ[ZHUKILULÄ[ZIL[^LLUKL]LSVWLYZLUK\ZLYZHUKLULYN` Z\WWSPLYZ^OPJOWYL]LU[ZHU`WHY[`MYVTWYVHJ[P]LS`HKVW[PUNZVS\[PVUZ

REGULATORY

„
OPPORTUNITIES TO ACCELERATE MARKET DEVELOPMENT

;OLYLHYLU\TLYV\ZVWWVY[\UP[PLZMVYTHYRL[Z[HRLOVSKLYZ[V[HRLHJ[PVU[V HJJLSLYH[L[OLKL]LSVWTLU[VM*OPUH»Z.YLLU)\PSKPUN:LJ[VYPUJS\KPUN! „-VYTPUNUL^TVKLSZVMT\S[PWHY[`JVSSHIVYH[PVUHJYVZZ[OL.YLLU )\PSKPUN]HS\LJOHPU[VTPUPTPaLSPMLJ`JSLLJVUVTPJHUKLU]PYVUTLU[HS JVZ[Z^OPSLPTWYV]PUNI\PSKPUNZLY]PJLZ „,UNHNPUNL_PZ[PUNHUKWV[LU[PHSI\PSKPUNV^ULYZ[VJVTT\UPJH[L WYLMLYLUJLZMVYI\PSKPUNZ[OH[TPUPTPaLLU]PYVUTLU[HSPTWHJ[ZHUKJVTWS` ^P[OLU]PYVUTLU[HSYLN\SH[PVUZ „0UUV]H[PUNNYLLUÄUHUJPUNWYVK\J[ZMVYWYV]PKLYZHUKHKVW[LYZ „+L]LSVWPUNHUKL_WHUKPUNNYLLUI\PSKPUNJVTWVULU[WYVK\J[SHILSPUN and standards A breakdown of opportunities for different classes of stakeholders is available in the full version of the report.

Calculated as the product of a country’s population (Source: United Nations, “World Population Prospects: The 2008 Revision”) and total floor space per capita (Source: China Council for International Cooporation on Environment and Development, Annual General Meeting 2008: Energy Efficiency and Urban Development (Beijing, China: CCICED, 2008)). Western Europe includes the U.K., Ireland, Belgium, France, Netherlands, Portugal, and Spain.” 2 Crosthwaite David et al., World Construction 2007-2008 Report, (London, U.K.: Davis Langdon, 2007), 4 3 Based on the proportion of 2009 expected construction that is certified as “LEED” (Source: US Green Building Council, “LEED Registered Projects Directory”) or by “Green Building Label” (Source: MOHURD, “Announcement of ‘Green Building Label’ Project Names,” July 16, 2008) as of March, 2009” 4 China Council for International Cooperation on Environment and Development, Energy Efficiency and Urban Development Task Force: Background Report 2008 (Beijing, China: CCICED, 2008), 21 5 Zhang, Haimeng et al., China’s Green Revolution: Prioritizing Technologies to Achieve Energy and Environmental Sustainability (Chicago, U.S.: McKinsey & Company, 2009), 10 6 China Council for International Cooporation on Environment and Development, Annual General Meeting 2008: Energy Efficiency and Urban Development (Beijing, China: CCICED, 2008), 21 7 United National Environment Programme, Sustainable Buildings & Climate Initiative, “Briefing: Policies for Energy Efficient Buildings in China,” March 26, 2008, http://www.unepsbci.org/ 1



THE CHINA GREENTECH REPORT 2009

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SECTOR SNAPSHOT

CLEANER TRANSPORTATION SECTOR SNAPSHOTS

The China Greentech Initiative defines Cleaner Transportation as solutions that increase energy efficiency, reduce emissions and improve resource utilization to minimize negative impact of transportation on the environment.

DEFINITION

ROAD, RAILWAY, AIR AND WATERWAY [YHUZWVY[H[PVUYLWYLZLU[[OLMV\YTHPUZLNTLU[Z VM[OL*SLHULY;YHUZWVY[H[PVUZLJ[VY*SLHULYYVHK[YHUZWVY[H[PVUPUJS\KLZZVS\[PVUZ Z\JOHZTVYL,MÄJPLU[,UNPULZ*SLHULY-\LSZ(S[LYUH[P]L=LOPJSL,ULYN`:`Z[LTZ HUK *VTWYLOLUZP]L 9VHK 5L[^VYR 7SHUUPUN HUK +L]LSVWTLU[ *SLHULY YHPS [YHUZWVY[H[PVU PUJS\KLZ ,ULYN` ,MÄJPLU[ ;YHPUZ ,SLJ[YPÄJH[PVU VM 9HPS^H`Z HUK 6W[PTPaLK 6WLYH[PVUZ 4HUHNLTLU[ *SLHULY HPY HUK ^H[LY^H` [YHUZWVY[H[PVU PUJS\KL ZVS\[PVUZ Z\JO HZ -\LS ,MÄJPLU[ (PYJYHM[ HUK :OPWZ >LSS7SHUULK HUK *VUZ[Y\J[LK (PYWVY[ HUK >H[LY^H` 0UMYHZ[Y\J[\YL HUK 6W[PTPaLK (PY HUK >H[LY ;YHMÄJ4HUHNLTLU[

MARKET CONTEXT

*OPUH»Z Z[YVUN LJVUVTPJ NYV^[O HUK PUJYLHZPUN NV]LYUTLU[ PUMYHZ[Y\J[\YL PU]LZ[TLU[V]LY[OLWHZ[ML^KLJHKLZOH]LTHKL[OLJV\U[Y`VULVM[OL^VYSK»Z TVZ[ ZPNUPÄJHU[ [YHUZWVY[H[PVU THYRL[Z ;OPZ OHZ YLZ\S[LK PU Z\IZ[HU[PHS VPS PTWVY[ZZPNUPÄJHU[[YHUZWVY[H[PVULULYN`JVUZ\TW[PVUPUJYLHZLKLTPZZPVUZHUK OPNOSL]LSZVM\YIHU[YHMÄJJVUNLZ[PVU *OPUHPZL_WLYPLUJPUNZ[YVUNNYV^[OHJYVZZHSSTVKLZVM[YHUZWVY[0[ZÅLL[VM WHZZLUNLY ]LOPJSLZ NYL^ H[ ULHYS`   *(.9 IL[^LLU 1,2 9HPS^H` [YHMÄJNYV^[OOHZILLUZW\YYLKI`NV]LYUTLU[WSHUZ[VM\Y[OLYL_WHUKT\UPJPWHS

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THE CHINA GREENTECH REPORT 2009



SECTOR SNAPSHOT: CLEANER TRANSPORTATION

HUKPU[LYWYV]PUJPHSYHPSUL[^VYRZHUKL_[LUKLSLJ[YPÄJH[PVU*OPUHOHZMV\YVM[OL ^VYSK»Z [VW  ZOPWWPUN VWLYH[VYZ I` U\TILY VM ZOPWZ HUK SLHKZ [OL ^VYSK PU ZOPWWPUNWVY[JVU[HPULY[OYV\NOW\[3 0UHYLSH[P]LS`ZOVY[WLYPVKVM[PTL*OPUHOHZ ILJVTL H THQVY WSH`LY PU HPY [YHUZWVY[H[PVU ^P[O V]LY  TPSSPVU WHZZLUNLYZ Å`PUNVUV]LYJVTTLYJPHSHPYJYHM[PU4 (SVUN ^P[O *OPUH»Z L_WHUKPUN [YHUZWVY[H[PVU THYRL[Z [YHUZWVY[H[PVUIHZLK LULYN` JVUZ\TW[PVU OHZ NYV^U Z\IZ[HU[PHSS` ULHYS`   ZPUJL  HUK PZ MVYLJHZ[LK [V TVYL [OHU KV\ISL IL[^LLU  HUK 5 +YP]LU I` *OPUH»Z I\YNLVUPUN YVHK [YHUZWVY[H[PVU VPS JVUZ\TW[PVU PZ MVYLJHZ[ [V NYV^ H[ H   *(.9 MYVT   MHY L_JLLKPUN [OL NSVIHS H]LYHNL VM   6PS HUK V[OLY [YHUZWVY[H[PVU LULYN` JVUZ\TW[PVU OHZ SLK [V [OL ZPNUPÄJHU[ LTPZZPVU VM NYLLUOV\ZLNHZLZHUKV[OLYWVSS\[HU[ZHJJV\U[PUNMVYULHYS` VM*OPUH»Z*6 LTPZZPVUZPU

CHINA’S REGULATORY RESPONSE

*OPUH»Z NV]LYUTLU[ PZ PU]LZ[PUN OLH]PS` PU [YHUZWVY[H[PVU PUMYHZ[Y\J[\YL HUK HNNYLZZP]LS`WYVTV[PUNJSLHU[YHUZWVY[H[PVUZVS\[PVUZI`Z\WWVY[PUNWVSPJPLZHUK Z[YPJ[LYZ[HUKHYKZPULTPZZPVUZHUKM\LSJVUZ\TW[PVU -VYYVHK[YHUZWVY[H[PVU*OPUH»ZNV]LYUTLU[Z\WWVY[Z[OLNYV^[OVMHKVTLZ[PJ H\[VPUK\Z[Y`HUKOHZHSZVHUUV\UJLKWSHUZ[VYLK\JL[V[HSVPSJVUZ\TW[PVUVUH WLY]LOPJSLIHZPZVMULHYS` I` ;OL UH[PVUHS YHPS^H` Z`Z[LT PZ OPNOS` LMÄJPLU[ JVTWHYLK [V V[OLY TVKLZ VM [YHUZWVY[H[PVU HUK [OL L_WHUZPVU VM YHPS^H` [YHUZWVY[ JHWHJP[` PZ H [VW WYPVYP[` MVY *OPUH»ZNV]LYUTLU[)`YHPZPUN[OLWYLZLU[YHPSLSLJ[YPÄJH[PVUSL]LSVM [VTVYL [OHU I`HUKTVYL[OHU I`*OPUHOVWLZ[VWYVTV[LLMÄJPLUJ` HUKYLK\JLKLWLUKLUJLVUVPSPTWVY[Z 4LHU^OPSLWV[LU[PHSM\[\YLSPILYHSPaH[PVUVM *OPUH»ZYHPSZLJ[VY^V\SKHSZVZLY]L[VZ\WWVY[PUJYLHZPUNLMÄJPLUJ`SL]LSZ -VYIV[O^H[LY^H`HUKHPY[YHUZWVY[H[PVUPU[LYUH[PVUHS[YLH[PLZHUKYLN\SH[PVUZ HSYLHK`JVU[HPUTLHZ\YLZ[VHKKYLZZ[OLLU]PYVUTLU[HSPTWHJ[ZVM[OL[YHUZWVY[VM IV[ONVVKZHUKWLVWSLPUJS\KPUNJSPTH[LJOHUNLPTWHJ[Z(ZWVSPJ`THRLYZOH]L \U]LPSLKYL]P[HSPaH[PVUWSHUZKLZPNULK[VM\Y[OLYKL]LSVW[OLJV\U[Y`»ZZOPWI\PSKPUN PUK\Z[Y`*OPUH»ZZOPWI\PSKLYZZOV\SKILVISPNLK[VJVUMVYT[VLTLYNPUNZ[HUKHYKZ MVYLULYN`LMÄJPLU[ZOPWKLZPNUHUKVWLYH[PVUZ(SVUNZPKL*OPUH»ZOLH]`PU]LZ[TLU[ PU IV[O HPY [YHUZWVY[ PUMYHZ[Y\J[\YL HUK HPYWSHUL THU\MHJ[\YPUN JHWHIPSP[PLZ [OL *P]PS(]PH[PVU(KTPUPZ[YH[PVUVM*OPUH*((*OHZYLJLU[S`LZ[HISPZOLKHU6MÄJLVM ,ULYN`*VUZLY]H[PVU7VSS\[HU[ZHUK,TPZZPVUZ[VW\[MVY^HYKWSHUZ[VHKKYLZZ[OL LU]PYVUTLU[HSPTWHJ[VM*OPUH»ZHPY[YHUZWVY[

EXISTING AND EMERGING GREENTECH SOLUTIONS

(ZKLZJYPILKPU[OL,_PZ[PUNHUK,TLYNPUN:VS\[PVUZ*OHW[LY[OL*OPUH.YLLU[LJO 0UP[PH[P]LL]HS\H[LKNYLLU[LJOZVS\[PVUZHJYVZZ[^VRL`KPTLUZPVUZLU]PYVUTLU[HS PTWHJ[WV[LU[PHSHUKJVTTLYJPHSPaH[PVUWV[LU[PHSHUHNNYLNH[PVUVMHKKYLZZHISL THYRL[ZPaLZVS\[PVUH[[YHJ[P]LULZZHUKTHYRL[HJJLZZPIPSP[`:LL[OL:VS\[PVUZ JOHW[LYMVYHTVYLJVTWSL[LKLZJYPW[PVUVM[OLTL[OVKVSVN`\ZLK 5LHYS` HSS JSLHULY YVHK [YHUZWVY[H[PVU ZVS\[PVUZ ^LYL MV\UK [V OH]L OPNO \UP[ LU]PYVUTLU[HSPTWHJ[WV[LU[PHSYLK\JPUN\W[V VM*62LTPZZPVUZ>OPSL[OL JVTTLYJPHSH[[YHJ[P]LULZZVMHS[LYUH[P]LM\LSZMVYYVHK[YHUZWVY[H[PVUPZL_WLJ[LK[V KLJSPULV]LY[PTLK\L[VZ[YPJ[LYSPTP[H[PVUZVUTHYRL[HJJLZZKYP]LUI`YLN\SH[PVUZ IV[OUL^LULYN`]LOPJSLZHUKHK]HUJLKPU[LYUHSJVTI\Z[PVULUNPULIHZLK]LOPJSLZ HYLL_WLJ[LK[VOH]LPUJYLHZPUNJVTTLYJPHSWV[LU[PHSHZZVS\[PVUZTH[\YLHUKNSVIHS VPSWYPJLZTHPU[HPU[OLYPZRVMPUJYLHZL11 ,SLJ[YPJIPJ`JSLZOH]LZLLUZ[YVUNNYV^[OPU *OPUH^P[O\UP[ZHSLZNYV^PUNH[HULZ[PTH[LK *(.9MVYHUKHYL VULVM[OLWV[LU[PHSKYP]LYZVM*OPUH»ZL_WLJ[LKNYV^[OPULSLJ[YPJ]LOPJSLZ12 9HPSZVS\[PVUZ^LYLHSZVMV\UK[VOH]LOPNO\UP[LU]PYVUTLU[HSPTWHJ[WV[LU[PHS I\[ TVYL SPTP[LK JVTTLYJPHSPaH[PVU WV[LU[PHS K\L [V *OPUH»Z THU` OPNOS` JVUJLU[YH[LKYHPS^H`ZVS\[PVUTHYRL[Z *SLHULY HPY HUK ^H[LY^H` ZVS\[PVUZ HSZV ZJVYL OPNO VU LU]PYVUTLU[HS PTWHJ[ WV[LU[PHS I\[ ]HY` PU JVTTLYJPHSPaH[PVU WV[LU[PHS 6U H]LYHNL JSLHULY ^H[LY^H` [YHUZWVY[H[PVU ZVS\[PVUZ HYL YLSH[P]LS` TVYL JVTTLYJPHSS` H[[YHJ[P]L K\L [V *OPUH»Z KYP]L [V M\SS` SL]LYHNL P[Z THU\MHJ[\YPUN ZLJ[VY [OYV\NO H ^VYSKSLHKPUN ZOPWWPUN PUK\Z[Y`HUKNP]LU*OPUH»ZTHYRL[HJJLZZPIPSP[`YLZ[YPJ[PVUZVMHPY[YHMÄJTHUHNLTLU[ PUK\Z[Y`



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SECTOR SNAPSHOT: CLEANER TRANSPORTATION

CLEANER TRANSPORTATION SOLUTIONS EVALUATION SUMMARY AREA

SOLUTION

CLEANER ROAD TRANSPORTATION - Advanced ICE solutions

CLEANER ROAD TRANSPORTATION - Alternative fuel solutions

CLEANER ROAD TRANSPORTATION - New energy vehicle solutions

UNIT ENVIRONMENTAL IMPACT POTENTIAL

AREA

SOLUTION

UNIT ENVIRONMENTAL IMPACT POTENTIAL

(K]HUJLK+PLZLS 3VJVTV[P]L

5

5

,SLJ[YPJ 3VJVTV[P]L

5

)PVL[OHUVS,

5

4\S[PWSL
3

*VTWYLZZLK5H[\YHS.HZ

5

(K]HUJLK Aircrafts

4

)H[[LY`

5

Cleaner Aircraft Fuels

5

)H[[LY`,SLJ[YPJ=LOPJSL

5

6W[PTPaLK(PY ;YHMÄJ4HUHNLTLU[

1

,SLJ[YPJ;^V>OLLSLYZ

5

-\LS*LSS=LOPJSL

5

/`IYPK,SLJ[YPJ=LOPJSL

4

(K]HUJLK+PLZLS0*,

5

(K]HUJLK.HZVSPUL0*,

CLEANER RAIL TRANSPORTATION

CLEANER AIR TRANSPORTATION

CLEANER WATERWAY TRANSPORTATION

(K]HUJLK:OPWZ

*SLHULY:OPW-\LSZ

6W[PTPaLK>H[LY^H` 6WLYH[PVUZ

4

5

4

LEGEND: Unit environmental impact potential of solutions:!5!=!More than 40%!1!=!Less than 10% CLENER TRANSPORTATION COMMERCIALIZATION POTENTIAL

COMMERCIALIZATION POTENTIAL

HIGHEST

Cleaner road - Advanced ICE solutions Cleaner road - Alternative fuel solutions Cleaner road - New energy vehicle solutions Cleaner rail solutions Cleaner air solutions Cleaner waterway solutions

LOWEST

Commercialization potential is a product of average addressable market size, solution attractiveness and market accessibility for all solutions within each displayed category. More detail on solutions is included in the Existing and Emerging Solutions chapter and the Cleaner Transportation chapter of the full report.

0 - 1 YEARS

1 - 5 YEARS

5 - 10 YEARS

National Bureau of Statistics of China, “China Statistical Yearbook 2008” CAGR stands for Compound Annual Growth Rate United Nations Conference on Trade and Development, Review of Maritime Transport 2008 (Geneva, Switzerland: United Nations Conference on Trade and Development, 2008), 96 4 National Bureau of Statistics of China, “China Statistical Yearbook 2008” 5 Parkash, Manmohan, Promoting Environmentally Sustainable Transport in the People’s Republic of China (Mandaluyong City, Philippines: Asian Development Bank, 2009), 21 6 Ibid. 7 McKinsey & Company, China’s Green Revolution (Chicago, U.S.: McKinsey & Company, 2009), 31 8 中国机电网, “汽车专家谈中国汽车业的可持续发展,” [China Electromechanical Website, “Automotive experts on China’s auto industry for sustainable development”], March 12, 2005, http://www. chinanics.com/ 1 2 3

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THE CHINA GREENTECH REPORT 2009

Gerson Lehrman, “Rail and electric sectors to benefit from China’s stimulus plan”, http://www. glgroup.com/ (accessed on Mar.15, 2009) 中华人民共和国国家发展和改革委员会,“国家发展改革委批准’中长期铁路网规划 (2008年调整)” 2008年10月, [National Development and Reform Commission, “On issuing Medium and Long-Term Plan for Rail Network Development (2008 revision),” October, 2008], http://www.ndrc.gov.cn/ 11 The China Greentech Initiative Cleaner Transportation working group evaluated one type of biofuel - bioethanol. Bioethanol is used to create a hybrid fuel E10, which is a mixture of bioethanol with regular gasoline in 10% to 90% respective composition. The Renewable Energy sector chapter contains a more detailed treatment for different types of biofuels. 12 Asia Consulting Alliance, “M&A Analysis and Research on Electric Bicycle Industry in China 2008”, http://www.acunion.net/ (accessed on July 28, 2009) 9

10



SECTOR SNAPSHOT: CLEANER TRANSPORTATION

GREENTECH DEVELOPMENT CHALLENGES

A number of challenges complicate the ongoing development of China’s Cleaner Transportation sector:

CATEGORY

DESCRIPTION

MARKET

„3V^H^HYLULZZVMILULÄ[ZHUKYLZPZ[HU[THYRL[PUJ\TILU[ZOPUKLY[OL JVTTLYJPHSPaH[PVUVM*SLHULY;YHUZWVY[H[PVUZVS\[PVUZ

TECHNOLOGY

„4HU`*SLHULY;YHUZWVY[H[PVUZVS\[PVUZOH]LOPNOHKVW[PVUJVZ[Z\UJSLHY M\[\YLKL]LSVWTLU[[YLUKZHUKVYHYLUV[`L[Z\MÄJPLU[S`TH[\YLMVYTHZZ JVTTLYJPHSPaH[PVU

FINANCING

„0TTH[\YL[YHUZWVY[H[PVU[LJOUVSVNPLZOH]LZPNUPÄJHU[PU]LZ[TLU[YPZRZ" WYP]H[LPU]LZ[VYZOH]LSPTP[LKHJJLZZ[V[YHUZWVY[H[PVUPUMYHZ[Y\J[\YL PU]LZ[TLU[Z

REGULATORY

OPPORTUNITIES TO ACCELERATE MARKET DEVELOPMENT

„
Cleaner Transportation sector opportunities include: ;OYLLVM[OLRL`VWWVY[\UP[PLZOPNOSPNO[LKI`[OL*OPUH.YLLU[LJO0UP[PH[P]L[V HJJLSLYH[LTHYRL[KL]LSVWTLU[PU*SLHULY;YHUZWVY[H[PVUPUJS\KL! „,UOHUJPUN[OLJHWHIPSP[PLZVMSVJHSZVS\[PVUWYV]PKLYZ[VKL]LSVWJ\Z[VTPaLK *SLHULY;YHUZWVY[H[PVUZVS\[PVUZMVY*OPUH»ZTHYRL[JVUKP[PVUZ „*VU[PU\PUN[VZ\WWVY[[OLL_WHUZPVUVM*OPUH»Z[YHUZWVY[H[PVUPUMYHZ[Y\J[\YL ]PHVW[PVUZZ\JOHZW\ISPJWYP]H[LPU]LZ[TLU[WHY[ULYZOPWZ „(KVW[PUNILZ[THUHNLTLU[WYHJ[PJLZHUKHK]HUJLK0;ZVS\[PVUZMYVT V[OLYJV\U[YPLZ^P[OYLZWLJ[[V[OLWSHUUPUNHUKVWLYH[PVUZVMIV[OW\ISPJ [YHUZWVY[H[PVUHUKNVVKZ[YHUZWVY[ A breakdown of opportunities for different classes of stakeholders is available in the full version of the report.



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SECTOR SNAPSHOT

CLEANER INDUSTRY SECTOR SNAPSHOTS

DEFINITION

Cleaner Industry encompasses practices that increase energy efficiency, reduce pollution of air and water and decrease the amount of solid waste produced by industrial activities. Solutions include on-site Combined Heat and Power (CHP), Energy Efficient Motors, Flue Gas Desulfurization (FGD) systems and Process Redesign.

MARKET CONTEXT

CHINA’S INDUSTRIAL SECTOR, ^OPJOOHZNYV^UYHWPKS`ZPUJL[OL ZHUKH[HUL]LU TVYLHJJLSLYH[LKYH[LZPUJL*OPUHQVPULK[OL>VYSK;YHKL6YNHUPaH[PVUPU THU\MHJ[\YLZH^PKLYHUNLVMJVUZ\TLYHUKPUK\Z[YPHSWYVK\J[Z\ZLKHYV\UK[OL ^VYSK(Z*OPUH»ZPUK\Z[YPHSV\[W\[OHZNYV^U[VTLL[NSVIHSKLTHUKHUK[OLULLKZ VM*OPUH»ZVUNVPUNPUK\Z[YPHSPaH[PVUZVOHZP[ZPUK\Z[YPHSZLJ[VY»ZJVUZ\TW[PVUVM LULYN`*OPUH»ZPUK\Z[YPHSZLJ[VYHJJV\U[ZMVY VM[OLJV\U[Y`»Z[V[HSLULYN` JVUZ\TW[PVUJVTWHYLK[V[OL^VYSKH]LYHNLVM 10U*OPUH^HZ[OL ZLJVUK SHYNLZ[ JVUZ\TLY JV\U[Y` VM WYPTHY` LULYN` ^VYSK^PKL HJJV\U[PUN MVY  VM[OL^VYSK»Z[V[HS2 7YVK\J[PVU PU *OPUH NLULYHSS` \ZLZ YLZV\YJLZ SLZZ LMÄJPLU[S` [OHU WYVK\J[PVU PU V[OLY JV\U[YPLZ -VY L_HTWSL ^OPSL [OL LULYN` PU[LUZP[` VM THU` VM *OPUH»Z IHZPJ TH[LYPHS WYVK\J[Z OHZ ILLU KLJSPUPUN Z[LHKPS` MVY [OL WHZ[ [^LU[` `LHYZ SL]LSZYLTHPUZPNUPÄJHU[S`OPNOLY[OHU[OVZLPUTVYLKL]LSVWLKJV\U[YPLZ3*OPUH»Z LULYN`PU[LUZP[`WLY\UP[VM.+7PZMV\Y[PTLZ[OH[VM[OL<:HUKLPNO[[PTLZ[OH[ VM1HWHU4

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131

SECTOR SNAPSHOT: CLEANER INDUSTRY

*OPUH»Z PUK\Z[YPHS HJ[P]P[` OHZ H ZPNUPÄJHU[ PTWHJ[ VU [OL LU]PYVUTLU[ ^P[O [OL PUK\Z[YPHS ZLJ[VY YLZWVUZPISL MVY [OL V]LY^OLSTPUN THQVYP[` VM *OPUH»Z *62 LTPZZPVUZ0UK\Z[YPHSHJ[P]P[PLZPU*OPUHNLULYH[LZPNUPÄJHU[HPYHUK^H[LYWVSS\[PVU HZ^LSSHZZVSPK^HZ[LYLZ\S[PUNPUZ[YHPULKHPY^H[LYHUKSHUKYLZV\YJLZ

CHINA’S REGULATORY RESPONSE

>OPSL *OPUH»Z YLN\SH[VY` YLZWVUZL [V [OL *SLHULY 0UK\Z[Y` JOHSSLUNL OHZ ILLU YLZVS\[LHUKIYVHKTHYRL[WHY[PJPWHU[ZVM[LUOH]LSPTP[LKRUV^SLKNLVMTLKP\T HUK SVUN[LYT WVSPJ` WHJL ZWLJPÄJZ HUK [PTPUN ( U\TILY VM TPUPZ[YPLZ HUK HKTPUPZ[YH[P]L IVKPLZ HYL PU]VS]LK PU YLN\SH[PUN [OL PUK\Z[YPHS ZLJ[VY ^P[O [OL 5H[PVUHS+L]LSVWTLU[HUK9LMVYT*VTTPZZPVU5+9*[OL4PUPZ[Y`VM0UK\Z[Y` HUK 0UMVYTH[PVU ;LJOUVSVN` 400; HUK [OL 4PUPZ[Y` VM ,U]PYVUTLU[HS 7YV[LJ[PVU 4,7WSH`PUNJLU[YHSYVSLZ ([[OLUH[PVUHSSL]LS*OPUH»Zth-P]L@LHY.\PKLSPULZLZ[HISPZOLK HTIP[PV\Z [HYNL[Z MVY PTWYV]PUN LULYN` LMÄJPLUJ` YLK\JPUN LTPZZPVUZ HUK TPUPTPaPUN UH[\YHS YLZV\YJL \ZL HJYVZZ H YHUNL VM WYPTHY` HUK ZLJVUKHY` PUK\Z[YPLZ2L`[HYNL[ZMVY[OLthÄ]L`LHYWLYPVKPUJS\KLH YLK\J[PVUPU.+7 LULYN`PU[LUZP[`HUKH YLK\J[PVUPUIV[OZ\SM\YKPV_PKL:62HUKJOLTPJHS V_`NLU KLTHUK *6+0U  *OPUH»Z JLU[YHSNV]LYUTLU[ SH\UJOLK [OL ;VW ,ULYN`*VUZ\TPUN,U[LYWYPZLZ7YVNYHTVULVM[OLRL`PUP[PH[P]LZILOPUKP[Z [HYNL[LKLULYN`PU[LUZP[`YLK\J[PVU5;OLJLU[YHSNV]LYUTLU[OHZHSZVPUZ[P[\[LKH U\TILYVMZ\IZPKPLZHUKPUJLU[P]LZJOLTLZ[VWYVTV[LPUK\Z[YPHSLULYN`LMÄJPLUJ` HUKYLZV\YJLJVUZLY]H[PVU (ZPKL MYVT *OPUH»Z UH[PVUHS YLN\SH[VYZ WYV]PUJPHS NV]LYUTLU[Z HUK SVJHS H\[OVYP[PLZHSZVWSH`JYP[PJHSYVSLZPUPTWSLTLU[PUNZ\Z[HPUHIPSP[`WVSPJPLZTVUP[VYPUN JVTWSPHUJLHUKLUMVYJPUNYLN\SH[PVUZ

EXISTING AND EMERGING GREENTECH SOLUTIONS

(ZKLZJYPILKPU[OL,_PZ[PUNHUK,THYNPUN:VS\[PVUZJOHW[LY[OL*OPUH.YLLU[LJO 0UP[PH[P]LL]HS\H[LKNYLLU[LJOZVS\[PVUZHJYVZZ[^VRL`KPTLUZPVUZLU]PYVUTLU[HS PTWHJ[WV[LU[PHSHUKJVTTLYJPHSPaH[PVUWV[LU[PHSHUHNNYLNH[PVUVMHKKYLZZHISL THYRL[ZPaLZVS\[PVUH[[YHJ[P]LULZZHUKTHYRL[HJJLZZPIPSP[`KPTLUZPVUZ:LL[OL :VS\[PVUZJOHW[LYMVYHKLZJYPW[PVUVM[OLTL[OVKVSVN`\ZLK

CLEANER INDUSTRY SOLUTIONS EVALUATION SUMMARY UNIT ENVIRONMENTAL IMPACT POTENTIAL

2 5 3

AIR AND WATER POLLUTION MITIGATION SOLUTIONS *HYIVU*HW[\YLHUK:LX\LZ[YH[PVU Flue Gas Denitration -S\L.HZ+LZ\SM\YPaH[PVU -\LS:^P[JOPUN 0UK\Z[YPHS>HZ[L^H[LY 7HY[PJ\SH[L4H[[LY9LTV]HS

5 5 5 2 4 5

SOLID WASTE MANAGEMENT SOLUTIONS 0UJPULYH[PVU,ULYN`9LJV]LY` >HZ[L:LWHYH[PVUHUK6MM;HRL

2 4

COMMERCIALIZATION POTENTIAL

)HSHUJLVM7SHU[ *VTIPULK/LH[HUK7V^LY ,ULYN`,MÄJPLU[4V[VYZ

HIGHEST

ENERGY EFFICIENCY SOLUTIONS

COMMERCIALIZATION POTENTIAL OVER TIME

Commercialization potential is a product of average addressable market size, solution attractiveness and market accessibility for all solutions within each displayed category. More detail on solutions is included in the Existing and Emerging Solutions chapter and the Cleaner Industry chapter of the full report.

LOWEST

SOLUTION

0 - 1 YEARS

132

2 2 3 2

5 - 10 YEARS

Energy efficiency solutions Air and water pollution mitigation solutions Solid waste management solutions Cross-area solutions

CROSS-AREA SOLUTIONS *VTTPZZPVUPUN ,U]PYVUTLU[HS4HUHNLTLU[:`Z[LTHUK0;:`Z[LTZ 7YVJLZZ9LKLZPNU :[HUKHYK6WLYH[PUN7YVJLK\YLZ;YHPUPUN-LLKIHJR

1 - 5 YEARS

LEGEND Unit environmental impact potential of solutions: 5!=!More than 40%!1!=!Less than 10% THE CHINA GREENTECH REPORT 2009

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SECTOR SNAPSHOT: CLEANER INDUSTRY

L]HS\H[LKNYLLU[LJOZVS\[PVUZHJYVZZ[^VRL`KPTLUZPVUZLU]PYVUTLU[HSPTWHJ[ WV[LU[PHSHUKJVTTLYJPHSPaH[PVUWV[LU[PHSHUHNNYLNH[PVUVMHKKYLZZHISLTHYRL[ ZPaLZVS\[PVUH[[YHJ[P]LULZZHUKTHYRL[HJJLZZPIPSP[`KPTLUZPVUZ:LL[OL:VS\[PVUZ JOHW[LYMVYHKLZJYPW[PVUVM[OLTL[OVKVSVN`\ZLK (PYHUK^H[LYWVSS\[PVUZVS\[PVUZ^LYLMV\UK[VOH]L[OLNYLH[LZ[\UP[LU]PYVUTLU[HS PTWHJ[WV[LU[PHSHZ[OL`[HYNL[ZWLJPÄJWVSS\[HU[ZHUKPUTHU`JHZLZJHUHJOPL]L HYLTV]HSYH[LVM\W[V  ;OLJVTTLYJPHSWV[LU[PHSVM[OLZLZVS\[PVUZZOV\SK PUJYLHZLYHWPKS`V]LY[PTLPUYLZWVUZL[V[OLPTWYV]LKLUMVYJLTLU[VMNV]LYUTLU[ YLN\SH[PVUZHUKHNYV^PUNHKKYLZZHISLTHYRL[ >OPSL [OL H]LYHNL \UP[ LU]PYVUTLU[HS PTWHJ[ VM LULYN` LMÄJPLUJ` ZVS\[PVUZ ^HZ HSZV MV\UK [V IL ZPNUPÄJHU[S` OPNO [OL HUHS`ZPZ Z\NNLZ[Z [OH[ NYLH[LY LMÄJPLUJ` NHPUZ JHU IL HJOPL]LK [OYV\NO VW[PTPaPUN OLH[PUN WV^LY HUK TV[VY Z`Z[LTZ [OHU MYVT LUOHUJPUN [OL LULYN` LMÄJPLUJ` VM V[OLY PUK\Z[YPHS LX\PWTLU[ ,ULYN` LMÄJPLUJ` ZVS\[PVUZ OV^L]LY ^LYL MV\UK VU H]LYHNL [V WYLZLU[ [OL NYLH[LZ[ V]LYHSSJVTTLYJPHSWV[LU[PHSK\L[V[OLPYSHYNLVWLUTHYRL[ZHUKH[[YHJ[P]LULZZ[V HKVW[LYZJVUZJPV\ZVM[OLLULYN`JVTWVULU[ZVMTHU\MHJ[\YPUNJVZ[Z (S[OV\NOZVSPK^HZ[LTHUHNLTLU[HUKJYVZZHYLHZVS\[PVUZ^LYLMV\UK[VOH]L SV^LY H]LYHNL \UP[ LU]PYVUTLU[HS PTWHJ[ [OL` JHU Z[PSS OH]L UV[HISL LMMLJ[Z HJYVZZHPYHUK^H[LYWVSS\[PVUHZ^LSSHZZVSPK^HZ[L;OLPYJVTTLYJPHSWV[LU[PHS ^HZ JVTTVUS` SPTP[LK K\L [V H YLSH[P]LS` ZTHSS THYRL[ ZPaL JVTWHYLK [V V[OLY ZVS\[PVUZ

GREENTECH DEVELOPMENT CHALLENGES

A number of challenges complicate the ongoing development of China’s Cleaner industry sector, including:

CATEGORY

DESCRIPTION

MARKET

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TECHNOLOGY

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FINANCING

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REGULATORY

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OPPORTUNITIES TO ACCELERATE MARKET DEVELOPMENT

6WWVY[\UP[PLZMVYHJJLSLYH[PUN*SLHULY0UK\Z[Y`THYRL[KL]LSVWTLU[PUJS\KL! Cleaner Industy sector opportunities include: „7YPVYP[PaPUNKLTVUZ[YH[PVUWYVQLJ[Z[VWYV]L[OL]PHIPSP[`VMZVS\[PVUZ „ ,Z[HISPZOPUN J\S[\YLZ VM LMÄJPLUJ` HUK LU]PYVUTLU[HS H^HYLULZZ" JVUK\J[PUN THUHNLTLU[HUKZ[HMM[YHPUPUNHUKJHWHJP[`KL]LSVWTLU[ „+L]LSVWPUNHUKWYVTV[PUNPUUV]H[P]LÄUHUJPUNTLJOHUPZTZMVYPUK\Z[YPHS MHJPSP[`\WNYHKLZ „,UHISPUNHUKKYP]PUNNYLH[LYYLN\SH[VY`LUMVYJLTLU[HUKJVTWSPHUJLH[HSSSL]LSZ A breakdown of opportunities for different classes of stakeholders is available in the full version of the report. Energy Information Administration, International Energy Outlook 2009 (Washington DC, U.S.: United States Department of Energy, 2009), 203, 215 International Energy Agency, Key World Energy Statistics 2008 (Paris, France: IEA, 2008), 48-57 3 Hu, Xiulian et al., “Development of China Carbon Emissions Scenarios Towards 2050” (presentation given at the Asia-Pacific Initiative toward Environmentally Sound and Sustainable Society, Bonn, Germany, May 23, 2006), 5,6 4 Energy Information Administration, “International Energy Annual 2006” 5 Price, Lynn et al., China’s Top-1000 Energy-Consuming Enterprises Program (Berkeley, California, U.S.: Lawrence Berkeley National Laboratory, 2008), 3 6 中国社会科学院, “中国节能及环境政策调研报告,” [China Academy of Social Sciences, “China Energy Saving and Environment Policy Survey Report”], (Beijing, China: 2008), 41-4 1

2

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SECTOR SNAPSHOT

CLEAN WATER

SECTOR SNAPSHOTS

CHINA’S RENEWABLE ENERGY SECTOR DEFINITION

The China Greentech Initiative defines the clean water sector as the collective sum of activities within the economic water cycle – water extraction, water treatment, water distribution, water use and DEFINITION wastewater treatment – with solutions including water treatment technologies, water quality measurement and monitoring and efficient point-of-use equipment.

MARKET CONTEXT

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SECTOR SNAPSHOT: CLEAN WATER

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CHINA’S REGULATORY RESPONSE

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EXISTING AND EMERGING GREENTECH SOLUTIONS

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1 Jian, Xie et al., Addressing China’s Water Scarcity: Recommendations for Selected Water Resource Management Issues, (Washington, DC, U.S.: The World Bank, 2009), 23 2 Food and Agriculture Organization of the United Nations, “AQUASTAT” 3 Jian, Xie et al., Addressing China’s Water Scarcity: Recommendations for Selected Water Resource Management Issues, (Washington, DC, U.S.: The World Bank, 2009), 11 4 National Bureau of Statistics of China, “China Statistical Yearbook 2008” 5 Greenpeace, “Water Pollution Has Become China’s Most Urgent Environmental Problem Today,” July 24, 2008, http://www.greenpeace.org/ 6 IGD, “The Value of Water,” http://www.igd.com/ (accessed on August 25, 2009) 7 People’s Daily, “中共中央关于制定十一五规划的建议（全文）,” [Full Text of the Chinese Communist Party Central Committee on the Full Development of the 11th Five-Year Plan], October 18, 2005, http://politics.people.com.cn/ 8 Ibid. 9 “People’s Daily, “Singapore International Water Week Opens Gateway to China Market,” June 18, 2008, http://english.peopledaily.com.cn/ 10 Ministry of Water Resource, “China to Strengthen Rural Water Conservation with 20 Billion Yuan Plan,” November, 24, 2008, http://www.mwr.gov. cn/ 11 Ministry of Water Resource, “Govt to Spend $249M on Groundwater Monitors,” October, 29, 2008, http://www.mwr.gov.cn/

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SECTOR SNAPSHOT: CLEAN WATER

CLEAN WATER SOLUTIONS EVALUATION SUMMARY UNIT ENVIRONMENTAL IMPACT POTENTIAL

3 2

POLLUTION MINIMIZATION SOLUTIONS :LJVUKHY`;YLH[TLU[:VS\[PVUZ :S\KNL;YLH[TLU[HUK+PZWVZHS ;LY[PHY`;YLH[TLU[:VS\[PVUZ

3 3 1

WATER EFFICIENCY SOLUTIONS 0TWYV]LK0YYPNH[PVU 3V^-SV^-P_[\YLZ

5 3

MULTI-USE SOLUTIONS

Commercialization potential is a product of average addressable market size, solution attractiveness and market accessibility for all solutions within each displayed category. More detail on solutions is included in the Existing and Emerging Solutions chapter and the Clean Water chapter of the full report.

0 - 1 YEARS

(K]HUJLK+PZ[YPI\[PVU4H[LYPHSZHUK*VTWVULU[Z 0UK\Z[YPHS>H[LY9L\ZL 4VUP[VYPUNHUK4LHZ\YLTLU[:VS\[PVUZ 7VPU[VM
GREENTECH DEVELOPMENT CHALLENGES

COMMERCIALIZATION POTENTIAL

Desalination ,_[YHJ[PVU:VS\[PVUZ

HIGHEST

WATER SUPPLY SOLUTIONS

COMMERCIALIZATION POTENTIAL OVER TIME

LOWEST

SOLUTION

1 4 2 3 5

1 - 5 YEARS

5 - 10 YEARS

Water supply solutions Pollution minimization solutions Water efficiency solutions Cross-area solutions LEGEND: Unit environmental impact potental of solutions: 5!=!More than 40%!1!=!Less than 10%

A number of challenges complicate the development of Clean Water sector in China, including:

CHALLENGES

DESCRIPTION

MARKET

„
TECHNOLOGY

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FINANCING

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REGULATORY

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OPPORTUNITIES TO ACCELERATE MARKET DEVELOPMENT

;OLYLHYLZL]LYHSVWWVY[\UP[PLZMVYTHYRL[Z[HRLOVSKLYZ[VHJJLSLYH[L[OLKL]LSVWTLU[VM*OPUH»Z*SLHU>H[LY;OYLLVM[OLRL`VWWVY[\UP[PLZOPNOSPNO[LKI`[OL *OPUH.YLLU[LJO0UP[PH[P]LPUJS\KL! „*\Z[VTPaL^H[LYZVS\[PVUZ[V[OL\UPX\LULLKZVM*OPUH»Z^H[LYTHYRL[ „0TWYV]LÄUHUJPHSWSHUUPUNMVY[OLLZ[HISPZOTLU[HUKVWLYH[PVUVM^H[LYPUMYHZ[Y\J[\YL „:\WWVY[]HS\LJOHPUWHY[ULYZOPWZIL[^LLUW\ISPJHUKWYP]H[LZLJ[VYÄUHUJLYZ ZVS\[PVUZWYV]PKLYZVWLYH[VYZHUKV[OLYRL`THYRL[WHY[PJPWHU[Z A breakdown of opportunities for different classes of stakeholders is available in the full version of the report.

Ministry of Water Resource, “China to Strengthen Rural Water Conservation with 20 Billion Yuan Plan”, http://www.mwr.gov.cn/ (accessed on February 29, 2009) Ministry of Water Resource, “Govt to spend $249 m on Groundwater Monitors”, http://www.mwr.gov.cn/ (accessed on February 29, 2009)

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THE CHINA GREENTECH REPORT 2009

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PATH FORWARD This report is a starting point for defining and framing China’s greentech issues, challenges and opportunities, recognizing that these markets will continue to evolve rapidly.

THE CHINA GREENTECH REPORT 2009 provides an overall picture of China’s greentech markets, challenges and opportunities as of the middle of 2009. As discussed, China’s market requirements for greentech solutions are tremendous. Stakeholders have clear opportunities to accelerate market development and create a more LU]PYVUTLU[HSS`Z\Z[HPUHISL*OPUHHZPSS\Z[YH[LKI`[OLRL`ÄUKPUNZMYVT[OLYLWVY[! „ China’s greentech markets encompass a wide range of sectors, segments and distinct solutions „ China has transformed dramatically over the last three decades into a JVSVZZHSHUKYLZPSPLU[LJVUVT`I\[H[ZPNUPÄJHU[LU]PYVUTLU[HSJVZ[Z „ While China is likely to continue its rapid economic development, it is expected to do so in an environmentally sustainable way „ China has already laid the foundation for greentech market growth, HUK[OLÄYZ[ZPNUZVM[OPZNYLLU[YHUZMVYTH[PVUHYLWYVTPZPUN „ Regulators have taken concrete steps to address its environmental issues and support the development of greentech markets „ *OPUH»ZNYLLU[LJOTHYRL[ZHYLHSZVPUÅ\LUJLKI`PU[LYUH[PVUHSWVSPJ` principles, agreements and relationships, with China proactively engaging in dialogues related to global climate change and other environmental issues „ While many green technologies, products and services are still being developed, a great number already exist and are available in China today „ These greentech solutions hold the potential to mitigate the impact of economic development on China’s natural environment and offer attractive commercial opportunities for both providers and adopters „ ;^LS]LV]LYHSSJOHSSLUNLZYLTHPU[VILHKKYLZZLK"MV\YHYLHZ!THYRL[ [LJOUVSVN`ÄUHUJPUNHUKYLN\SH[VY` „ :VS\[PVUHKVW[LYZZVS\[PVUWYV]PKLYZÄUHUJPHSPU]LZ[VYZNV]LYUTLU[ regulators and other stakeholders have clear opportunities to address these challenges in an open source collaborative model, accelerating China’s greentech markets and achieving the vision of an environmentally sustainable China 0U[LUKLK [V IL H Z[HY[PUN WVPU[ [OH[ KLÄULZ HUK MYHTLZ THYRL[ PZZ\LZ HUK opportunities, the Initiative recognizes that the report doesn’t answer every question that market participants have. Given the broad scope of greentech markets in China, the country’s immense scale and the intense speed at which regulatory, end user, competitive and technology markets are changing, certain aspects of this report will become dated relatively quickly. Important questions that remain to be answered include evaluations of competing green technologies’ functionalities and cost curves, assessments of emerging business models, strategies for addressing intellectual property and technology [YHUZMLY JVUJLYUZ YL]PL^Z VM HS[LYUH[P]L ÄUHUJPUN HUK WHY[ULYZOPW TVKLSZ [OL impact of the Copenhagen climate change agreement on China, and many others. Readers of The China Greentech ReportTM 2009 are invited to join the conversa[PVUI`]PZP[PUN^^^JOPUHNYLLU[LJOJVT;OL0UP[PH[P]L»Z^LIZP[LHSSV^ZWLVWSL[V! „ Download electronic copies of the Executive Overview, full report and individual sector chapters „ Order printed versions of the report „ Access additional content developed by the Initiative „ Participate in interactive discussion forums to create, uncover and promote greentech solutions for an environmentally sustainable China and the world The China Greentech Initiative looks forward to welcoming readers to its extended community. Suggestions on improving the content in this report are also welcome at [email protected]. www.china-greentech.com

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ACKNOWLEDGMENTS Hundreds of individuals from more than 80 leading technology and services companies, entrepreneurs, investors, NGOs and policy advisors provided input to The China Greentech Report 2009. The logos of these organizations are presented on the front and inside covers, and a complete listing of partners and strategic advisors is included on the last page of the report. This report is only possible because of the support and direction provided from these organizations and their people. THE CHINA GREENTECH INITIATIVE also recognizes and profusely thanks the many talented professionals who became part of its core and extended teams over the past year. Driven by their passion for greentech opportunities in China, these team members demonstrated their willingness to tackle huge objectives and meet unrealistic deadlines while delivering the highest quality deliverables. They’ve ^VYRLK JV\U[SLZZ SH[L OV\YZ ZHJYPÄJLK THU` ^LLRLUKZ THZ[LYLK UL^ ZRPSSZ Q\NNSLKJVTWL[PUNWYPVYP[PLZHUKÅL_PIS`HKKYLZZLKWYVISLTZPKLU[PÄLKHSVUN[OL ^H`;OLZLWYVMLZZPVUHSZHUK[OLPYHMÄSPH[PVU^OLUUV[LTWSV`LKKPYLJ[S`I`[OL Initiative) are acknowledged below.

RESEARCH TEAM Randall S. Hancock, co-Managing Director of the Initiative and CEO of MangoStrategy, LLC, led the research team and the writing of this report. Hermes :\U孙兆庆) directed the research team onsite from Beijing. Constantin Crachilov HUK.HY`:OHYRL`7^*JV^YV[LT\JOVM[OPZYLWVY[HUKLHJOTHUHNLKT\S[PWSL YLZLHYJO [LHTZ (UUHILSS *OHY[YLZ 7^* (UH 3PU ; *OPVUN 4HUNV:[YH[LN` 4PJOHLS 3P 李明 :OLYY` 3P 李晓丽 704 ,YPJH @\ 郁晓菲, PIM) and Jasmine AOHUN 张金莉, PwC) managed individual sector teams. Core analysts with the 0UP[PH[P]LMVY[OLK\YH[PVU^LYL1V`)PHU卞玉娟(UNLSH-HU范羽/LSLU/L何 晓彦HUK9HJOLS?PHV肖凝). 6[OLYZQVPULK[OLYLZLHYJO[LHTH[ZWLJPÄJWVPU[ZPU[OLWYVQLJ[THU`HZ]VS\U[LLYZ ;OLZLL_[LUKLK[LHTTLTILYZPUJS\KLK(UUH:(IHYYV4HUNV:[YH[LN`9LU`P (UN(HYVU(YMTHU/HV*HWP[HS)YPHUUH)\JR<:-VYLPNU*VTTLYJPHS:LY]PJL 4HU\LS 3PVULS 9 )HZPSPV 4HUNV:[YH[LN` AOHV *OHV 704 (UUPL *OLU 704 2L]PU *OPUN <: -VYLPNU *VTTLYJPHS :LY]PJL ?PU *OLU 陈歆, PwC), Siobhan +HZ)HJOYHU(TLYPJHU*OHTILYVM*VTTLYJLPU:OHUNOHP4LP7PUN+VLY`李 美萍7^*)PLU]LUPKV,,ZTLYV4HUNV:[YH[LN`5PJRP-\UN冯斯琦, PwC） 3`KPH/L704@\ZOH/\-\SIYPNO[:JOVSHYH[;ZPUNO\HHUN王白羽*SPTH[L*OHUNL*HWP[HS*SH\KPH>HUN王晴, PwC), Wilson >HUN 王吉涛 7^* 9HJOLS >HZZLY 7H\S * >H[ZVU @HUN @HUN 杨阳, PwC), 1LZZPL@\喻方7^*HUK:[L]LAOV\周尤, PwC).

PARTNER OUTREACH TEAM Ellen G. Carberry, co-Managing Director of the Initiative and a Partner with Hao Capital, led the partner outreach and government relations team. Craig Adams, *OYPZ[PHU )LKHYK *PUK` 1PHUN 姜新燕 HUK ;VT >HYK 704 ^LYL [OL WYPUJPWHSZ responsible for developing and managing relationships with the Initiative’s partners and strategic advisors. Together, they complimented one another to achieve a IYVHK YLWYLZLU[H[PVU HUK ZPNUPÄJHU[ WHY[PJPWH[PVU VM JVTWHUPLZ HUK UVUWYVÄ[ organizations from diverse industries, geographies and roles. Craig Adams, with HZZPZ[HUJL MYVT 1HTLZ +V\NOLY[` JVU[YPI\[LK ZPNUPÄJHU[S` [V THUHNPUN [OL 138

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ACKNOWLEDGMENTS 0UP[PH[P]L»ZTHYRL[PUNHUKJVTT\UPJH[PVUZHJ[P]P[PLZ1HZVU/\于经东) provided tremendous administrative support across all facets of the Initiative. In addition, [OL (TLYPJHU *OHTILY VM *VTTLYJL PU :OHUNOHP (T*OHT :OHUNOHP HSZV contributed to the partner outreach activities.

PROJECT MANAGEMENT (UUHILSS *OHY[YLZ 7^* ZLY]LK HZ [OL WYVQLJ[ THUHNLY MVY [OL 0UP[PH[P]L PU addition to the research role noted earlier. Thanks to her organizational skills and tireless commitment, she made it possible to manage successfully the Initiative’s enormous complexity.

REPORT PRODUCTION Several individuals from AmCham Shanghai played critical roles in the production of the report – Siobhan Das Bachran, in addition to overseeing the Chamber’s overall participation in the Initiative, coordinated the overall production effort. Katie Howe edited and managed the editorial process. David Basmajian, along with other Chamber staff, provided additional support. Marianne Kaulima was responsible for the report’s design and layout. Julius Mak, a Shanghai based photographer, provided all of the images used in this report at no cost to the Initiative. Scribes of the Orient provided the Chinese translation for the online version and print production was executed by Snap Printing, Shanghai.

NOTABLE OTHERS Finally, while it is impossible to name the hundreds of other individuals from the partner and strategic advisor group who’ve assisted in so many ways, a few people stand out for special recognition. 9\[O +VIZVU 7^* ^OV THUHNLK 7YPJL^H[LYOV\ZL*VVWLYZ» WHY[PJPWH[PVU PU the Initiative, provided detailed feedback on all facets of the research, procured additional research support when needed, ensured availability of meeting facilities, participated in sector working sessions, hosted team parties and much more. Other members of PricewaterhouseCoopers’ leadership team who contributed NYLH[S`[V[OL0UP[PH[P]LPUJS\KL5VYH>\顾宜4HY[PU-VSL`*`UHYH;HU陈细丽) HUK(SSHUAOHUN张鉴钧). 6[OLY PUKP]PK\HSZ THKL ZPNUPÄJHU[ JVU[YPI\[PVUZ [V [OL MV\UKPUN VM [OL 0UP[PH[P]L ^OLU P[ ^HZ Q\Z[ H ]PZPVU PUJS\KPUN *OHYSLZ 3P\ 刘扬声), Simon Eckersley and ,SHPUL >VUN /HV *HWP[HS :[L]L )LY[HTPUP MVYTLY *,6 VM ., 5VY[O (ZPH HUK *OPUH 7L[LY 4HYYZ +LSS )Y`HU 3HYZVU <: -VYLPNU *VTTLYJPHS :LY]PJL HUK .HY` 9PLZJOLS 8PTPUN =LU[\YLZ  )YLUKH 3LP -VZ[LY (T*OHT :OHUNOHP HUK P[Z,U]PYVUTLU[HS*VTTP[[LLSLKI`PUJS\KPUN;VT4J*H^SL`6^LUZ*VYUPUN *OHYSLZ4J,S^LL:X\PYL:HUKLYZHUK+LTWZL`HUK4H[[;HYNL[[)H`LY^OV saw the potential of broadening the Initiative to include seven working sector teams. 0U1\S`-YHUZ.YLPKHU\Z7OPSPWZ(ZPHILJHTL[OL0UP[PH[P]L»ZÄYZ[,\YVWLHU WHY[ULYHUKPU[OLZHTLTVU[O)LPQPUN*HWP[HS北京首创ILJHTL[OLÄYZ[*OPULZL Z[H[LV^ULK LU[LYWYPZL [V QVPU ;PUH 1\ 27*) *OPUH OVZ[LK *,6Z VM 0UP[PH[P]L WHY[ULYZH[HWYP]H[LYLJLW[PVU^P[OMVYTLY<:=PJL7YLZPKLU[(S.VYL+H]PK5PLO :O\P6U+L]LSVWTLU[瑞安房地产) hosted discussion dinners for the Initiative’s YLZLHYJO[LHTPU:OHUNOHP:[L]L>P[[YPNHUK3PAOLUN;ZPUNO\H)7*SLHU,ULYN` Center, 清华-BP清洁能源中心) dedicated hours of their time on weekends and contributed a steady stream of secondary research.

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GLOSSARY

GLOSSARY TERM

DEFINITION

Advanced aircraft

(PYJYHM[[OH[HYLTVYLM\LSLMÄJPLU[HUKWYVK\JLSLZZLTPZZPVUZ[OHU JVU]LU[PVUHSTVKLSZ\ZLKPU*OPUH

Advanced coal mining equipment

*VHS TPUPUN LX\PWTLU[ [OH[ PZ TVYL LULYN` LMÄJPLU[ HUK LUHISLZ OPNOLYL_[YHJ[PVUYH[LZ[OHUJVU]LU[PVUHSLX\PWTLU[

Advanced diesel internal combustion engine (ICE) vehicles

=LOPJSLZ^P[OKPLZLS0*,[OH[HYLTVYLM\LSLMÄJPLU[HUKWYVK\JLSLZZ LTPZZPVUZ[OHUJVU]LU[PVUHSTVKLSZ\ZLKPU*OPUH

Advanced diesel locomotives

+PLZLS SVJVTV[P]LZ [OH[ HYL TVYL M\LS LMÄJPLU[ HUK WYVK\JL SLZZ LTPZZPVUZ[OHUJVU]LU[PVUHSTVKLSZ\ZLKPU*OPUH

Advanced envelopes

0UJS\KLZ PUZ\SH[PVU ^PUKV^Z YVVÄUN HUK V[OLY WHZZP]L ZVS\[PVUZ LP[OLYPUZ[HSSLKTVYLHJJ\YH[LS`[OHU*OPUH»ZTHYRL[JVU]LU[PVUVY JVTIPULK ^P[O HJ[P]L Z`Z[LTZ Z\JO HZ TVPZ[\YL VY [LTWLYH[\YL ZLUZVYZ[VLUHISLYLK\JLKOLH[NHPUVYSVZZ

Advanced gasoline internal combustion engine (ICE) vehicles

=LOPJSLZ^P[ONHZVSPUL0*,[OH[HYLTVYLM\LSLMÄJPLU[HUKWYVK\JL SLZZLTPZZPVUZ[OHUJVU]LU[PVUHSTVKLSZ\ZLKPU*OPUH

Advanced metering infrastructures (AMI)

0U[LNYH[LKZ`Z[LTZ[OH[TLHZ\YLJVSSLJ[Z[VYLHUKHUHS`aL\[PSP[` \ZHNL:VTLVM^OPJOPUJS\KLLSLJ[YPJP[`NHZVY^H[LY"HIYVHKLY JVUJLW[[OHU(4907IHZLKZVS\[PVUZ

Advanced recycling fees

-LLZ WHPK \WVU [OL W\YJOHZL VM UL^ LSLJ[YPJ VY LSLJ[YVUPJ LX\PW TLU[HUKHYL\ZLK[VÄUHUJL[OLYLJ`JSPUNVMLSLJ[YPJHUKLSLJ[YVUPJ LX\PWTLU[^HZ[L

Advanced ships

:OPWZ[OH[HYLTVYLM\LSLMÄJPLU[HUKWYVK\JLSLZZLTPZZPVUZ[OHU JVU]LU[PVUHSTVKLSZ\ZLKPU*OPUH

Aeration

>HZ[L^H[LY[YLH[TLU[HWWSPJH[PVUPU^OPJO^H[LYPZWHZZLK[OYV\NO HPY;OLZ\IZLX\LU[PUJYLHZLPU[OL^H[LY»ZV_`NLUJVU[LU[HZZPZ[Z IHJ[LYPHPU[OLJSLHU\WWYVJLZZ

Amine treatments

(SZV JHSSLK HTPUL NHZ Z^LL[LUPUN H KLZ\SM\YPaH[PVU [LJOUPX\L PZ HWYVJLZZ[OH[YLTV]LZO`KYVNLUZ\SÄKLHUKJHYIVUKPV_PKLMYVT UH[\YHSNHZ

Amorphous silicon thin film photovoltaic cells (a-Si PV)

;`WL VM [OPU ÄST ZVSHY JLSSZ IHZLK VU HTVYWOV\Z ZPSPJVU JOLTPJHS JVTWV\UK

Anaerobic digestion

:LYPLZ VM WYVJLZZLZ PU ^OPJO TPJYVVYNHUPZTZ IYLHR KV^U IPVKLNYHKHISL TH[LYPHS PU [OL HIZLUJL VM V_`NLU (WWSPJH[PVU PZ ^PKLS` \ZLK [V [YLH[ ^HZ[L^H[LY ZS\KNL HUK VYNHUPJ ^HZ[L 0[ YLK\JLZ[OLLTPZZPVUVMSHUKÄSSNHZHUKWYVK\JLZHTL[OHULHUK JHYIVUKPV_PKLYPJOIPVNHZZ\P[HISLMVYLULYN`WYVK\J[PVU

Balance of plant

6W[PTPaH[PVU VM H WSHU[»Z LX\PWTLU[ HPTLK H[ TH_PTPaPUN LULYN` ^H[LYLMÄJPLUJ`HZ^LSSHZTPUPTPaPUNWVSS\[PVUHUK^HZ[L

Basic industries

*VSSLJ[PVU VM LU[LYWYPZLZ [OH[ WYVK\JL [OL YLÄULK IHZPJ TH[LYPHSZ ULJLZZHY` MVY THU\MHJ[\YPUN JVUZ\TLY NVVKZ HUK [OH[ \ZL YH^ TH[LYPHSZMYVTL_[YHJ[P]LPUK\Z[Y`

Batteries

*VTIPUH[PVUVMLSLJ[YVJOLTPJHSJLSSZ[OH[Z[VYLLSLJ[YPJP[`

Battery electric vehicles (BEV)

=LOPJSLZ [OH[ JVTWSL[LS` YLS` VU LSLJ[YPJP[` Z[VYHNL IH[[LYPLZ HZ H WV^LYZV\YJLHUKHYLKYP]LUI`LSLJ[YPJTV[VYZ

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GLOSSARY

Battery storage

,SLJ[YVJOLTPJHS JLSSZ [OH[ JHU IL \ZLK [V Z[VYL LULYN`  ;OL` HYL HISL[VILJOHYNLK\ZPUNLSLJ[YPJP[`HUK[OLUKPZJOHYNLK[VWYVK\JL LSLJ[YPJP[`

Biochemicals

*OLTPJHSZ[OH[HYLUH[\YHSS`L_PZ[PUNHUKVJJ\Y^P[OV\[HY[PÄJPHSHPK

Biodiesel

5VUWL[YVSL\TIHZLKKPLZLSM\LS[OH[\[PSPaLZLP[OLY]LNL[HISLVPSVY HUPTHSMH[

Bioethanol

,[O`S HSJVOVS HU HS[LYUH[P]L [V NHZVSPUL PZ WYVK\JLK MYVT JLY[HPU HNYPJ\S[\YHSJYVWZ[OYV\NOHTPJYVIPHSZ\NHYMLYTLU[H[PVUWYVJLZZ

Biofuels

:VSPKSPX\PKVYNHZLV\ZM\LSZKLYP]LKMYVTIPVSVNPJHSTH[LYPHSZLN Z\NHY JHUL VY MLLKZ[VJR )PVKPLZLS HUK IPVL[OHUVS HYL [OL TVZ[ JVTTVU[`WLZVMIPVM\LSZ\ZLKPUH\[VTVIPSLZ

Biogas

;`WLVMIPVM\LS[OH[PZWYVK\JLKI`[OLIYLHRKV^UVMVYNHUPJTH[[LY ]PHMLYTLU[H[PVUWYVK\JPUNTHPUS`JHYIVUKPV_PKLHUKTL[OHULVY [OLNHZPÄJH[PVUVM^VVKTH[[LYWYVK\JPUNUP[YVNLUHUKO`KYVNLU

Bioheat

-\LSJVTWYPZLKVMHISLUKVMOLH[PUNVPSHUKIPVM\LS\ZLKTHPUS`MVY OVTLOLH[PUNHWWSPJH[PVUZ

Biological flocculation

7YVJLZZ^OLYLWVSS\[HU[ZPU^H[LYHYLJVUJLU[YH[LK[VNL[OLYPU[OL MVYTVMÅHRLZ^OPJOHYL\ZLKPU[OLW\YPÄJH[PVUVMKYPURPUN^H[LY HUK[YLH[TLU[VMZL^HNL

Biological wastewater treatments

;YLH[TLU[ TL[OVKZ [OH[ \Z\HSS` ZLLR [V YLK\JL [OL VYNHUPJ HUK U\[YPLU[JVU[LU[UV[HIS`UP[YVNLUHUKWOVZWOVY\ZVM^HZ[L^H[LY

Biomass

9LUL^HISLLULYN`ZV\YJLJVTWYPZLKVMSP]PUNVYYLJLU[S`KLHKIPVSVNPJHS TH[LYPHSWSHU[VYHUPTHSTH[[LY[OH[JHUILJVU]LY[LKPU[VM\LS

Biomass co-firing

7YVJLZZ [OH[ NLULYH[LZ WV^LY WSHU[ LSLJ[YPJP[` I` ZPT\S[HULV\ZS` I\YUPUNIPVTHZZ^P[OJVHS

Biomass combustion

)\YUPUNVMIPVTHZZ[VNLULYH[LWV^LYWSHU[LSLJ[YPJP[`

Biosphere

;LYT\ZLK[VKLZJYPIL[OLLU[PYLNSVIHSLJVSVNPJHSZ`Z[LTHUK[OL YLSH[PVUZOPWVMP[ZPUOHIP[HU[Z

Building energy intensity

4LHZ\YLTLU[VMHI\PSKPUN»ZLULYN`LMÄJPLUJ`JHSJ\SH[LKHZ\UP[ZVM LULYN`WLYZX\HYLTL[LY

Building integrated heat and power

*VTIPUH[PVUVMOLH[PUNHUKWV^LYNLULYH[PVUZVS\[PVUZ[OH[JV\SK ILPU[LNYH[LKPU[VHI\PSKPUN:VTLVM^OPJOPUJS\KLZVSHYWOV[V]VS [HPJJLSSZ^PUK[\YIPULZHUKZVSHY^H[LYOLH[LYZ

Building integrated photovoltaics (BIPV)

(WWSPJH[PVU VM ZVSHY WOV[V]VS[HPJ TH[LYPHSZ ^OL[OLY JY`Z[HSSPUL VY [OPUÄST PU[V HJ[\HS I\PSKPUN Z[Y\J[\YLZ  ;OPZ UVYTHSS` YLWSHJLZ JVU]LU[PVUHS I\PSKPUN TH[LYPHSZ PU WHY[Z VM [OL I\PSKPUN LU]LSVWL Z\JOHZ[OLYVVMZR`SPNO[ZVYMHJHKLZ

Build-operate-transfer (BOT)

(YYHUNLTLU[^OLYLPU[OLNV]LYUTLU[H^HYKZHMYHUJOPZLSPJLUZL[V HWYP]H[LZLJ[VYJVTWHU`PUJS\KPUNMVYLPNUJVTWHUPLZMVYHJLY[HPU WLYPVKVM[PTL;OPZPU[\YUWLYTP[Z[OLJVUZ[Y\J[PVUHUKVWLYH[PVU VM H ZWLJPÄJ W\ISPJ PUMYHZ[Y\J[\YL WYVQLJ[ ^OPJO PZ L]LU[\HSS` [YHUZMLYYLK[V[OLNV]LYUTLU[MYLLVMJOHYNL^OLU[OLJVUJLZZPVU WLYPVKL_WPYLZ

Bus rapid transit (BRT)

(ULMÄJPLU[I\ZZ`Z[LTYLZ\S[PUNMYVTPTWYV]LTLU[ZPUPUMYHZ[Y\J[\YL ]LOPJSLZHUKZJOLK\SLZ

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GLOSSARY

Cadmium telluride thin film photovoltaic cells (CdTe PV)

;`WLVM[OPUÄSTZVSHYJLSSZIHZLKVU[OLJHKTP\T[LSS\YPKLJOLTPJHS JVTWV\UK

Capture and use of coal mine ventilation air methane

7YVJLZZVMJHW[\YPUNHUK[OLU\ZPUN[OLTL[OHUL[OH[PZJVU[HPULK PU[OLL_OH\Z[HPYMYVT\UKLYNYV\UKJVHSTPULZ

Carbon capture and sequestration (CCS)

:`Z[LT [OH[ JHW[\YLZ JHYIVU KPV_PKL MYVT MVZZPS M\LS LP[OLY WYPVY [V VY HM[LY JVTI\Z[PVU HUK ZLX\LZ[LYZ P[ MVY SVUN[LYT Z[VYHNL \UKLYNYV\UK

Carbon dioxide equivalent (CDE)

-VYHNP]LUHTV\U[VMNYLLUOV\ZLNHZP[PZ[OLHTV\U[VMJHYIVU KPV_PKL *62 ^P[O [OL ZHTL NSVIHS ^HYTPUN WV[LU[PHS .>7 HZZ\TPUNP[YLTHPUZPU[OLH[TVZWOLYLMVY`LHYZ-VYL_HTWSL [OL .>7 VM UP[YV\Z V_PKL PZ  [PTLZ [OH[ VM *62 [O\Z VUL [VU UP[YVNLUV_PKLLX\HSZ[VUZ*+,

Carbon monoxide (CO)

6KVYSLZZ JVSVYSLZZ WVPZVUV\Z NHZ WYVK\JLK I` [OL PUJVTWSL[L I\YUPUN VM MVZZPS M\LSZ LN NHZVSPUL VPS UH[\YHS NHZ 7YVK\JLK WYPTHYPS`I`]LOPJSLZHUKPUK\Z[YPHSWYVJLZZLZ

Cassava bioethanol

)PVL[OHUVSWYVK\JLKMYVTJHZZH]HJYVW

Cellulosic bioethanol

)PVL[OHUVSWYVK\JLKMYVT^VVKNYHZZLZVYV[OLYWSHU[Z

Centralized energy generation model

,ULYN` PZ NLULYH[LK PU SHYNLZJHSL JLU[YHSPaLK WV^LY WSHU[Z HUK KPZ[YPI\[LK[V[OLLUK\ZLY]PH[OLWV^LYNYPK

Certified emission reductions (CER)

9LMLYZ[VJHYIVUHUKVYJSPTH[LJYLKP[ZPZZ\LKI`[OL*SLHU+L]LSVWTLU[ 4LJOHUPZT*,9ZHYL\[PSPaLKI`WHY[PJPWH[PUNJV\U[YPLZHUKWYVQLJ[Z PUVYKLY[VJVTWS`^P[OLZ[HISPZOLKLTPZZPVUSPTP[H[PVU[HYNL[Z;OL`JHU IL[LTWVYHY`VYWLYTHULU[KLWLUKPUNVU[OLK\YH[PVUVMP[ZILULÄ[Z HUKJHUILHJX\PYLKVY[YHKLKVU[OLTHYRL[

Chemical wastewater treatments

;YLH[TLU[TL[OVKZ[OH[\ZLZ\IZ[HUJLZZ\JOHZJOSVYPULVaVULVY O`KYVNLUWLYV_PKL[VYLTV]LWVSS\[HU[Z

CIGS thin film photovoltaic cells (CIGS PV)

;`WL VM [OPU ÄST ZVSHY JLSSZ IHZLK VU [OL JVWWLY PYYPKP\T NHSSP\T ZLSLUPKLJOLTPJHSJVTWV\UK

Circulating fluidized bed combustion (CFBC)

*VTI\Z[PVUHWWSPJH[PVU[OH[\ZLZÅ\PKPaLKILKZ^OPJOPZHKL]PJL [OH[JH\ZLZ[OLZVSPKJVTWVULU[ZVMHÅ\PK[VHJ[SPRLHSPX\PK0[[OLU Z\ZWLUKZZVSPKM\LSV]LYZ[YLHTZVMOV[HPYK\YPUN[OLJVTI\Z[PVU WYVJLZZ[OLYLI`YLZ\S[PUNPUTVYLLMÄJPLU[JOLTPJHSYLHJ[PVUZ

Civil heat

)\YUPUNVMIPVTHZZ[VNLULYH[LOLH[[VIL\ZLKMVYJP]PSW\YWVZLZ

Clean Development Mechanism (CDM)

4LJOHUPZT I` ^OPJO JV\U[YPLZ [OH[ HYL ZPNUH[VYPLZ [V [OL 2`V[V 7YV[VJVS JHU PU]LZ[ PU LTPZZPVU YLK\J[PVU WYVQLJ[Z PU KL]LSVWPUN JV\U[YPLZPUZ[LHKVMPTWSLTLU[PUNZPTPSHYWYVQLJ[ZPUJV\U[Y`

Cleaner aircraft fuels

(PYJYHM[ M\LSZ [OH[ WYVK\JL JVUZPKLYHIS` SLZZ HPY LTPZZPVUZ [OHU JVU]LU[PVUHS HPYJYHM[ M\LSZ ^OPSL KLSP]LYPUN LX\HS VY IL[[LY WLYMVYTHUJL

Cleaner ship fuels

:OPW M\LSZ [OH[ WYVK\JL JVUZPKLYHIS` SLZZ HPY LTPZZPVUZ [OHU JVU]LU[PVUHS ZOPW M\LSZ ^OPSL KLSP]LYPUN LX\HS VY IL[[LY WLYMVYTHUJL

Coal bed methane (CBM)

4L[OHUL VYPNPUH[PUN PU JVHS ZLHTZ PU H ULHY SPX\PK Z[H[L [OH[ PZ KYHPULKMYVTZ\YMHJLIVYLOVSLZILMVYLTPUPUN[HRLZWSHJL

Coal blending

7YVJLZZ VM JVTIPUPUN ]HYPV\Z [`WLZ VM W\S]LYPaLK JVHS [V [HRL HK]HU[HNLVM[OLPYKPMMLYLU[JVTI\Z[PVUHUKLTPZZPVUWYVWLY[PLZ

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GLOSSARY

Coal briquettes

:THSS YLJ[HUN\SHY ISVJRZ VM JVTWYLZZLK JVHS \ZLK PU SPTP[LK PUK\Z[YPHS HWWSPJH[PVUZ WYPTHYPS` ZTHSSLY ZJHSL JOLTPJHS WSHU[Z HUK ISHZ[ M\YUHJLZ <[PSPaH[PVU VM IYPX\L[[LZ JHU YLK\JL LTPZZPVU YLZ\S[PUNMYVTJVTI\Z[PVU

Coal liquefaction

7YVJLZZ[OH[JVU]LY[ZJVHSPU[VSPX\PKM\LSZ

Coal mine methane (CMM)

4L[OHUL JVU[HPULK PU NHZLZ JHW[\YLK PU H ^VYRPUN JVHS TPUL I` TL[OHULKYHPUHNLZ`Z[LTZ

Coal screening and scrubbing

7YVJLZZLZ[OH[YLK\JLZPTW\YP[PLZZ\JOHZHZOVYZ\SM\YJVU[HPULK PUJVHSWYPVY[VI\YUPUNUVYTHSS`H[VYJSVZL[V[OLJVHSTPUL

Coal water slurry

*VHSIHZLK SPX\PK M\LS JVUZPZ[PUN VM ÄUL JVHS WHY[PJSLZ Z\ZWLUKLK PU^H[LY0[JVUZPZ[ZVM VMÄULKPZWLYZLKJVHSWHY[PJSLZHUK  VM^H[LY

Coal water slurry technology

;LJOUVSVN`HUKHWWSPJH[PVU[OH[[YHUZMVYTZJVHS^H[LYZS\YY`PU[VH ]PHISLLULYN`WYVK\J[;OL\ZLVMZS\YY`ZH]LZZ\IZ[HU[PHSHTV\U[Z VM OLH]` VPS PU [OL LSLJ[YPJP[` NLULYH[PUN WYVJLZZ HUK LTP[Z ML^LY WVSS\[HU[Z

Coke

+LUZL HSTVZ[ JVTWSL[LS` W\YL MVYT VM JHYIVU [OH[ I\YUZ H[ ]LY` OPNO [LTWLYH[\YLZ
Combined cycle

([LJOUPX\LLTWSV`LKI`WV^LYWYVK\JPUNWSHU[ZVYLUNPULZ[OH[ \ZLZ TVYL [OHU VUL [OLYTVK`UHTPJ J`JSL ZV HZ [V M\Y[OLY \[PSPaL ^HZ[LOLH[NLULYH[LKMYVTPUP[PHSJVTI\Z[PVU

Combined heat and power (CHP)

:`Z[LT[OH[ZPT\S[HULV\ZS`NLULYH[LZLSLJ[YPJP[`HUK\ZHISLOLH[I` JHW[\YPUNOLH[[OH[^V\SKUVYTHSS`ILSVZ[

Commissioning and efficient operations

(ZZ\YPUN[OH[HSSZ`Z[LTZPUHI\PSKPUNHYLPUZ[HSSLK[LZ[LKVWLYH[LK HUKTHPU[HPULKHZVYPNPUHSS`PU[LUKLK

Composite materials cables

;YHUZTPZZPVU HUK KPZ[YPI\[PVU SPUL JHISLZ THKL MYVT JVTWVZ[P]L TH[LYPHSZ[OH[HYLZWLJPÄJHSS`LUNPULLYLK[VYLK\JLSVZZLZ

Compost

)PVKLNYH[PVU VY KLJH` VM VYNHUPJ TH[[LY Z\JO HZ HNYPJ\S[\YHS HUK MVVK^HZ[L*VTWVZ[HOPNOX\HSP[`MLY[PSPaLYPZ[OLTHPUI`WYVK\J[ VM[OLWYVJLZZ

Compressed air energy storage (CAES)

:`Z[LT[OH[JHUZ[VYLLULYN`I`JVTWYLZZPUNHPYPUHJVTWHY[TLU[ Z\JOHZHPY[PNO[\UKLYNYV\UKJH]LYUHUK[OLUNLULYH[LLSLJ[YPJP[` I`YLSLHZPUN[OLHPYMYVTZ[VYHNL[OYV\NOHJVTI\Z[PVU[\YIPUL

Compressed natural gas (CNG)

-VZZPSM\LSZ\IZ[P[\[LMVYNHZVSPULKPLZLSVYWYVWHULTHKLI`JVTWYLZZPUN UH[\YHSNHZHUKZ[VYLKPUZWLJPHSJVTWYLZZLKNHZJ`SPUKLYZ

Concentrating photovoltaics (CPV)

+L]PJLZ[OH[JVUJLU[YH[LZ\USPNO[VU[VWOV[V]VS[HPJZ\YMHJLZ[VWYV K\JLLSLJ[YPJP[`

Concentrating solar power (CSP)

>OLYLHZ JVUJLU[YH[LK WOV[V]VS[HPJ \ZLZ WOV[V]VS[HPJ Z\YMHJLZ [V NLULYH[L LSLJ[YPJP[` *:7 \ZLZ SLUZLZ VY TPYYVYZ HUK [YHJRPUN Z`Z [LTZ[VJVUJLU[YH[LHSHYNLHYLHVMZ\USPNO[PU[VHZTHSSILHT;OL OLH[WYVK\JLKI`[OLZTHSSILHTVMSPNO[^PSS[OLUIL\ZLK[VNLULY H[LLSLJ[YPJP[`

Control systems

:`Z[LTZ[OH[TVUP[VYHUKJVU[YVS[OLILOH]PVYVMV[OLYKL]PJLZVY Z`Z[LTZ[VLUZ\YLVW[PTHSVWLYH[PVUVM[OL^PUK[\YIPUL

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THE CHINA GREENTECH REPORT 2009



GLOSSARY

Conversion efficiency

9H[PVIL[^LLUPUW\[HUKV\[W\[HM[LYHULULYN`PZJVU]LY[LKMYVT VULMVYT[VHUV[OLY;OLJHSJ\SH[PVUVM[OPZYH[PVHSZVÄN\YLZPU[OL \ZLM\SULZZVM[OLV\[W\[HTV\U[:WLJPÄJHSS`MVYWOV[V]VS[HPJJLSSZ JVU]LYZPVU LMÄJPLUJ` PZ [OL WYVWVY[PVU VM Z\USPNO[ LULYN` [OH[ [OL JLSSJVU]LY[Z[VLSLJ[YPJHSLULYN`

Conversion technologies

+L]PJLZ[OH[JVU]LY[LSLJ[YPJP[`YLJLP]LKMYVTHZL[VM^PUK[\YIPULZ [V[OLZ[HUKHYKYLX\PYLKI`[OLWV^LYNYPKILMVYLMLLKPUN[OLLSLJ [YPJP[`VU[V[OLNYPK

Copper rotor motors (CRM)

4V[VY [LJOUVSVNPLZ [OH[ VMMLY PUJYLHZLK LSLJ[YPJHS LULYN` LMÄJPLU J`SV^LYVWLYH[PUN[LTWLYH[\YLL_[LUKLKTV[VYSPMLHUKYLK\JLK ^LPNO[HUKZPaL

Crystalline silicon photovoltaic cells (cSi PV)

;`WLVMZVSHYJLSSTHKLMYVTHZPUNSLJY`Z[HSVYHWVS`JY`Z[HSSPULZSPJL VMZPSPJVU"P[^HZ[OLÄYZ[[`WL[VIL^PKLS`JVTTLYJPHSPaLK

Cylinder deactivation

(\[VTVIPSL LUNPUL [LJOUVSVN` [OH[ JHU YLK\JL M\LS JVUZ\TW[PVU HUKLTPZZPVUVMHULUNPULK\YPUNSPNO[SVHKVWLYH[PVUI`RLLWPUN[OL PU[HRLHUKL_OH\Z[]HS]LZJSVZLKMVYHWHY[PJ\SHYJ`SPUKLY

De-dusting

7YVJLZZKLZPNULK[VYLTV]LWHY[PJ\SH[LTH[[LYJYLH[LKPU[OLWV^LY NLULYH[PVU WYVJLZZ ,SLJ[YVZ[H[PJ WYLJPWP[H[VYZ JYLH[L HU LSLJ[YPJ ÄLSK[OH[LZZLU[PHSS`JHW[\YLZWHY[PJ\SH[LZ"\W[V VMWHY[PJ\SH[LZ PUNHZJHUILJHW[\YLKPU[OPZ^H`

Desalination

7YVJLZZ[OH[YLTV]LZZHS[HUKV[OLYTPULYHSZMYVTZHSPUL^H[LYZ\JO HZZLH^H[LYPUVYKLY[VTHRLP[Z\P[HISLMVYO\THUJVUZ\TW[PVU VYPYYPNH[PVU

Diesel oxidation catalysts (DOC)

+LZPNULK [V V_PKPaL JHYIVU TVUV_PKL NHZ WOHZL O`KYVJHYIVUZ HUK[OLZ\SM\YJVTWVULU[VMKPLZLSWHY[PJ\SH[LTH[[LY[OLYLI`JYLH[ PUNJHYIVUKPV_PKLHUK^H[LY/HZILLUZOV^U[VYLK\JLLTPZZPVU I`\W[V 

Diesel particulate filters (DPF)

-PS[LYZ [OH[ \ZL ZPSPJVU JHYIPKL ISVJRZ PU [OL L_OH\Z[ Z`Z[LTZ VM SVJVTV[P]LZ[V[YHWWHY[PJ\SH[LTH[[LY*HUYLK\JLLTPZZPVUI`\W [V 

Digital substations

(\[VTH[LK HUK JVTW\[LYPaLK Z\IZ[H[PVUZ [OH[ WYV]PKL NYLH[LY [YHUZWHYLUJ`OPNOLYYLSPHIPSP[`HUKLMÄJPLUJ`VMVWLYH[PVUZ

Dimethyl ether (CH3OCH3)

*VUZPKLYLKHJSLHUI\YUPUNO`KYVJHYIVUM\LS*/6*/PZWYVK\JLK I` [OL NHZPÄJH[PVU VM JVHS VY UH[\YHS NHZ *VUZPKLYLK [V OH]L WV[LU[PHSHZHZ`U[OL[PJIPVM\LS

Discharge rate

9H[L H[ ^OPJO WVSS\[HU[Z VY V[OLY TH[LYPHSZ HYL LTP[[LK PU[V [OL LU]PYVUTLU[ PL [OL HTV\U[ VM ZVSPK SPX\PK VY NHZLV\Z TH[LYPHS LTP[[LKV]LYHWLYPVKVM[PTL

Disinfection

7YVJLZZ [OH[ PU]VS]LZ [OL YLTV]HS VM WH[OVNLUPJ VYNHUPZTZ MYVT ^H[LY ]PH [OL \ZL VM JOSVYPUL HUK \S[YH]PVSL[ SPNO[ HTVUN V[OLY HWWSPJH[PVUZ

Distributed generation

:THSSZJHSL WV^LY NLULYH[PVU [LJOUVSVNPLZ [`WPJHSS` PU [OL YHUNL VM  R> [V  R> \ZLK [V WYV]PKL HU HS[LYUH[P]L [V VY HU LUOHUJLTLU[ VM [OL [YHKP[PVUHS LSLJ[YPJ WV^LY Z`Z[LT 7V^LY NLULYH[PVU PZ HJOPL]LK VUVYVMMNYPK HZ VWWVZLK [V SHYNLZJHSL JLU[YHSPaLKWV^LYWSHU[Z

Distribution materials and components

7PWLZ]HS]LZHUKUVaaSLZ[OH[HYL\ZLK[V[YHUZWVY[^H[LYWYPTHYPS` IL[^LLU[YLH[TLU[WSHU[ZHUK\ZHNLWVPU[Z

144

THE CHINA GREENTECH REPORT 2009

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GLOSSARY

Efficient motors

,SLJ[YPJ TV[VYZ [OH[ HYL TVYL LULYN` LMÄJPLU[ [OHU JVU]LU[PVUHS TVKLSZJ\YYLU[S`\ZLKPU*OPUH

Efficient processing

7YVJLZZLZ[OH[HYLLULYN`LMÄJPLU[SV^WVSS\[PUNLJVMYPLUKS`HUK SLH]LILOPUKSP[[SLVYUVZVSPK^HZ[L

Effluent

>HZ[L^H[LY [YLH[LK VY \U[YLH[LK [OH[ JVTLZ V\[ VM ZL^HNL [YLH[TLU[MHJPSP[PLZHUKVYPUK\Z[YPHSMHJPSP[PLZ

Electric two wheelers (E2W)

)PRLZ HUK ZJVV[LYZ LX\PWWLK ^P[O H YLJOHYNLHISL IH[[LY` HUK HU LSLJ[YPJTV[VY\ZLKMVYWYVW\SZPVU

Electric auto vehicle (EAV) charging systems

:`Z[LTZ[OH[HSSV^MVYWS\NPULSLJ[YPJ]LOPJSLZ[VILJOHYNLK\ZPUN WV^LYMYVT[OLNYPK

Electric locomotives

3VJVTV[P]LZ WV^LYLK I` HU LSLJ[YPJ LUNPUL ^OPJO \ZLZ HU LSLJ[YPJP[`ZV\YJLZ\JOHZHUV]LYOLHKSPUL[OPYKYHPSVYHUVUIVHYK LSLJ[YPJP[`Z[VYHNLKL]PJLYH[OLY[OHUMVZZPSM\LSZ[VTLL[P[ZLULYN` YLX\PYLTLU[Z

Electrical/electronic waste (e-waste)

+PZJHYKLK VIZVSL[L IYVRLU VY Z\YWS\Z JVTW\[LYZ LU[LY[HPUTLU[ LSLJ[YVUPJ KL]PJLZ TVIPSL WOVULZ [LSL]PZPVUZ YLMYPNLYH[VYZ HUK LSLJ[YVUPJP[LTZ^OL[OLYZVSKKVUH[LKVYKPZJHYKLKI`[OLPYVYPNPUHS V^ULYZ

Embodied energy

;V[HSLULYN`\ZLKPU[OLTHU\MHJ[\YPUNVMWYVK\J[(UHJJV\U[PUN TL[OVK[OH[JVTW\[LZ[OLZ\T[V[HSVM[OLLULYN`ULJLZZHY`MVY[OL LU[PYLSPMLJ`JSLVMHWYVK\J[

Emission standards

9LX\PYLTLU[Z [OH[ ZL[ ZWLJPÄJ SPTP[Z [V [OL HTV\U[ VM WVSS\[HU[Z [OH[JHUILYLSLHZLKPU[V[OLLU]PYVUTLU[^OPJONLULYHSS`PUJS\KL UP[YVNLUV_PKLZZ\SM\YV_PKLZWHY[PJ\SH[LTH[[LYL[J

Energy intensity of GDP

(]LYHNLHTV\U[VMLULYN`JVUZ\TLK[VWYVK\JLH\UP[VM.+7

Engineering, procurement, construction (EPC)

7YVQLJ[ JVU[YHJ[ [OH[ PUJS\KLZ LUNPULLYPUN WYVJ\YLTLU[ HUK JVU Z[Y\J[PVU

Enhanced coal bed methane (CBM) recovery

7YVJLZZVMYLJV]LYPUNHKKP[PVUHSJVHSILKTL[OHULMYVTO`KYVJHY IVUYPJOYVJRZ

Enhanced oil recovery (EOR)

:VS\[PVUZ [OH[ PUJYLHZL [OL HTV\U[ VM L_[YHJ[HISL JY\KL VPS MYVT HU VPS ÄLSK Z\JO HZ! .HZ PUQLJ[PVU JOLTPJHS PUQLJ[PVU \S[YHZVUPJ Z[PT\SH[PVUTPJYVIPHSPUQLJ[PVUVY[OLYTHSYLJV]LY`

Environmental management system (EMS) and IT systems

*VTWYLOLUZP]L Z`Z[LTH[PJ KVJ\TLU[LK THUHNLTLU[ VM HU VYNHUPaH[PVU»ZLU]PYVUTLU[HSWYVNYHTZ[OH[YLS`VU0;ZVS\[PVUZMVY LMMLJ[P]LVWLYH[PVU

Ethanol 10 (E10)

=LOPJSLM\LSJVTWYPZLKVM L[OHUVSISLUK^P[ONHZVSPUL[OH[OHZ ILJVTLHZ[HUKHYKPU*OPUH)SLUKJHUIL\ZLKPUZ[HUKHYKPU[LYUHS JVTI\Z[PVULUNPULZ^P[OV\[ULLKMVYTVKPÄJH[PVUZ

Extraction solutions

:VS\[PVUZ [OH[ OLSW SVJH[L HJJLZZ HUK L_[YHJ[ ^H[LY MYVT \UKLYNYV\UKZV\YJLZ

Fabrication industries

)\ZPULZZLZ LUNHNLK PU [OL WYVK\J[PVU VM THU\MHJ[\YLK NVVKZ" L_JS\KPUN[OLNLULYH[PVUVMLULYN`MVYTHU\MHJ[\YPUNWYVJLZZLZ;OPZ PZPUJVU[YHZ[[V[OL[LYT¸THU\MHJ[\YPUNPUK\Z[Y`¹^OPJOZVTL[PTLZ LUJVTWHZZLZIV[OLULYN`NLULYH[PVUHUKNVVKZMHIYPJH[PVU

Fast neutron reactors

;`WLVMU\JSLHYYLHJ[VYZ[OH[JHU\[PSPaLU\JSLHY^HZ[LZMYVT[OLYTHS YLHJ[VYZHZMLLKZ[VJRHUKVWLYH[LH[OPNOLYLMÄJPLUJPLZ

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THE CHINA GREENTECH REPORT 2009



GLOSSARY

F-class gas turbines

(K]HUJLK [LJOUVSVN` NHZ [\YIPULZ ^OPJO HYL YV[HY` LUNPULZ [OH[ L_[YHJ[ LULYN` MYVT H ÅV^ VM JVTI\Z[PVU NHZ H[ [OLYTHS WV^LY WSHU[Z [OH[ HYL TVYL LMÄJPLU[ HUK YLSPHISL [OHU JVU]LU[PVUHS NHZ [\YIPULZ

Filtration

9LTV]PUNZVSPKWHY[PJ\SH[LTH[[LYZ\ZWLUKLKPU^H[LYI`WHZZPUN [OL^H[LY[OYV\NOWLYTLHISLMHIYPJZVYWVYV\ZSH`LYZVMZVPS

First generation biofuels

-\LSZ[OH[\ZLMLLKZ[VJRZ\JOHZZ\NHY`VYZ[HYJO`TH[LYPHSZ[OH[ HYL[OLUMLYTLU[LKPU[VIPVL[OHUVS(SZVPUJS\KLZVPSMYVTZLLKZ[OH[ JHUIL\ZLKPUIPVKPLZLS

Flue gas denitration (De-NOx)

:`Z[LT[OH[YLTV]LZUP[YVNLUV_PKLZMYVTÅ\LNHZ

Flue gas desulfurization (De-SOx)

:`Z[LT[OH[YLTV]LZZ\SM\YV_PKLZMYVTÅ\LNHZ

Flue gas purification

7YVJLZZ I` ^OPJO Å\L VY L_OH\Z[ NHZLZ HYL JSLHULK PU VYKLY [V YLTV]LUP[YVNLUV_PKLZZVV[HUKV[OLYWHY[PJ\SH[LZ

Fresnel mirrors

:VSHY [OLYTHS LULYN` JVSSLJ[VYZ [OH[ JVUZPZ[ VM H ZLYPLZ VM SVUN UHYYV^ ZSPNO[S` J\Y]LK TPYYVYZ [OH[ MVJ\Z [OL SPNO[ VU[V SPULHY YLJLP]LYZWVZP[PVULKHIV]L[OLTPYYVYZ[VILL]LU[\HSS`JVU]LY[LK PU[VLSLJ[YPJP[`

Fuel cell vehicles (FCV)

=LOPJSLZWYVWLSSLKI`HULSLJ[YPJTV[VY\ZPUNLSLJ[YPJP[`NLULYH[LK [OYV\NO H JOLTPJHS WYVJLZZ ^P[OPU H M\LS JLSS ^OPJO YLX\PYLZ O`KYVNLUM\LSHUKV_`NLUMYVT[OLHPYHZMLLKZ[VJR

Fuel economy standards

:[HUKHYKZ [OH[ YLN\SH[L [OL HTV\U[ VM M\LS YLX\PYLK [V TV]L [OL H\[VTVIPSLV]LYHNP]LUKPZ[HUJL

Fuel switching

(IPSP[`[VTHRL\ZLVMHS[LYUH[P]LM\LSZLP[OLYI`\ZPUNT\S[PWSLM\LSZ ZPT\S[HULV\ZS`VYI`Z^P[JOPUNIL[^LLUM\LSZ

Gas flaring and venting

4L[OVK I` ^OPJO L_JLZZ UH[\YHS NHZ [`WPJHSS` MV\UK H[ VPS ^LSSZ HUK YLÄULYPLZ PZ I\YULK PU VYKLY [V WYL]LU[ [OL I\PSK\W VM L_JLZZ WYLZZ\YL-SHYPUNHUK]LU[PUNHYLTHQVYJVU[YPI\[VYZ[VNYLLUOV\ZL NHZLTPZZPVU

Gas reburning

7YVJLZZKLZPNULK[VYLK\JL[OLLTPZZPVUVMUP[YV\ZV_PKLZNLULYH[LK I`UH[\YHSNHZIVPSLYZI`PUQLJ[PUNUH[\YHSNHZHIV]L[OLIVPSLYZ»JVHS I\YULYZPUVYKLY[V¸YLI\YU¹[OLI`WYVK\J[ZVMJVTI\Z[PVU

Gasification

4L[OVK[OH[L_[YHJ[ZLULYN`MYVTVYNHUPJTH[LYPHSZ*HYIVUIHZLK TH[[LYLNJVHSYLHJ[ZH[OPNO[LTWLYH[\YLZ^P[OV_`NLUWYVK\JPUN Z`U[OLZPZNHZ7YVJLZZJHUILTVYLLMÄJPLU[[OHUKPYLJ[JVTI\Z[PVU VM JHYIVU TH[LYPHS HUK PZ JVUZPKLYLK [V IL TVYL LU]PYVUTLU[HSS` ZV\UKHZ^LSS

Gasoline grades

*SHZZPÄJH[PVU Z`Z[LT [OH[ JH[LNVYPaLZ NHZVSPUL I` VJ[HUL YH[PUNZ ;OL [OYLL [`WLZ VM NHZVSPUL JVU]LU[PVUHS V_`NLUH[LK HUK YLMVYT\SH[LK HYL M\Y[OLY IYVRLU KV^U PU[V YLN\SHY TPKNYHKL HUK WYLTP\TJH[LNVYPLZHSSIHZLKVUVJ[HULJVU[LU[

Generators

4HJOPULZ [OH[ JVU]LY[ VUL [`WL VM LULYN` Z\JO HZ RPUL[PJ VY TLJOHUPJHSPU[VLSLJ[YPJHSLULYN`

Global warming potential (GWP)

4LHZ\YL VM H NP]LU WVSS\[HU[»Z LZ[PTH[LK JVU[YPI\[PVU [V NSVIHS ^HYTPUN:JHSLPZYLSH[P]LHUKJVTWHYLZ[OLNHZPUX\LZ[PVU[V[OH[ VM[OLZHTLTHZZVMJHYIVUKPV_PKL

146

THE CHINA GREENTECH REPORT 2009

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GLOSSARY

Green devices

,SLJ[YVUPJKL]PJLZ\ZLKPUZPKLI\PSKPUNZPUJS\KPUNSPNO[PUNZVS\[PVUZ HWWSPHUJLZHUKJVUZ\TLYLSLJ[YVUPJZ[OH[HYLTVYLLULYN`LMÄJPLU[ [OHUJVU]LU[PVUHSHS[LYUH[P]LZ

Greenfield refineries

9LÄULY`MHJPSP[PLZ[OH[HYLI\PS[VUZP[LZ[OH[OH]LUV[L_WLYPLUJLK WYL]PV\ZKL]LSVWTLU[

Greenhouse gas (GHG)

.HZ PU [OL H[TVZWOLYL [OH[ HIZVYIZ HUK LTP[Z YHKPH[PVU ^P[OPU [OL [OLYTHS PUMYHYLK YHUNL PUJS\KPUN ^H[LY ]HWVY JHYIVU KPV_PKL TL[OHULUP[YV\ZV_PKLVaVULHUKJOSVYVÅ\VYVJHYIVUZ

Greywater systems

:`Z[LTZ[OH[MVJ\ZVU[OLYL\ZLVM^H[LYNLULYH[LKMYVTKVTLZ[PJ WYVJLZZLZ Z\JO HZ KPZO ^HZOPUN SH\UKY` HUK IH[OPUN MVY LP[OLY PUKVVY\ZLVYPUPYYPNH[PVU

Hazardous wastes

>HZ[LZ JOHYHJ[LYPaLK HZ ILPUN ÅHTTHISL V_PKPaPUN JVYYVZP]L [V_PJYHKPVHJ[P]LL_WSVZP]LVY^P[O[OLWV[LU[PHS[V[OYLH[LUW\ISPJ OLHS[OVY[OLLU]PYVUTLU[

Heating, ventilation and air conditioning (HVAC)

*SPTH[LJVU[YVSZ`Z[LTVMI\PSKPUNZ"P[LUZ\YLZ[OH[YVVT[LTWLYH[\YL O\TPKP[`HUKHPYÅV^HYLHKLX\H[L[VZ\Z[HPUHJVTMVY[HISLSP]PUN LU]PYVUTLU[

High temperature superconducting transformers

;YHUZMVYTLYZ[OH[\ZLOPNO[LTWLYH[\YLZ\WLYJVUK\J[PUNTH[LYPHSZ [VPTWYV]LLMÄJPLUJ`HUKYLK\JLSVZZLZPULSLJ[YPJHS[YHUZTPZZPVU

High voltage transmission

4V]LTLU[ VM ]VS[HNL V]LY SVUN KPZ[HUJLZ NYLH[LY [OHU  ]VS[Z

Horizontal-axis wind turbines (HAWT)

4VZ[JVTTVU[`WLVM[\YIPUL^P[O[OLTHPUYV[VYZOHM[HUKLSLJ[YPJHS NLULYH[VYH[[OL[VWVMH[V^LYHUKPZ\Z\HSS`WVPU[LKPU[V[OL^PUK

Hot-summer/cold-winter zone (aka transition zone)

9LNPVU PU *OPUH JOHYHJ[LYPaLK I` OV[ O\TPK Z\TTLYZ HUK JVSK O\TPK ^PU[LYZ ;LTWLYH[\YL KPMMLYLUJL IL[^LLU KH` HUK UPNO[ PZ YLSH[P]LS`SP[[SLHUK[OLYLPZ\Z\HSS`SHYNLHTV\U[VMWYLJPWP[H[PVUPU H `LHY AVUL PUJS\KLZ [OL ^OVSL VM /\ILP /\UHU 1PHUN_P (UO\P AOLQPHUN WYV]PUJLZ :OHUNOHP *OVUNXPUN [OL LHZ[LYU WHY[Z VM :PJO\HU HUK .\PaOV\ WYV]PUJLZ [OL ZV\[OLYU WHY[Z VM /LUHU 1PHUNZ\ :OHU_P HUK .HUZ\ WYV]PUJLZ HUK [OL UVY[OLYU WHY[Z VM -\QPHU.\HUNKVUNHUK.\HUN_PWYV]PUJLZ

Hybrid electric vehicles (HEV)

=LOPJSLZ [OH[ JVTIPUL HU PU[LYUHS JVTI\Z[PVU LUNPUL ^P[O HU LSLJ[YPJTV[VY[VKYP]L[OL]LOPJSLZHUKYLS`VUNHZVSPULVYKPLZLS HUKLSLJ[YPJP[`Z[VYHNLIH[[LYPLZHZWV^LYZV\YJLZ

Hybrid locomotives

3VJVTV[P]LZ [OH[ \[PSPaL H JVU]LU[PVUHS WV^LY ZV\YJL [`WPJHSS` H KPLZLS LUNPUL PU JVUQ\UJ[PVU ^P[O H YLJOHYNLHISL LULYN` Z[VYHNL Z`Z[LT9,,:;OL9,,:PZJOHYNLK\ZPUN[OLZ\YWS\ZLULYN`MYVT [OLWV^LYZV\YJLHUKVYMYVTYLNLULYH[P]LIYLHRPUNHUKJHU[OLU IL\ZLK[VWYV]PKLLULYN`MVYWYVW\ZPVU

Improved irrigation

0YYPNH[PVUZVS\[PVUZZ\JOHZZWYPURSLYVYKYPWPYYPNH[PVU[OH[\ZL^H[LY TVYL LMÄJPLU[S` [OHU *OPUH»Z JVU]LU[PVUHS PYYPNH[PVU TL[OVKZ ^P[O LX\HSVYNYLH[LYILULÄ[[V[OL\ZLY

Incineration energy recovery

>HZ[L[VLULYN`ZVS\[PVU[OH[NLULYH[LZWV^LYMYVT[OLJVTI\Z[PVU VMZVSPK^HZ[L

Industrial heat

)\YUPUN VM IPVTHZZ [V NLULYH[L OLH[ [V IL \ZLK MVY PUK\Z[YPHS W\YWVZLZ

Industrial solid wastes

.HYIHNL YLM\ZL ZS\KNL HUK V[OLY ZVSPK TH[LYPHSZ KPZJHYKLK HZ H YLZ\S[ VM PUK\Z[YPHS VWLYH[PVUZ *VTTVUS` \UKLYZ[VVK [V L_JS\KL IPVKLNYHKHISLHUKOHaHYKV\Z^HZ[L

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THE CHINA GREENTECH REPORT 2009



GLOSSARY

Industrial symbiosis

-VYT VM PUK\Z[YPHS VYNHUPaH[PVU ^OLYL ^HZ[L MYVT VUL WYVK\J[PVU WYVJLZZJHUIL\ZLKHZHUPUW\[PUWYVK\JPUNHUV[OLYNVVK[O\Z TH_PTPaPUNYLZV\YJLLMÄJPLUJ`HUKTPUPTPaPUNPUK\Z[YPHS^HZ[L

Industrial wastewater systems

:`Z[LTZ \ZLK H[ PUK\Z[YPHS ZP[LZ [V [YLH[ ^H[LY HM[LY \ZL WYPVY [V LP[OLYYL\ZLVYYLSLHZLPU[V[OLUH[\YHSLU]PYVUTLU[

Industrial water reuse

7YVJLZZ ^OLYLI` JLY[HPU WVSS\[HU[Z HYL YLTV]LK MYVT PUK\Z[YPHS ^HZ[L^H[LYZV[OH[[OL^H[LYJHUILYLJ`JSLKMVYM\Y[OLY\ZLZH[[OL ZHTLZP[L

Influent

>H[LYÅV^PUNPU[V^HZ[L^H[LY[YLH[TLU[WSHU[Z

Installed capacity

;OLVYL[PJHS WYVK\J[PVU JHWHJP[` VM [OL [V[HS LX\PWTLU[ [OH[ PZ PUZ[HSSLKHZVWWVZLK[V[OLLMMLJ[P]LJHWHJP[`^OPJOPZ[OLHJ[\HS VW[PTHSWYVK\J[PVU

Integrated design

(WWYVHJO [OH[ IYPUNZ [VNL[OLY HSS [OL Z[HRLOVSKLYZ PU [OL I\PSKPUN WYVJLZZH[HULHYS`Z[HNL[VTH_PTPaLI\PSKPUNJVTMVY[HUK\ZHIPSP[` ^OPSLTPUPTPaPUNYLZV\YJL\ZL

Integrated gasification combined cycle (IGCC)

:`Z[LT [OH[ [\YUZ JVHS PU[V Z`U[OLZPZ NHZ HUK YLTV]LZ PTW\YP[PLZ ILMVYLJVTI\Z[PUNP[PUNHZ[\YIPULZ"[OL^HZ[LOLH[PZJHW[\YLKHUK WHZZLK[VHZ[LHT[\YIPULZ`Z[LTMVYLULYN`YLJV]LY`

Integrated rainwater collection

:`Z[LT [OH[ JVSSLJ[Z HUK Z[VYLZ YHPU^H[LY MYVT [OL YVVM[VW VM H I\PSKPUN[VIL\ZLKSVJHSS`

Internal combustion engines (ICE)

,UNPULZPU^OPJO[OLJVTI\Z[PVUVMHM\LSVJJ\YZ^P[OHUV_PKPaLY PU H JVTI\Z[PVU JOHTILY 0U HU 0*, [OL L_WHUZPVU VM [OL OPNO [LTWLYH[\YLHUKWYLZZ\YLNHZLZKPYLJ[S`HWWS`MVYJL[VHTV]HISL JVTWVULU[VM[OLLUNPULZ\JOHZ[OLWPZ[VUZVY[\YIPULISHKL

IP-based automatic meter reading (AMR)

:VS\[PVUZ [OH[ H\[VTH[PJHSS` NH[OLY KH[H MYVT LULYN` TL[LYPUN KL]PJLZHUK[YHUZTP[[VHJLU[YHSWYVJLZZPUNMHJPSP[`^OLYLIPSSPUNPZ OHUKSLKHUKJVUZ\TW[PVUWH[[LYUZHYLHUHS`aLK

Jathropa diesel

)PVKPLZLSWYVK\JLKMYVTQH[YVWOHJYVW

Kim hotstart idle reduction systems

:`Z[LTZ[OH[YLS`VULSLJ[YPJHUKZTHSSKPLZLSWV^LYLKOLH[PUN\UP[Z [VTHPU[HPUKLZPYLKLUNPUL[LTWLYH[\YLZIV[OJVVSHU[HUKS\ILVPS ^OPSL[OLSVJVTV[P]LPZZO\[KV^U

Lean manufacturing

4L[OVKVSVN` ZLLRPUN [V TPUPTPaL ^HZ[L UVU]HS\L HKKLK HJ[P]P[PLZPUTHU\MHJ[\YPUNWYVJLZZLZ[OYV\NO[OL\ZLVMPU]LU[VY` THUHNLTLU[WYL]LU[P]LTHPU[LUHUJLWYVK\J[X\HSP[`HUKÅL_PISL ^VYRMVYJLZHUKWYVK\J[PVUMHJPSP[PLZ

Line loss rate

4LHZ\YLTLU[VM[OLLULYN`SVZ[K\YPUN[OL[YHUZTPZZPVUVMLSLJ[YPJP[` HZPNUPÄJHU[WVY[PVUVM^OPJOPZ[OLYTHSPUUH[\YL

Liquefied natural gas (LNG)

5H[\YHS NHZ [LTWVYHYPS` JVU]LY[LK PU[V SPX\PK MVYT PU VYKLY [V LUZ\YL LHZL VM Z[VYHNL HUK [YHUZWVY[ ;OL YLK\J[PVU PU ]VS\TL PZ HJJVTWSPZOLKI`JVVSPUN[OLNHZ\U[PSP[ILJVTLZSPX\PK

Liquefied petroleum gas (LPG)

4P_[\YL VM O`KYVJHYIVU NHZLZ [`WPJHSS` WYVWHUL HUK I\[HUL [OH[ HYL Z`U[OLZPaLK MYVT WL[YVSL\T 0[ PZ H SV^ JHYIVU LTP[[PUN M\LS ZV\YJLMVYWV^LYPUNHWWSPHUJLZHUK]LOPJSLZ

Liquefied petroleum gas (LPG) vehicles

=LOPJSLZ [OH[ \ZL 37. HZ P[Z WYPTHY` M\LS ;OLYL HYL [^V [`WLZ VM 37.]LOPJSLZ![OVZL[OH[VUS`\[PSPaL37."HUKZVJHSSLK¸K\HS M\LS¹H\[VZ[OH[JHU\ZLIV[O37.HUKJVU]LU[PVUHSNHZVSPUL

148

THE CHINA GREENTECH REPORT 2009

www.china-greentech.com

GLOSSARY

Liquid flow batteries

9LJOHYNLHISLIH[[LYPLZ[OH[JVU]LY[JOLTPJHSLULYN`PU[VLSLJ[YPJP[` I`HSSV^PUNHULSLJ[YVS`[LJVU[HPUPUNVULVYTVYLKPZZVS]LKLSLJ[YV HJ[P]LZWLJPLZ[VÅV^[OYV\NOHULSLJ[YVJOLTPJHSJLSS

Lithium ion (Li-Ion) batteries

2UV^UMVY[OLPY\ZLPUJVUZ\TLYLSLJ[YVUPJZHZ^LSSHZPUJYLHZPUNS` ILPUN \ZLK PU W\YL LSLJ[YPJ ]LOPJSLZ HWWSPJH[PVUZ *VTWHYLK [V UPJRLSTL[HSO`KYPKLIH[[LYPLZ3P0VUIH[[LYPLZLUQV`HOPNOLYLULYN` KLUZP[`SVUNLYSPMLJ`JSLTVYLYHWPKJOHYNLHUKWLYMVYTIL[[LYPU JVSKLY^LH[OLY

Local sourcing

7YVJ\YPUN HUK ZV\YJPUN I\PSKPUN TH[LYPHSZ ^P[OPU [OL NLVNYHWOPJHS WYV_PTP[`VM[OLPYPU[LUKLK\ZL

Low-flow fixtures

-H\JL[Z HUK V[OLY ^H[LY \ZL Z`Z[LTZ [OH[ \ZL SLZZ ^H[LY [OHU JVU]LU[PVUHSZ`Z[LTZI\[KLSP]LY[OLZHTLVYNYLH[LYILULÄ[[V[OL \ZLY

Low-impact materials

)\PSKPUNTH[LYPHSZ[OH[\ZLSLZZYLZV\YJLZHUKWYVK\JLSLZZWVSS\[PVU JVTWHYLK[VJVU]LU[PVUHSI\PSKPUNTH[LYPHSZV]LY[OLPYSPMLJ`JSL

Maintenance

:L[ VM PUZWLJ[PVUZ YLWHPYZ VY TVKPÄJH[PVUZ VM PUKP]PK\HS ^PUK [\YIPULZVY^PUKMHYTZ[VLUZ\YLVW[PTHSVWLYH[PVU

Medical wastes

(SZVRUV^UHZJSPUPJHS^HZ[LZUVYTHSS`YLMLYZ[V^HZ[LZWYVK\JLK VUOLHS[OJHYLWYLTPZLZZ\JOHZOVZWP[HSZJSPUPJZKVJ[VYZVMÄJLZ SHIZ HUK U\YZPUN OVTLZ  ;OL` HYL UVYTHSS` IPVOHaHYKV\Z VY PUMLJ[PV\ZHUKTH`JVU[HPUISVVKVIQLJ[ZJVU[HTPUH[LKPUTLKPJHS WYVJLK\YLZHUKIVK`WHY[Z

Membrane bioreactor (MBR) process

4\S[PZ[HNL ^HZ[L ^H[LY [YLH[TLU[ WYVJLZZ ^OPJO JVTIPULZ IPVSVNPJHS ^HZ[L V_PKH[PVU HUK TLTIYHUL ZLWHYH[PVU PU VYKLY [V YLTV]LLMÅ\LU[Z

Membrane separation

;LJOUVSVNPLZ \[PSPaLK [V YLTV]L ^H[LY ]HWVY HUK JHYIVU KPV_PKL MYVTUH[\YHSNHZ

Metallurgical coal

( OPNOLYX\HSP[` JVHS \ZLK PU THRPUN JVRL (SZV RUV^U HZ JVRPUN JVHS

Methane hydrocarbons

4HPU H[TVZWOLYPJ WVSS\[HU[Z YLSLHZLK PU [OL WYVJLZZ VM VPSÄLSK L_WSVP[H[PVUHUK[OLWYVK\J[PVUVMWL[YVSL\T

Methane recovery and utilization

;LJOUVSVN` KLZPNULK [V JHW[\YL TL[OHUL YLSLHZLK PU JVHS TPUL YLSH[LK LTPZZPVU HUK \[PSPaL P[ PU ]HYPV\Z HWWSPJH[PVUZ <[PSPaH[PVU PUJS\KLZ HTVUN V[OLY [OPUNZ PUQLJ[PUN YLJV]LYLK TL[OHUL PU[V UH[\YHSNHZWPWLSPULZ

Microalgae diesel

+PLZLS WYVK\JLK MYVT TPJYVHSNHL WOV[VZ`U[OL[PJ VYNHUPZTZ [OH[ JHUILMHYTLKPU^H[LY

Micrositing

*VUZPKLYH[PVU VM HU HYYH` VM MHJ[VYZ YLSH[LK [V ^PUK ÅV^ [LYYHPU SVJHS WV^LY KLTHUK LU]PYVUTLU[HS HUK SHUK\ZL PZZ\LZ JHYYPLK V\[K\YPUNZP[LZLSLJ[PVUMVY^PUK[\YIPULZ[VTH_PTPaL^PUKMHYT»Z VWLYH[PVUHSLMÄJPLUJ`HUKLJVUVTPJZ

Mixed refrigerant cycle (MRC)

(WWSPJH[PVUZ HYL \ZLK [V SPX\LM` UH[\YHS NHZ *VUZPKLYLK [V IL HU LMÄJPLU[HUKJVZ[LMMLJ[P]L[LJOUVSVN`HUK\ZLKPU]HYPV\Z*OPULZL SPX\LÄLKUH[\YHSNHZWSHU[Z

Modular high-temperature gas-cooled reactors (MHTGCR)

;`WL VM U\JSLHY YLHJ[VYZ [OH[ HYL ZHMLY HUK OH]L OPNOLY LMÄJPLUJ` ^OLUJVTWHYLK[VJVU]LU[PVUHSU\JSLHYYLHJ[VYZ

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THE CHINA GREENTECH REPORT 2009



GLOSSARY

Monitoring and measurement solutions

:VS\[PVUZ [OH[ [YHJR [OL JVTWVZP[PVU VY ]VS\TLZ VM ^H[LY ÅV^Z PU UH[\YHS^H[LYZV\YJLZ^H[LYKPZ[YPI\[PVUZ`Z[LTZ^H[LY[YLH[TLU[ WSHU[ZVY\ZLYWYLTPZLZ^OPJOHYLVM[LUPU[LNYH[LK^P[O0;HUKVY .7:[LJOUVSVNPLZ

Multiple units (MU) train

;YHPUZ [OH[ YLS` VU H ZLYPLZ VM ZLSMWYVWLSSPUN JHYYPHNLZ JVU[YVSSLK MYVTVULJHIPUMVYP[ZWYVW\SZPVUPUZ[LHKVMSVJVTV[P]LZ

Municipal solid wastes (MSW)

>HZ[LTH[LYPHSZNLULYH[LKI`\YIHUHYLHZHUKHYL[`WPJHSS`KLHS[ ^P[O I` PUJPULYH[PVU VY WSHJLTLU[ PU SHUKÄSSZ *VTWVZ[PUN HUK ZVSPKPÄJH[PVUHYLV[OLYKPZWVZHSTL[OVKZ

Natural gas

0TWVY[HU[M\LSZV\YJLHUKMLY[PSPaLYJVTWVULU[JVUZPZ[PUNWYPTHYPS` VM TL[OHUL HUK PZ MV\UK PU MVZZPS M\LSZ HUK JVHS ILKZ HTVUN V[OLYWSHJLZ*VUZPKLYLK[VIL[OLJSLHULZ[VM[OLMVZZPSM\LSZI\[ YLX\PYLZ L_[LUZP]L WYVJLZZPUN PU VYKLY [V YLTV]L LSLTLU[Z V[OLY [OHUTL[OHUL

Natural gas combined cycle (NGCC)

:`Z[LTZ [OH[ NLULYH[L LSLJ[YPJP[` \ZPUN NHZ [\YIPULZ HUK [OLU JHW[\YL ^HZ[L OLH[ [V NLULYH[L Z[LHT HUK HKKP[PVUHS LSLJ[YPJP[` \ZPUNHZ[LHT[\YIPUL

Natural gas desulfurization

)YVHK WYVJLZZ JVUZPZ[PUN VM ZL]LYHS HWWSPJH[PVUZ LN HTPUL [YLH[TLU[VYTLTIYHULHKZVYW[PVU[OH[YLTV]LZZ\SM\YMYVTUH[\YHS NHZ[OLYLI`W\YPM`PUNZHPKNHZHUKYLTV]PUNWVSS\[HU[Z9LJV]LYLK Z\SM\YJHUIL\ZLKPU]HYPV\ZJOLTPJHSPUK\Z[Y`HWWSPJH[PVUZ

Natural gas vehicles

=LOPJSLZ^P[OTV[VYZ[OH[Y\UWYPTHYPS`PMUV[L_JS\ZP]LS`VUUH[\YHS NHZ

Net zero buildings (NZB)

)\PSKPUNZ[OH[KYH^UVUL[LULYN`MYVT[OLNYPKVUHUHUU\HSIHZPZ (JOPL]LK [OYV\NO H JVTIPUH[PVU VM LULYN` LMÄJPLUJ` HUK VUZP[L NLULYH[PVU

Neutralization

7YVJLZZPU^OPJO[OLOHaHYKV\ZJVTWVULU[ZVM^HZ[LHYLLSPTPUH[LK [OLYLI`YLUKLYPUN[OLTILUPNULNHJVYYVZP]LHJPKPZUL\[YHSPaLK ^P[OHIHZPJZ\IZ[HUJLZV[OH[P[PZUVSVUNLYJVYYVZP]LL[J

New energy vehicles

=LOPJSLZ[OH[HYLUV[KYP]LUI`NHZVSPULVYKPLZLSPU[LYUHSJVTI\Z[PVU LUNPULZ I\[ I` V[OLY WV^LY ZV\YJLZ Z[VYHNL IH[[LYPLZ M\LS JLSS ZVSHYWV^LYL[J

Nitrogen oxide (NOx)

.LULYPJKLZPNUH[PVUMVYHU\TILYVMTVUVUP[YVNLUV_PKLZ56_PZ WYVK\JLKHUKYLSLHZLKK\YPUNJVTI\Z[PVUHUKPZHJOPLMJVTWVULU[ VMZTVN

Non-GHG air pollutants

4HPUS` Z\SM\Y V_PKLZ UP[YVNLU V_PKLZ ]VSH[PSL VYNHUPJ JVTWV\UKZ HUK V[OLY WVSS\[HU[Z ^OVZL WYPTHY` KL[YPTLU[HS LMMLJ[Z VU OLHS[O HUKLU]PYVUTLU[KVUV[Z[LTMYVT[OLPYNSVIHS^HYTPUNWV[LU[PHS

Offgrid / <1 MW / Horizontal

/VYPaVU[HS^PUK[\YIPULZ^P[O\UKLY4>JHWHJP[`[OH[NLULYH[L LSLJ[YPJP[`[VIL\ZLKSVJHSS`HUKKVLZUV[YLX\PYLJVUULJ[PVU[V[OL WV^LYNYPK

Offgrid / <1 MW / Vertical

=LY[PJHS ^PUK [\YIPULZ ^P[O \UKLY  4> JHWHJP[` [OH[ NLULYH[L LSLJ[YPJP[`[VIL\ZLKSVJHSS`HUKKVLZUV[YLX\PYLJVUULJ[PVU[V[OL WV^LYNYPK

Oil tank automatic dehydrators

7VSS\[PVU HIH[LTLU[ KL]PJLZ KLZPNULK [V YLK\JL VPS SL]LSZ PU KPZJOHYNLK^HZ[L^H[LY]PHKLO`KYH[PVUZLWHYH[PVU


THE CHINA GREENTECH REPORT 2009

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GLOSSARY

Ongrid / >3 MW / Offshore

/VYPaVU[HS^PUK[\YIPULZ^P[OJHWHJP[`V]LY4>[OH[HYLSVJH[LK VMMZOVYLHUKMLLK[OLNLULYH[LKLSLJ[YPJP[`VU[V[OLWV^LYNYPK

Ongrid / >3 MW / Onshore

/VYPaVU[HS^PUK[\YIPULZ^P[OJHWHJP[`V]LY4>[OH[HYLSVJH[LK VUZOVYLHUKMLLK[OLNLULYH[LKLSLJ[YPJP[`VU[V[OLWV^LYNYPK

Ongrid / 1-3 MW / Onshore

/VYPaVU[HS^PUK[\YIPULZ^P[OJHWHJP[`IL[^LLUHUK4>[OH[ HYL SVJH[LK VUZOVYL HUK MLLK [OL NLULYH[LK LSLJ[YPJP[` VU[V [OL WV^LYNYPK

Optimized air traffic management

:L[ VM WYVJLZZLZ KLZPNULK [V HJOPL]L [OL OPNOLZ[ WVZZPISL WYVK\J[P]P[`VM[OLHPYÅLL[HUKNYV\UKMHJPSP[PLZ;OPZPZHJJVTWSPZOLK I`VW[PTPaPUNÅPNO[WSHUUPUNSVNPZ[PJZHUKHPY[YHMÄJTHUHNLTLU[ ^OPSLLUZ\YPUNZHML[`HUKJVU]LUPLUJLHUKTPUPTPaPUN[OLULNH[P]L PTWHJ[VU[OLLU]PYVUTLU[

Optimized waterway management

:L[ VM WYVJLZZLZ KLZPNULK [V HJOPL]L [OL OPNOLZ[ WVZZPISL WYVK\J[P]P[` VM ZOPWZ HUK YLSH[LK MHJPSP[PLZ Z\JO HZ WVY[Z  ;OPZ PZ HJJVTWSPZOLK I` VW[PTPaPUN ^H[LY [YHMÄJ WSHUUPUN SVNPZ[PJZ HUK [YHMÄJ THUHNLTLU[ ^OPSL LUZ\YPUN ZHML[` HUK JVU]LUPLUJL HUK TPUPTPaPUN[OLULNH[P]LPTWHJ[VU[OLLU]PYVUTLU[

Oxygen-enriched combustion

;`WLVMJVTI\Z[PVU[OH[\ZLZV_`NLULUYPJOLKI\YULY[VPUJYLHZL V_`NLUJVU[LU[PU[OLJVTI\Z[PVUHPYZVHZ[VYLK\JLLULYN`SVZZ HUKPUJYLHZLOLH[PUNLMÄJPLUJ`

Parabolic dish stirling engines

+L]PJLZ [OH[ JVUJLU[YH[L Z\USPNO[ H[ H ZPUNSL MVJHS WVPU[ ]PH H WHYHIVSPJ KPZO [V WYVK\JL LSLJ[YPJP[` HUK JHU [YHJR [OL Z\U HSVUN [^VH_LZI`H\[VTH[PJHSS`HKQ\Z[PUN[OLKPYLJ[PVUVM[OLKPZO

Parabolic troughs

:VSHY[OLYTHSLULYN`JVSSLJ[VYZ[OH[JVUZPZ[VMHSVUNWHYHIVSPJTPYYVY HUKH+L^HY[\ILY\UUPUNP[ZSLUN[OH[[OLMVJHSWVPU[[OH[HIZVYIZ LULYN`MYVT[OLZ\USPNO[^OPJOPZJVU]LY[LKPU[VLSLJ[YPJP[`

Particulate matter (PM) removal systems

:`Z[LTZ[OH[YLTV]LWHY[PJ\SH[LTH[[LYOHYTM\SÄULWHY[PJSLZMYVT Å\LNHZ

Passive design

)\PSKPUNKLZPNU[OH[[HRLZHK]HU[HNLVM[OLSVJHSJSPTH[L[VWYV]PKL ZVTLVYHSSVM[OLOLH[PUNJVVSPUNSPNO[PUNHUK]LU[PSH[PVUULLKZVM [OLVJJ\WHU[Z

Peak load capacity

4H_PT\TLSLJ[YPJHSSVHKJHWHISLVMILPUNOHUKSLKI`[YHUZTPZZPVU LX\PWTLU[PUHNP]LU[PTLWLYPVK

Physical wastewater treatments

;YLH[TLU[ TL[OVKZ [OH[ \Z\HSS` [YLH[ Z\ZWLUKLK HZ VWWVZLK [V KPZZVS]LK WVSS\[HU[Z ;OL WYVJLZZ VM[LU PU]VS]LZ ZPTWS` HSSV^PUN Z\ZWLUKLK WHY[PJSLZ [V ÅVH[ [V [OL [VW VM H JVU[HPULY VY ZL[[SL H[ [OL IV[[VT I\[ TH` HSZV \ZL TLJOHUPJHS TLHUZ [V HZZPZ[ PU [OL ZL[[SPUNÅVH[PUNWYVJLZZ

Point-of-use solutions

>H[LY TVUP[VYPUN VY [YLH[TLU[ ZVS\[PVUZ [OH[ HYL PUZ[HSSLK H[ [OL WVPU[^OLYL^H[LYPZHJ[\HSS`\ZLKZ\JOHZHWHY[TLU[ZJVTTLYJPHS HUKPUK\Z[YPHSMHJPSP[PLZ

Power towers

;`WL VM ZVSHY WV^LY WSHU[Z [OH[ \ZLZ H [V^LY HUK H OPNO OLH[ JHWHJP[`JVTWVULU[[VYLJLP]L[OLZ\USPNO[MVJ\ZLKI`HUHYYH`VM ÅH[TV]HISLTPYYVYZHUKJVU]LY[P[PU[VLSLJ[YPJP[`

Pressure swing adsorption

(WWSPJH[PVU [OH[ ZLLRZ [V ZLWHYH[L JLY[HPU [HYNL[ NHZLZ MYVT H IYVHKLY TP_[\YL VM NHZLZ \ZPUN ZWLJPHSPaLK HKZVYW[P]L TH[LYPHSZ ;`WPJHSS` \ZLK [V YLTV]L JHYIVU KPV_PKL HUK O`KYVNLU Z\SÄKL [V PUJYLHZL[OLX\HU[P[`VMTL[OHULHRL`JVTWVULU[VMUH[\YHSNHZ

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GLOSSARY

Pressurized fluidized bed combustion (PFBC)

+L]LSVWLK[VM\Y[OLYPTWYV]LLMÄJPLUJ`SL]LSZPUJVHSÄYLKWSHU[ZP[ YLWSHJLZ[OLJVU]LU[PVUHSJVTI\Z[PVUJOHTILYVM[OLNHZ[\YIPUL ^P[OHWYLZZ\YPaLKÅ\PKPaLKILKJVTI\Z[VY;OLLUKYLZ\S[PZ[OH[ [OLWYVK\J[ZVMJVTI\Z[PVUWHZZ[OYV\NOHOV[NHZJSLHUPUNZ`Z[LT ILMVYLLU[LYPUN[OL[\YIPUL

Primary treatment solutions

:VS\[PVUZ \ZLK WYPTHYPS` H[ [OL ZLKPTLU[H[PVU Z[HNL ^OLYL [OL ZVSPKZHYLZLWHYH[LKMYVT[OL^HZ[L^H[LYZ[YLHT

Process wastes

>HZ[LZ[OH[YLZ\S[MYVT[OLWYVJLZZVMJVU]LY[PUNYH^TH[LYPHSZPU[V ÄUHSWYVK\J[ZLNZJYHWTL[HSZSHNTPUL[HPSPUNZL[J

Process redesign

9LKLZPNU HUKVY Z`Z[LTZ VW[PTPaH[PVU VM [OL VWLYH[PVU ^P[O [OL W\YWVZL VM PUJYLHZPUN YLZV\YJL \ZL LMÄJPLUJ` HUK TPUPTPaPUN WVSS\[PVU

Pumped hydro storage

4L[OVK\UKLY^OPJOLULYN`JHUILZ[VYLKI`W\TWPUN^H[LYPU[V H OPNO YLZLY]VPY HUK [OLU YLSLHZPUN P[ IHJR PU[V H SV^LY YLZLY]VPY [V NLULYH[L LSLJ[YPJP[` ^OLU WHZZPUN [OYV\NO WV^LY NLULYH[PUN [\YIPULZ

Real-time information processing

:VS\[PVUZ[OH[LUHISLYLHS[PTLJVTT\UPJH[PVUIL[^LLUJVYLUVKLZ PU [OL LSLJ[YPJ UL[^VYR PUJS\KPUN J\Z[VTLY WYLTPZL HUK HSSV^ [V IL[[LY THUHNL KLTHUK PTWYV]L YLSPHIPSP[` HUK ÅL_PIPSP[` VM [OL UL[^VYR

Recycled materials

)\PSKPUN TH[LYPHSZ THU\MHJ[\YLK MYVT TH[LYPHSZ [OH[ OH]L ILLU YLJ`JSLK

Renewable energy access flexible alternating current transmission system (FACTS)

:`Z[LTJVTWYPZLKVMZ[H[PJLX\PWTLU[\ZLKMVYHS[LYUH[PUNJ\YYLU[ [YHUZTPZZPVUZ[OH[HYLTLHU[[VLUOHUJLJVU[YVSSHIPSP[`HUKPUJYLHZL WV^LY[YHUZMLYJHWHIPSP[`VM[OLUL[^VYR

Resource service companies

7YVMLZZPVUHS ZLY]PJL JVTWHUPLZ PUJS\KPUN ,ULYN` :LY]PJL *VTWHUPLZ [OH[ WYV]PKL WYVQLJ[ THUHNLTLU[ JVUZ\S[PUN LUNPULLYPUN ÄUHUJPUN VWLYH[PVU HUK THPU[LUHUJL ZLY]PJLZ [OH[ YLK\JLLULYN`HUK^H[LY\ZLPUI\PSKPUNZ

Second generation biofuels

-\LSZ[OH[\ZLZWLJPHSLULYN`UVUMVVKJYVWZ[OH[OH]L[OLLMMLJ[ VMUV[KP]LY[PUNMVVKZ\WWSPLZH^H`MYVT[OLMVVKJOHPUHUK^HZ[L IPVTHZZJVU[HPUPUNSPNUPUHUKJLSS\SVZL

Secondary treatment solutions

:VS\[PVUZ[OH[Z\IZ[HU[PHSS`YLTV]L[OLIPVSVNPJHSJVU[LU[VMZL^HNL PUJS\KPUN KLYP]H[LZ VM O\THU ^HZ[L MVVK ^HZ[L ZVHWZ HUK KL[LYNLU[

Sedimentation

;YHKP[PVUHS^H[LY[YLH[TLU[TL[OVK[OH[PZIHZLKVU[OLZL[[SPUNVM WHY[PJ\SH[LZH[[OLIV[[VTVMHIVK`VM^H[LY

Sludge

:LTPZVSPKTH[LYPHSSLM[MYVTPUK\Z[YPHS^H[LY[YLH[TLU[VY^HZ[L^H[LY [YLH[TLU[WYVJLZZLZ

Sludge treatment and disposal

:VS\[PVUZ PUJS\KPUN KL^H[LYPUN SHUKÄSS Z[VYHNL HUK MLY[PSPaLY JVU]LYZPVU[OH[[YLH[ZS\KNLNLULYH[LKMYVT^HZ[L^H[LY[YLH[TLU[ PU VYKLY [V YLTV]L \ZHISL Z\IZ[HUJLZ HUK WYVWLYS` KPZWVZL VM YLZPK\HS^HZ[LZ

Smart buildings

)\PSKPUNZ[OH[YLS`VUPU[LNYH[LK0;IHZLKYLZV\YJL\ZLTLHZ\YLTLU[ HUKTVUP[VYPUNPU[LSSPNLU[HUHS`ZPZVM[OLPU[LYUHSLU]PYVUTLU[HSHUK WLYMVYTHUJLKH[HHUKH\[VTH[PVUVMJVUULJ[LKI\PSKPUNZ`Z[LTZ



THE CHINA GREENTECH REPORT 2009

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GLOSSARY

Smart grid networks

5L[^VYRZZ\WWVY[LKI`KPNP[HS[LJOUVSVN`JHWHISLVML_LY[PUN¸ZTHY[ JVU[YVS¹ V]LY HSS HZWLJ[Z VM [OL LSLJ[YPJ WV^LY ZLJ[VY PUJS\KPUN NLULYH[PVU[YHUZTPZZPVUKPZ[YPI\[PVUJ\Z[VTLYZLY]PJLHUKWV^LY KPZWH[JO H[ HSS ]VS[HNL SL]LSZ ;OL` KLSP]LY WV^LY PU HU LMÄJPLU[ THUULYHUKJHUIL[[LYPU[LNYH[LWV^LYMYVTYLUL^HISLZV\YJLZ

Sodium-sulfur (NaS) batteries

)H[[LYPLZ ^P[O OPNO LULYN` KLUZP[` HUK OPNO LMÄJPLUJ` VM JOHYNL KPZJOHYNL[OH[YLX\PYLOPNOVWLYH[PUN[LTWLYH[\YLZ

Solar photovoltaics (PV)

7OV[V]VS[HPJZZVSHYJLSSZHYLKL]PJLZ[OH[JVU]LY[SPNO[PU[VKPYLJ[ J\YYLU[ \ZPUN [OL WOV[VLSLJ[YPJ LMMLJ[ :VSHY 7=Z HYL [OL THPU [LJOUVSVN`\ZLKPU*OPUHMVY[OLNLULYH[PVUVMLSLJ[YPJZVSHYWV^LY

Solar water heaters (SWH)

:`Z[LTZ[OH[OLH[^H[LYI`HIZVYIPUN[OLLULYN`MYVT[OLZ\UUVYTHSS` JVUZPZ[PUNVMZVSHY[OLYTHSJVSSLJ[VYZÅ\PKZ`Z[LTZ[V[YHUZWVY[[OL OLH[HUKH^H[LY[HUR^OLYL^H[LYPZOLH[LKHUKZ[VYLK

Solidification/stabilization (S/S)

*VTTVUTL[OVK\ZLKMVY[YLH[TLU[THUHNLTLU[HUK[OLYL\ZLVM JVU[HTPUH[LK^HZ[LLZWLJPHSS`[YLH[LKPUK\Z[YPHSOHaHYKV\Z^HZ[L HUKJVU[HTPUH[LKTH[LYPHS;OPZWYVJLZZPU]VS]LZTP_PUN7VY[SHUK JLTLU[^P[O[OLJVU[HTPUHU[Z^OPJOYLZ\S[ZPUHIYPJR^OPJOJHUIL YL\ZLKVUZP[L

Standard operating procedures (SOPs)

:L[ VM WYLZJYPW[PVUZ MVY LTWSV`LLZ VM[LU THUKH[LK VU OV^ [V L_LJ\[L ZWLJPÄJ [HZRZ VY [V YLHJ[ [V JPYJ\TZ[HUJLZ PU [OL TVZ[ LMÄJPLU[HUKLMMLJ[P]L^H`Z

Standard operating procedures (SOPs), training, feedback

*VSSLJ[PVUVMTHUHNLTLU[[VVSZKLZPNULK[VPTWYV]L[OLLMÄJPLUJ` VMLTWSV`LLZHZ^LSSHZ[OLLMMLJ[P]LULZZVM[OLTHUHNLTLU[H[HU PUK\Z[YPHSZP[L

Stop-start systems

:`Z[LTZ [OH[ ZHMLS` Z[VW HUK YLZ[HY[ H SVJVTV[P]L»Z LUNPUL K\YPUN PKSPUN VWLYH[PVU [V JVUZLY]L M\LS HUK YLK\JL HPY HUK UVPZL WVSS\[PVUZ

Subcritical power generation

*VHSÄYLK Z\IJYP[PJHS WV^LY WSHU[Z [OH[ VWLYH[L H[ ]LY` OPNO [LTWLYH[\YLZYLZ\S[PUNPUT\JOOPNOLYOLH[LMÄJPLUJPLZ

Sulfur dioxide (SO2)

)`WYVK\J[YLZ\S[PUNMYVT[OLJVTI\Z[PVUVMJVHSHUKVPSJVU[HPUPUN Z\SM\Y>OLUJVTIPULK^P[OUP[YVNLUKPV_PKLZ\SM\YKPV_PKLMVYTZ HJPKYHPU

Supercapacitors

,SLJ[YVJOLTPJHS JHWHJP[VYZ [HZRLK ^P[O Z[VYPUN LSLJ[YPJHS JOHYNL [OH[OH]LHU\U\Z\HSS`OPNOLULYN`KLUZP[`^OLUJVTWHYLK[VJVT TVUJHWHJP[VYZ[`WPJHSS`VU[OLVYKLYVM[OV\ZHUKZVM[PTLZNYLH[LY [OHUHOPNOJHWHJP[`LSLJ[YVS`[PJJHWHJP[VY

Sustainable materials

4H[LYPHSZ NH[OLYLK PU LU]PYVUTLU[HSS` YLZWVUZPISL ^H`Z PUJS\KPUN YLJ`JSLKTH[LYPHSZJLY[PÄLK^VVKHUKIPVKLNYHKHISLWSHZ[PJZ

Sustainable urban planning


Sweet sorghum bioethanol

)PVL[OHUVSWYVK\JLKMYVTZ^LL[ZVYN\TJYVW

Tertiary treatment solutions

:VS\[PVUZ [OH[ WYV]PKL H ÄUHS [YLH[TLU[ PU VYKLY YHPZL [OL LMÅ\LU[ X\HSP[`VM[OL^H[LYILMVYLP[PZKPZJOHYNLKPU[V[OLYLJLP]PUNLU]P YVUTLU[

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THE CHINA GREENTECH REPORT 2009



GLOSSARY

Thermal coal

(SSV[OLYJVHSZ[OH[HYLUV[JSHZZPÄLKHZTL[HSS\YNPJHSVYJVRPUNJVHS *VHSZ VM [OLZL [`WL HYL \Z\HSS` SV^ PU NYHKL HUK HYL JVTTVUS` I\YULKPUWV^LYWSHU[Z[VNLULYH[LLSLJ[YPJP[`(SZVRUV^UHZZ[LHT JVHS

Thin film

;LJOUVSVN` [OH[ \[PSPaLZ [OPU SH`LYZ VM TH[LYPHS MVY LSLJ[YVUPJ ZLTPJVUK\J[VYHUKVW[PJHSHWWSPJH[PVUZ;OPUÄSTPZ\ZLKPUZLJVUK HUK[OPYKNLULYH[PVUWOV[V]VS[HPJ[LJOUVSVNPLZHUKVM[LUHWWSPLKMVY I\PSKPUNPU[LNYH[LKHWWSPJH[PVUZ

Third generation biofuels

7YVJLZZLZ [OH[ PU]VS]L [OL WYVK\J[PVU VM IPVKPLZLS MYVT HSNHS VPSZ ,ULYN`KLYP]LKMYVTHSNHLJYVWZPZZ\IZ[HU[PHSS`NYLH[LY\W[V [PTLZ[OHUZLJVUKNLULYH[PVUIPVM\LSJYVWZ

Time-of-use (TOU) pricing

*VZ[ Z`Z[LT ^OLYLPU [OL WYPJL VM LSLJ[YPJP[` PZ LZ[HISPZOLK HOLHK VM [PTL HUK MVY H ZWLJPÄJ WLYPVK VM [PTL LUJV\YHNPUN JVUZ\TLYZ [V TVKPM` [OLPY JVUZ\TW[PVU OHIP[Z I` [HRPUN WYPJL MHJ[VYZ PU[V JVUZPKLYH[PVU

Transformers with amorphous core

(S[LYUH[P]L [YHUZMVYTLYZ [OH[ HYL TVYL LULYN`LMÄJPLU[ HUK LU]PYVUTLU[HSS`MYPLUKS`[OHUJVU]LU[PVUHS

Ultra high voltage (UHV) transmission

7V^LY [YHUZTPZZPVU SPULZ ^P[O ]VS[HNLZ VM  R= VY OPNOLY MVY HS[LYUH[PUNJ\YYLU[VYR=VYOPNOLYMVYKPYLJ[J\YYLU[0[HSSV^Z WV^LY[VIL[YHUZTP[[LKH[NYLH[LYKPZ[HUJLZ^P[OSV^LYSVZZLZ[OHU SV^LY]VS[HNL[YHUZTPZZPVUSPULZ

Ultra supercritical power generation (USPG)

*VHSÄYLK WV^LY WSHU[Z [OH[ VWLYH[L H[ ]LY` OPNO [LTWLYH[\YLZ HUK \ZL HK]HUJLK Z[LHT J`JSLZ PU VYKLY [V HJOPL]L OPNOLY OLH[ LMÄJPLUJPLZHUKSLZZLTPZZPVU[OHUJVU]LU[PVUHSJVHSWV^LYWSHU[Z

Underground coal gasification combined cycle (UCGCC)

7YVJLZZI`^OPJOJVHSPZJVU]LY[LKPU[VHWYVK\J[NHZ\UKLYNYV\UK HUK [OLU JVTI\Z[LK HIV]LNYV\UK [V NLULYH[L LSLJ[YPJP[` PU JVTI\Z[PVUZ`Z[LTZ[OH[JHW[\YLHUK\[PSPaL^HZ[LOLH[

Vanadium redox batteries

-SV^ IH[[LYPLZ ^P[O KLLW J`JSPUN SPML [OH[ JHU IL TLJOHUPJHSS` YLM\LSLKHUKOHZSV^ULNH[P]LLU]PYVUTLU[HSPTWHJ[

Vapor recovery

7YVJLZZ VM JVSSLJ[PUN L]HWVYH[PUN VPS ^OPSL P[ PZ ILPUN SVHKLK YLJLP]LK VY Z[VYLK H[ ÄSSPUN Z[H[PVUZ =HWVY YLJV]LY` PZ JHYYPLK V\[ ]PHHIZVYW[PVUJVTI\Z[PVUJVUKLUZH[PVUVYÄSTZLWHYH[PVU

Vertical-axis wind turbines

;`WLVM^PUK[\YIPULZ^OLYL[OLTHPUYV[VYZOHM[Y\UZ]LY[PJHSS`

Waste management

*VSSLJ[PVU[YHUZWVY[WYVJLZZPUNTVUP[VYPUNYLJ`JSPUNHUKKPZWVZHS VM^HZ[LTH[LYPHSZ

Waste oil


Waste separation and off-take

:VY[PUNVMZVSPK^HZ[LZH[[OLPUK\Z[YPHSMHJPSP[`[VHZZPZ[P[ZL_JOHUNL YLJ`JSPUNPUJPULYH[PVUVYKPZWVZHS

Waste vegetable oil biodiesel

)PVKPLZLSWYVK\JLKMYVT^HZ[L]LNL[HISLVPS

Wastewater sulfur stripping units

4LJOHUPZTZ KLZPNULK [V YLTV]L O`KYVNLU Z\SÄKL HUK HTTVUPH MYVTYLÄULY`^HZ[L^H[LY

Water grades

:`Z[LT KLZPNULK I` *OPUH [V NYHKL ^H[LY X\HSP[` [OH[ \ZLZ H ZJHSL YHUNPUN MYVT 0 [V = ^P[O NYHKLZ 0 [OYV\NO 000 Ä[ MVY O\THU JVUZ\TW[PVU

Water productivity

;OLYH[PVVMNVVKZHUKZLY]PJLZWYVK\JLKV]LY[OL]VS\TLVM^H[LY YLX\PYLKMVY[OLPYWYVK\J[PVU"TLHZ\YLZ[OLLMÄJPLU[\ZLVM^H[LY



THE CHINA GREENTECH REPORT 2009

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THE CHINA GREENTECH REPORT SOURCES

SOURCES The following sources are applicable to the Executive Overview edition of the report. Additional sector-specific sources are included in the full version of the report. ‹ ‹ ‹ ‹ ‹ ‹ ‹ ‹ ‹ ‹ ‹ ‹ ‹ ‹ ‹ ‹ ‹ ‹ ‹ ‹ ‹ ‹ ‹ ‹ ‹ ‹ ‹ ‹ ‹ ‹ ‹ ‹ ‹ ‹ ‹ ‹ ‹ ‹ ‹ ‹ ‹ ‹ ‹ ‹ ‹

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中华人民共和国国务院办公厅,”国务院常务会议原则通过’能源中长期发展规划纲要’（草案）,” 2006年6月30日 B.LULYHS6MÄJLVM[OL:[H[L*V\UJPS¸6U0ZZ\PUN4LKP\THUK3VUN;LYT7SHUMVY,ULYN`+L]LSVWTLU[ 2020), (Draft),” June 30, 2006] http://202.123.110.3/ 中华人民共和国住房和城市建设部, “建筑节能:科技创新是重中之重,” 2008年3月17日 [Ministry of Housing and Urban-Rural Development,”Building Energy: Technology innovation is the most important,” March 17, 2008], http://www.mohurd.gov.cn/ 中华人民共和国住房和城市建设部,”关于公布2008年度第一批’绿色建筑设计评价标识’项目名单的公告,” 2008 年７ 月16日［Ministry of Housing and Urban-Rural Development, “Announcement of ‘Green Building Label’ Project Names,” July 16, 2008], http://www.mohurd.gov.cn/ 中国社会科学院, “中国节能及环境政策调研报告,” [China Academy of Social Sciences, “China Energy Saving and Environment Policy Survey Report”], (Beijing, China: CASS, 2008) 中华人民共和国财政部, “关于实施金太阳示范工程的通知”, 2009年07月16日 [Ministry of Finance, “Regarding the Golden Sun Policy,” July 16, 2009], http://www.mof.gov.cn/ 中华人民共和国财政部, “国家税务总局关于中国清洁发展机制基金及清洁发展机制项目实施企业有关企业所得税 政策问题的通知,” 2009年03月23日 [Ministry of Finance, “Tax Notice on China’s Clean Development Mechanism Fund and the Implementation of CDM project-related Corporate Income Tax Policy Issues,” March 23, 2009], http://www.js-n-tax.gov.cn/ 中华人民共和国财政部, “国家税务总局关于资源综合利用及其他产品增值税政策的通知,” 2008年12月09日 [Ministry of Finance, “Tax Policy on the Comprehensive Utilization of Resource and Other Products,” December 9, 2008], http://www.js-n-tax.gov.cn/ 中华人民共和国国家发展和改革委员会, “关于完善风力发电上网电价政策的通知,” 2009年7月24日, [National Development and Reform Commission, Notice on Improvements to the Wind Power Feed-In Pricing Policy, July 24, 2009] 中华人民共和国国家发展和改革委员会, “煤层气(煤矿瓦斯)开发利用 ‘十一五’规划,” 2007年4月 [NDRC, “11th Five-Year Plan for the Development and Utilization of Coal Bed Methane and Coal Mine Methane,” April 2007] 中华人民共和国国家发展和改革委员会, “煤炭工业发展‘十一五’规划,” 2007年1月, [NDRC, “11th Five Year Plan for Coal Industry Development,” January 2007] 中华人民共和国国家发展和改革委员会, 核电中长期发展规划 (2005-2020), [NDRC, Medium and Long Term Development Plan of Nuclear Power (2005-2020)] 中华人民共和国国家发展和改革委员会, 能源发展’十一五’ 规划, 2007年4月 [NDRC, “11th Five Year Energy Plan,” April, 2007] 中华人民共和国国家发展和改革委员会,”国家发展改革委批准中长期铁路网规划 , 2008年调整,” 2008年10月 [NDRC,“On Issuing Medium and Long-Term Plan for Rail Network Development, 2008 revision,” October 2008], http://www.ndrc.gov.cn/ 中华人民共和国国家发展和改革委员会,”节能中长期专项规划,” 2004年11月25日 [NDRC,“Medium and Long-Term Plan for Energy Conservation,” November 25, 2004], http://www.sdpc.gov.cn/ 中华人民共和国国家发展和改革委员会,可再生能源中长期发展规划,2007年8月, [China Climate Change Info-Net, Medium and Long-Term Plan for Renewable Energy Development] (Beijing, China: NDRC, August, 2007) 中华人民共和国国务院, “炼油工业中长期发展专项规划”, 2006年1月[The State Council, People’s Republic of China, 4LKP\THUK3VUN;LYT+L]LSVWTLU[7SHUVM6PS9LÄUPUN0UK\Z[Y`1HU\HY`D 中华人民共和国国务院, “装备制造业调整和振兴规划,” 2009年05月12日 [State Council, “Restructuring and Revitalization Plan for the Equipment Manufacturing Industry,” May 12, 2009], http://www.gov.cn/ 中华人民共和国国务院办公厅, “中华人民共和国国务院令第512号,” 2007年12月6日B.LULYHS6MÄJLVM[OL:[H[L Council, “State Council Circular 512,” December 6, 2007], http://www.gov.cn/ 中华人民共和国环境保护部, “国家环境保护总局办公厅文件,” 2007年8月30日 [Ministry of Environmental Protection, ¸*PYJ\SHYVU,U]PYVUTLU[HS7YV[LJ[PVU=LYPÄJH[PVUVM/PNOS`7VSS\[PUN0UK\Z[YPLZ[V-\Y[OLY:[HUKHYKPaL[OL 7YVK\J[PVUHUK4HUHNLTLU[VM*VTWHUPLZ(WWS`PUNMVY7\ISPJ3PZ[PUNVY9LÄUHUJPUN¹:LW[LTILYD http://www.mep.gov.cn/ 中华人民共和国科学技术部, “关于开展节能与新能源汽车示范推广试点工作的通知,” 2009年2月11日 [Ministry of Science and Technology, Provisional Measure on the Management of Government Subsidies for Energy-Saving and New Energy Vehicles, February 11, 2009], http://www.most.gov.cn/ 中央政府门户网站, “投资数据尽显亮色 “4万亿”投资计划初见成效”, 2009年3月29日 [Central Government Website, “4 Trillion Investment Has Achieved Preliminary Results,” March 29, 2009], http://www.gov.cn/

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PARTNERS AND STRATEGIC ADVISORS FOUNDING PARTNERS

SECTOR PARTNERS

The American Chamber of Commerce in Shanghai PricewaterhouseCoopers

Alcoa ARUP Ashland Water B&L Group Beijing Capital Dalian Tiandi Software Hub GreatPoint Energy Haworth Honeywell IBM IMW ITT LP Amina Lutron Millipore Modine National Instruments Owens Corning Powerspan Shui On Development Sixtron Advanced Materials Spaceframe Construction & Engineering TongFang Technovator United Solar Ovonic WL Gore ZhongDe Waste Treatment

PRESENTING PARTNERS Hao Capital Suntech Power Holdings

REPORT PARTNERS Alstom BP China International Capital Corporation Cisco Corning Dell Dow-Corning DNV Duke Energy General Electric KPCB (Kleiner Perkins) China Nike Philips Suzlon Volkswagen Westinghouse

SERVICES PARTNERS Amperex Technology APCO China Beijing Tianrun New Energy Investment Climate Change Capital Export Development Canada Microstaq Nixon-Peabody Ogilvy Public Relations Worldwide Qiming Ventures Standard Chartered Bank Vantage Point Partners

SUPPORTING ORGANIZATIONS Beijing Shougang International Engineering Technology Business Environment Council (HK) China Business Council for Sustainable Development China Datang Technologies & Engineering China Energy Net. Consulting Liaoning Huafu Group PIM Ltd. Reach Construction China Sound Group TsingHua TongFang U.S. Embassy in the People’s Republic of China U.S. Foreign Commercial Service

160

STRATEGIC ADVISORS The Asia Foundation Chinese Environment Service Industry Association Chinese Petroleum and Chemical Industry Association Clean Air Task Force The Climate Group Econet China DE (German Chamber) Embassy of The Netherlands EnTech China Future Generations HIFE Green Power Innovation Center for Energy and Transportation Shanghai Water Resources Foundation Society of Entrepreneurs and Ecology Tsinghua University

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