Clean Technology: A Growing Opportunity

The Chinese economy has been growing in leaps and bounds for more than 5 years. One of the byproducts of such swift economic growth has commonly been surging pollution levels. And so it has been with the world’s largest developing country. China had already overtaken the US as the world’s largest emitter of carbon way back in 2006, according to the Netherlands Environmental Assessment Agency.

Emission levels have not gone down since then (to say the least), with accelerating industrial growth. The country’s rising levels of effluence, greenhouse gasses and toxic wastes have thrown open a new set of opportunities for clean technology (cleantech) companies. Against this backdrop, domestic and foreign investors have made a beeline to seize these growing opportunities. Today, China has become the world’s largest cleantech market. This opportunity represents a market value of more than $200 billion in environment protection and renewable energy industries alone, said Patrick Tam, general partner of Tsing Capital, while speaking at a US-China clean-energy forum in January. Beijing-based Tsing Capital, formerly known as Tsinghua Venture Capital, is one of China’s pioneers in venture capital investing in cleantech. The venture capitalist firm, which begun making investments in cleantech as early as in 2002, is now raising its third fund that is targeting between US$200 million and US$250 million.

The cleantech sector gained prominence in 2005 and has been progressing since. In 2005, this sector attracted investments of US$170 million, which climbed to US$420 million the following year. Patrick Tam added that China’s cleantech sector had “gone from niche to mainstream” since 2006, and has been growing at more than 20% per annum. And yet, much of the Asian dragon’s massive cleantech market remains untapped. So, it’s not surprising that investments are now flowing in this direction, especially since China is offering policy incentives to this industry.