Renewable Energy: The Trillion Dollar Opportunity for Chinese Overseas Investment

This paper compares the global flows of Chinese overseas investment in power plants with renewable energy investment potential embodied in "Nationally Determined Contributions." With over US$1tn (671 GW) in Nationally Determined Contributions renewable energy investment potential in developing countries, we estimate the total level of power plant investments from China's policy banks and commercial entities since the early 2000s at US$216bn (158 GW). Although past investment has mainly been directed at fossil fuels and hydroelectric power, we argue that China is uniquely poised to lead renewable energy global investments for three reasons: (i) China's solar and wind industries are globally competitive; (ii) Chinese policy banks can give domestic firms advantages in financing global expansion; and (iii) renewable energy investment opportunities still exist in developing countries with less sovereign risk than for traditional energy investments. The Chinese government should provide special incentives for the policy banks to capitalize on these investment opportunities by deploying Chinese solar and wind technologies to Belt and Road countries and beyond.