Renewable Energy: The Trillion Dollar Opportunity for Chinese Overseas Investment

23 Pages Posted: 15 Nov 2018

See all articles by Miquel Munoz

Miquel Munoz

Boston University - Pardee Center

Kevin P. Gallagher

Boston University

Zhongshu Li

Princeton University

Date Written: November–December 2018

Abstract

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.

Keywords: climate finance, development finance, foreign direct investment, nationally determined contributions, renewable energy

JEL Classification: F3, O19, Q2, Q54

Suggested Citation

Munoz, Miquel and Gallagher, Kevin P. and Li, Zhongshu, Renewable Energy: The Trillion Dollar Opportunity for Chinese Overseas Investment (November–December 2018). China & World Economy, Vol. 26, Issue 6, pp. 27-49, 2018. Available at SSRN: https://ssrn.com/abstract=3284650 or http://dx.doi.org/10.1111/cwe.12260

Miquel Munoz (Contact Author)

Boston University - Pardee Center ( email )

67 Bay State Road
Boston, MA 02215
United States

HOME PAGE: http://www.bu.edu/pardee

Kevin P. Gallagher

Boston University ( email )

595 Commonwealth Avenue
Boston, MA 02215
United States

Zhongshu Li

Princeton University

22 Chambers Street
Princeton, NJ 08544-0708
United States

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