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| China will invest RMB3 trillion in Energy Conservation Market |
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| August 6, 2007 |
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China is in the midst of a huge energy-saving drive to stem its high energy consumption, thereby igniting an explosive offering of business opportunities in the energy conservation market. Estimates by some experts put the market size of energy conservation at nearly RMB3 trillion in the three main sectors ? industry, construction, and transportation.
A market of such magnitude has attracted energy conservation firms from both home and abroad. ABB, one of the world?s top 500 multinationals, signed a framework agreement with the Guangdong provincial government last November on strategic cooperation in energy conservation, the first and only agreement on energy conservation linked by a provincial government in China so far. Under the accord, ABB would in the next five years help many of the province?s major energy guzzlers find ways and means to conserve, and put forward proposals on energy conservation standards applicable to Guangdong so that the province may realize its target of a 16 percent cut in energy consumption per unit of GDP.
Siemens has signed a similar agreement with the Shenzhen municipal government. Under the strategic cooperation accord, Siemens would play an active part in the adjustment of the city?s industrial structure and work together in such areas as independent innovation, energy conservation, recycling and circular economy. Siemens would take Shenzhen enterprises as priority candidates in finding partners in hi-tech projects, environmental protection, energy conservation and recycling projects. Prior to the Shenzhen agreement, Siemens linked a number of strategic cooperation agreement with Inner Mongolia Ulan Cement Group and South China International Leasing Co Ltd. Through these agreements, Siemens is expected to, along with its partners, exploring ways to raise funds for the energy conservation sector and provide support to the mechanism of ?contractual energy management? put forward by the Chinese government.
Before ABB and Siemens, companies such as Infotech of the United States, PowerBoss of Britain, Philips of the Netherlands and several other foreign firms had entered the Chinese energy conservation market, followed by Honeywell of the US and Hitachi from Japan among others. While Infotech sells its foreign-manufactured products in China, PowerBoss has established a production base in Guangzhou, integrating its advanced energy-saving technology into local production and authorizing a number of local energy conservation firms to sell is products under a ?joint agency? agreement. Siemens and Honeywell have adopted the EMC mechanism after their entry into the Chinese energy conservation market. In August 2006, Honeywell signed China?s first EMC contract with Shenzhen-based Tsingtao-Asahi Brewery. Under the five-year cooperation project, Honeywell would help Tsingtao-Asahi cut energy
consumption by 17 percent annually, which translates into a cost saving of RMB5.47 million a year.
Schneider Electric, another power equipment giant, is also waging an all-out campaign to promote energy-conservation and efficiency-boosting strategies in China. With medium and low-voltage power distribution, and automation and control as its core business, Schneider now pursues energy management and energy conservation as its latest business priorities. Energy-saving projects in the construction sector span industrial buildings, power plants, telecommunications, office towers, hotels, hospitals, schools, malls and residential quarters. Schneider now offers 41 energy conservation solutions that cater to clients? needs providing them with relevant products and benefits.
Under China?s 11th Five-Year Program, energy consumption per nit of GDP will have to be cut by 20 percent and emissions slashed by 10 percent. The industrial sector represents nearly 70 percent of the county?s total energy consumption. According to one report, China?s industrial enterprises potentially cut energy consumption by more than 300 million tons of standard coal by 2020. If one ton of standard coal is made of 700 kg of coal and 300 kg of oil and natural gas, it may be priced at RMB1, 200. A reduction of 300 million tons of standard coal would thus amount to a saving of RMB360 billion. But according to Chou Baoxing, vice-minister of construction, the country?s construction sector has even greater potential in energy conservation. China?s existing buildings total 40 billion square meters in floorage, and about 13 billion square meters, or about one-third, need to retrofit for energy conservation. If the retrofitting coasts RMB200 per square meter, retrofitting of existing buildings along means a market size of up to RMB2.6 trillion. Energy conservation hence throws up great business opportunities.
Quoted from China Economic News (No. 30) 6th August 2007 |
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