The Vision Of "Zero Carbon China" Unlocks The 70 Trillion Level Market And Seven Industries May Usher In Investment Opportunities

The goal of "carbon peak" in 2030 and the vision of "carbon neutralization" in 2060 define the schedule and roadmap of green and low-carbon development in China, which will provide broad space for the development of new green and low-carbon technologies, new industries and new formats, and become a new opportunity for sustainable and healthy development of financial and investment institutions.

At present, zero carbon is transforming from global political consensus into policy objectives of various countries. The zero carbon industry represented by new energy is ushering in the critical point of accelerated development. In recent days, the investment goal of China's green infrastructure investment will be realized by the joint investment report of China's Zhonghe and Zhonghe Research Institute.

70 trillion market opportunities

"Under the goal of carbon neutrality, China's zero carbon energy transformation means a major change in energy supply and consumption patterns. Higher quality economic development will be supported by a lower total and more optimized energy system." Li Ting, managing director of Rockhill Institute and chief representative of Beijing Representative Office, said, "we expect that China's total terminal energy consumption in 2050 will be about 2.2 billion tons of standard coal, 27% lower than that in 2016, and fossil fuel demand will drop by more than 90%, and renewable energy will become the main energy source."

The Paris agreement reached in 2015 put forward the vision of controlling the global temperature rise within 2 ° C or even 1.5 ° C by the end of this century, and further proposed that the global carbon emissions should reach the peak as soon as possible, and achieve the specific goal of net zero carbon emissions in the second half of this century.

Under the promotion of the global target system established by the Paris Agreement, countries continue to improve their actions on carbon emission reduction, propose and update the quantitative carbon emission reduction targets, and strive to continuously meet the global long-term goal of zero carbon. The establishment of zero carbon emission target is becoming the core content of more and more countries to contribute to the global climate and carry out actions to deal with climate change.

According to the relevant statistics of the International Energy Agency (IEA), the annual sales volume of electric vehicles in the world has accounted for 2.6% of the total sales volume of passenger cars in 2019, which is likely to exceed 3% in 2020. The global photovoltaic power generation accounts for 2.7% of the total power generation, and the proportion of wind power generation has been close to 5% as early as 2018.

"Historical experience shows that when the market share of new disruptive technologies reaches about 3%, capital will begin to withdraw from traditional enterprises." "The fossil energy industry is facing a growing risk of asset grounding, and more and more investors are reassessing their portfolios and priorities to accelerate their withdrawal from fossil energy related fields," said Chen Ji, director of Rockhill Institute

For China, the transformation towards the "zero carbon" future may reshape the whole economic development pattern.

From the supply side, the report predicts that 67% of China's final energy demand will come from electricity in 2050, and the power generation will double at the current level. The vast majority of installed capacity comes from zero carbon power sources, of which photovoltaic and wind power will account for 70% of the total installed capacity, 22 times that of 2016.

Hydrogen energy will account for 12% of China's final energy demand, and the annual hydrogen production will increase from 25 million tons / year at present to 81 million tons / year in 2050. Digitalization will greatly improve the overall efficiency of energy supply and consumption at the system level.

From the demand side, the popularization of renewable resources utilization mode, the improvement of energy efficiency, the large-scale electrification of construction, transportation and industrial sectors and the utilization of new energy such as hydrogen energy will reshape the utilization of resources and energy and even the whole economic form.

In the industrial sector, the improvement of utilization rate and recovery rate of key materials such as steel and plastics, and the improvement of production efficiency will greatly reduce the energy demand, while the technologies of electric heating, hydrogen energy, bioenergy and carbon capture and storage also provide the possibility of decarbonization of raw materials and production process in heavy industry.

The seven fields are in coordination with each other

China's zero carbon energy transformation will generate huge investment markets in seven areas, including renewable resource utilization, energy efficiency, electrification of terminal consumption, zero carbon power generation technology, energy storage, hydrogen energy and digitization.

"By 2050, the market size of these seven fields will reach nearly 15 trillion yuan in the same year, and contribute 80% of the cumulative emission reduction for China to achieve zero carbon emissions." At the same time, direct investment in infrastructure will be about 70 trillion yuan by 2020

The development of innovative technology usually needs to go through five key stages, namely: Technology germination period, expectation inflation period, bubble burst period, steady recovery period and industrial maturity period. Finally, it forms core advantages, expands applicable scenarios, improves supporting services, and is widely adopted by mainstream markets.

Among the seven fields mentioned above, there are nearly 20 technological innovations, which are currently in different stages of development, forming a broad space for investment.

"The role of the government in the early stage of industrial development is particularly important, which is determined by the characteristics of the development of zero carbon related industries, such as large amount of capital, technology based on hardware, large inertia of technology route, and long investment return cycle." Li Ting said.

She believes that the government needs to design step-by-step and interlocking policy actions to guide the overall development of the industry through scientific research support and encouragement of demonstration projects, guidance of industrial policies and establishment of industrial standards. Market power is the main driving force in the middle and late stage of industrial development, which requires long-term collaborative deployment of production efficiency improvement, product optimization, application scenario expansion and auxiliary service facilities.

At the same time, there is a strong synergy between the investment fields. Zero carbon power, green hydrogen and energy storage are the "foundation" of zero carbon consumption side, and the three achieve each other; the zero carbon investment field of industry, transportation and construction sectors is an important "fulcrum", and these consumer side technological innovation will change the way of energy utilization, promote the formation of new industrial chain, and generate new profit pool; digital technology is the "accelerator" of the whole zero carbon ecological development Information technology means to optimize energy supply, operation, consumption and other aspects.

"Investors should pay attention to the interrelationship among fields, so as to provide the backing foundation, potential market and service ability for the development of this field. At the same time, we should consider the opportunities created by the new development of other external macro-economic, industrial industry technology and humanistic consumption concept for the zero carbon industry. " Li Ting said.