In this new series we look at stunning statistics from the world of sustainability. What do they mean? What is the impact for investors? Today: China is closing down more than 100 coal-fired power projects. Big deal?
China has announced plans to cancel more than 100 coal-fired power stations – enough to power 13 cities the size of Amsterdam for a year. It’s a big number, but it should be seen in a wider context, warn Robeco’s Emerging Market Equities specialists.
The country’s energy regulator in January ordered 11 provinces to end the projects that would have generated 120 gigawatts of electricity, partly to combat the acute pollution problems that have left Chinese cities cloaked in smog.
Instead, China aims to produce more power from solar and wind energy, with plans to generate 130 gigawatts from renewable sourced by 2020 – a figure equivalent to the current entire renewable power generation of France.
“The 120 GW capacity close is substantial, but on the other hand there is new capacity coming online, so the figure is misleading,” says the team’s senior analyst Yaowei Xu. “The major purpose of the policy is to eliminate the outdated coal-fired power capacity, while controlling the growth of the new capacity.”
“China is still targeting capacity of 1,100 GW of coal-fired capacity by 2020, according to the 13th Five-Year Plan, compared to about 960 GW in end-2015. So there is still a net capacity addition – it will just be growing at a slower pace.”
“China is indeed shifting to more renewable energy usage, although it is still at a very early stage. The major swing factor long term is whether nuclear energy will ramp up faster than expected – but this won’t be known for five years or more.”
As investors, Robeco currently targets trends in China and other emerging markets, but is wary of the time taken to switch to sustainable fuels, and avoids the coal-fired power sector. “The shift from coal to renewable energy is just one example of the structural changes occurring in China,” says Fabiana Fedeli, portfolio manager of Robeco’s Emerging Market Equities fund.
“Over the next decade we expect to see the economy shift from being manufacturing and fixed asset investment-led, to more service oriented. That said, given the size of China, such a transition will take time, and not necessarily progress in a straight line. In our portfolios we make sure we are on top of these trends. In light of this, none of our portfolios currently holds coal-fired power utilities in China.”
The content displayed on this website is exclusively directed at qualified investors, as defined in the swiss collective investment schemes act of 23 june 2006 ("cisa") and its implementing ordinance, or at “independent asset managers” which meet additional requirements as set out below. Qualified investors are in particular regulated financial intermediaries such as banks, securities dealers, fund management companies and asset managers of collective investment schemes and central banks, regulated insurance companies, public entities and retirement benefits institutions with professional treasury or companies with professional treasury.
The contents, however, are not intended for non-qualified investors. By clicking "I agree" below, you confirm and acknowledge that you act in your capacity as qualified investor pursuant to CISA or as an “independent asset manager” who meets the additional requirements set out hereafter. In the event that you are an "independent asset manager" who meets all the requirements set out in Art. 3 para. 2 let. c) CISA in conjunction with Art. 3 CISO, by clicking "I Agree" below you confirm that you will use the content of this website only for those of your clients which are qualified investors pursuant to CISA.
Representative in Switzerland of the foreign funds registered with the Swiss Financial Market Supervisory Authority ("FINMA") for distribution in or from Switzerland to non-qualified investors is ACOLIN Fund Services AG, Affolternstrasse 56, 8050 Zürich, and the paying agent is UBS Switzerland AG, Bahnhofstrasse 45, 8001 Zürich. Please consult www.finma.ch for a list of FINMA registered funds.
Neither information nor any opinion expressed on the website constitutes a solicitation, an offer or a recommendation to buy, sell or dispose of any investment, to engage in any other transaction or to provide any investment advice or service. An investment in a Robeco/RobecoSAM AG product should only be made after reading the related legal documents such as management regulations, articles of association, prospectuses, key investor information documents and annual and semi-annual reports, which can be all be obtained free of charge at this website, at the registered seat of the representative in Switzerland, as well as at the Robeco/RobecoSAM AG offices in each country where Robeco has a presence. In respect of the funds distributed in Switzerland, the place of performance and jurisdiction is the registered office of the representative in Switzerland.
This website is not directed to any person in any jurisdiction where, by reason of that person's nationality, residence or otherwise, the publication or availability of this website is prohibited. Persons in respect of whom such prohibitions apply must not access this website.