China kicked off 2017 by announcing that it will invest more than $360 billion over the next four years on renewable power sources like solar and wind energy. It’s an ambitious commitment, but not a surprising one, as China is the world’s leading investor in renewables. The announcement, which estimates the creation of 13 million new jobs in the renewable energy sector, comes at a pivotal time as China’s cities have been plagued by dangerous and persistent smog and pollution, brought on by decades of reliance on fossil fuels.
It’s a massive investment for China, both environmentally and economically, but also for the rest of the world and the global economy, according to Steve Yatsko, Vice President with JLL’s Alternative Energy, who says green, clean energy just makes good business sense.
“There’s no longer a question of global warming,” Yatsko said. “Climate change is real and of course we want to take care of the planet. But taking care of the planet is truly an economic decision now — and economics point to renewables.”
When it comes to renewable energy, the Chinese are already ahead of the game. Over the past five years, China has been at the forefront of clean energy development. With fewer labor laws and environmental restrictions than the United States and Europe, Chinese manufacturers are able to quickly build solar modules and wind turbines, at a far lower cost — driving down the overall price tag of renewable technology itself.
The resulting decrease in cost has allowed the global renewable market to grow because it introduces grid parity, where the cost of green energy is equal to or less than the cost of brown energy. With grid parity in play, renewables are considered strictly on an economical rather than environmental basis — and fossil fuel energy, which requires complex infrastructure to support, simply cannot compete with other sources.
At JLL, we see our clients’ interest and investment in renewables growing, and we consistently strive to drive value through sustainability considerations of their businesses, and to shape a corporate path to using renewable energy.
With five of the six largest solar manufacturers and the world’s largest wind turbine manufacturer in China, the price performance of wind and solar energy is only becoming better.
“The influence of Chinese manufacturing on renewables has been vital, and it’s not just cheap manufacturing — it’s good,” Yatsko said. “There’s also no brand name performance with clean energy. Clients do not care where the renewable goods that help run their companies are made. The number-one success factor for clients is running their businesses more economically — it’s all about pricing performance, and we have seen how renewables will be that solution.”
For China, this commitment to renewable energy is about strengthening their economic position, but also maintaining a quality of life for its citizens who routinely see their schools shut down and traffic stopped due to the smog and pollution, according to Kyle Goehring, National Alternative Energy Services Manager at JLL.
“China is recognizing, in front of the whole world, that they must reduce their emissions,” Goehring said. “But their financial investment speaks volumes about their commitment to be a global leader in the renewable sector.”