China is already a leading force when it comes to adoption and development of clean tech used to power the global energy transition, but the world’s second-largest economy isn’t resting on those laurels.
The country is moving to bolster its clean tech leadership, moves that could increase the allure of exchange traded funds including the KraneShares MSCI China Clean Technology ETF (KGRN ). The fund is among the climate-oriented ETFs that are relevant today because China is engaging in a delicate balancing between fossil fuels consumption to support near-term economic growth and longer-ranging environmental and carbon reduction goals.
Currently, China’s coal consumption is significant, but underscoring the utility of KGRN is the point that Beijing and Chinese companies are aware of the risks of putting too many eggs in the fossil fuels basket. China Energy Investment Corporation (China Energy) is part of that group.
“To accelerate the green transition, China Energy has increased its input in the development of new energy, the company said, noting that its installed new energy capacity has hit 82.73 million kilowatts,” reported China Daily.
Clean Tech ETF KGRN's Global Allure
As its name implies, KGRN is a China equity ETF, but the country’s clean technology footprint is global in stature and that could be accretive to the long-term KGRN thesis. China Energy is a prime example of that global expanse.
“China Energy has 14 overseas projects in 10 countries, including South Africa, Greece, Indonesia, Australia and Germany, spanning the fields of coal production, power generation, engineering and technological research and development, according to China Energy spokesperson Chen Jing,” noted China Daily.
The company is working with corporations and governments outside of China on clean tech endeavors, and the bulk of its clean tech projects are located outside its home nation. Africa, Latin America, and Southern Asia are among the regions in which Chinese firms are driving new clean tech and renewable energy projects. That geographic diversification could be a positive for KGRN.
Many of the green energy projects Chinese companies are behind outside of their home domicile are significant in size and revenue-generating opportunity.
“The De Aar Wind Farm in South Africa, the largest such project in the country, which is financed and operated by China Energy, has facilitated South Africa’s low-carbon transition while easing its energy shortage, providing 760 million kilowatt-hours of clean power a year since it went into operation in 2017, equivalent to the amount of power provided by 215,800 metric tons of standard coal, the company said,” according to China Daily.
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