What the Future Holds for Climate Technology – The Case of Hunan, PRC

Hunan’s low-carbon incubator wants to become a model that can be replicated across the PRC and developing Asia.
Hunan’s low-carbon incubator wants to become a model that can be replicated across the PRC and developing Asia.

By Xuedu Lu

Hunan, a major manufacturing hub in the PRC, recently launched a low-carbon technology incubator to offset environmental degradation and rising greenhouse emissions, and wants to become a model for developing Asia, where the business case for cleantech is emerging.

Hunan, one of the fastest-growing provinces in the People’s Republic of China (PRC), recently launched a low-carbon technology incubator in Golden Oasis Park for climate technology start-ups and businesses that aim to attract investors interested in clean climate technology or “cleantech.”

In addition, the provincial government has agreed to support the set-up of a venture capital fund for early-stage cleantech investments and a low-carbon network and market platform in Hunan, a highly polluted inland province where this type of technology is not widely available, and there are still many barriers to technology transfer and deployment.

Cleantech is seen as a way for Hunan to offset environmental degradation and rising greenhouse emissions that have accompanied the province’s rapid growth as a manufacturing hub. ADB’s Climate Technology Finance Center (CTFC) recently conducted a workshop there to explore the potential to establish and scale up a cleantech industry in Hunan, an initiative that could be replicated elsewhere in the PRC and in developing Asia, where the business case for cleantech is emerging.

Established in 2012 as a pilot program, CTFC is part of a wider partnership between ADB, the Global Environment Facility, and the United Nations Environment Program. Working closely with investors, technology suppliers and other partners from across the region and around the world, CTFC hopes to become a permanent knowledge facility that mobilizes finance while encouraging the development and deployment of climate-friendly technologies in Asia and the Pacific.

CTFC identified IPEx, a Singaporean firm, as the operator of the marketplace – the matchmaking platform for low carbon technologies. IPEx and the Hunan Innovative Low Carbon Center signed an agreement to transfer cleantech in and out of Hunan. IPEx is also now exploring future cooperation with other local companies with demand for cleantech such as Valin Steel, a large-scale steel and iron producer, and Iron and Zoomlion Environment, one of the top industrial machinery manufacturing companies in the PRC, both based in Changsa, Hunan.

The Hunan government indicated that it will continue to support cleantech innovation and deployment in the province, with CTFC as technical advisor to help design more instruments to facilitate cleantech promotion, transfer, adoption, and innovation.

The cleantech industry is rapidly evolving, and now also encompasses environmental pollution and resource efficiency as well as renewable energy. The PRC, in particular, has been increasingly working in this area given the country’s rapid industrialization, which has brought various environmental problems and increasing greenhouse gas emissions. A major innovation trend in cleantech there is looking for linkages between information and communications technology, for instance in constructing “smart buildings” that reduce energy consumption or “smart factories” that use technology to make production and supply chains more efficient.

Our experience in Hunan, where the cleantech industry is starting practically from scratch, shows this province can be an example of how a city and province can build a clean tech industry to support local growth and address environmental issues simultaneously. It also shows how ADB technical assistance in developing investment plans and mobilizing public and private sector investments can boost the marketability of cleantech in collaboration with a local government. CTFC is working to demonstrate the effectiveness of linking technology and finance mechanisms in catalyzing climate change mitigation and adaptation actions, and wants to mainstream climate technology into country partnership strategies and investment plans in ADB’s developing member countries.

The CTFC experience in Hunan in realizing the long-term benefits to invest in climate technologies may be shared by other developing member countries – even if cleantech there still remains a work in progress.