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The Green Team Speaks to…Pin Ni

Mr. Pin Ni is President of Wanxiang America, a four billion dollar American company that specializes in auto parts, hotels, electric vehicles, renewable energy, and more. He earned his bachelor’s degree and MBA from Zhejiang University and was a doctoral candidate in economics at the University of Kentucky. Mr. Ni established Wanxiang America in 1994 as a subsidiary of Hangzhou-based Wanxiang Group.

Pin Ni

Though Wanxiang has been established in the US for quite a while, there are still many that are not familiar with the company and its industrial leadership on sustainability. Can you tell us a little bit more about Wanxiang—particularly the company’s focus on building its new energy vehicle (NEV) capacity and any other recent greening achievements?

Wanxiang is one of the largest Chinese privately-held companies, and we came to the United States in 1994. Clean energy is one of the major areas Wanxiang has been involved in and was an idea that originated from our Chairman, who unfortunately passed away 2 years ago. He hoped to achieve a balance among his four main principles of doing business—bring value to the customer, bring a future to the employees, bring return to the shareholders, and bring prosperity to the local communities. This was the main reason Wanxiang started to get involved in green technology. It is this social responsibility that has been motivating Wanxiang to push extremely hard into this area.

There is a clear strategy for the move into the clean energy space. In 2010, Wanxiang became the first company to build a solar panel plant in Illinois and it is now the only plant left in that state. Next, Wanxiang bought the best battery company A123 out of bankruptcy in 2013 and the electric vehicle company Fisker Automotive in 2014. Following the acquisition of Fisker, Wanxiang established a greenfield operation and launched its new innovation and customization center in California with 1000 people and 2 billion dollars. The new luxury automotive company was named Karma in 2015, commencing a new era. Although Wanxiang itself has not seen the return of these investments, the direction is very clear as the company believes that clean energy is the future.

As an established name in the NEV space, what do you see are the key differences between the US and Chinese NEV markets, and even globally?

There are several fundamental differences between the US and China in the NEV space.

First, the extent to which both governments are involved in economic system are different. While the Chinese government is more involved in the NEV market, the US government is more reliant on the market itself. Thus, it is logical that there are a number of Chinese policies in place to intentionally drive the development of NEV primarily because the Chinese government believes that NEVs are the future.

Second, the market sizes in the NEV space are different between two countries. Even though the US is more well-developed in terms of the traditional vehicle supply chain and the existing assets in the relevant industries, this can also be an impediment to embracing new technology. On the other hand, the Chinese market is far from settling and there exist lots of dynamism in this country. In this regard, China will have more market opportunities for new technologies including the NEV.

Lastly, the perception gaps toward NEVs are different. People in China, especially the younger generations, are less price-sensitive than people in the US. They are more willing to spend money to buy into the newest and latest technology. Therefore, in our experience, the demand in China for NEVs is higher than in the US.

Wanxiang is quite involved in the renewables space, which has seen significant transformation. How has it changed from your perspective and how can its intersection with green finance be better leveraged to generate sustainability gains?

I do see green finance as an extremely important field. Without the finance in place, the green industries cannot mature in a way to really compete with traditional industries. Green finance is really unique, and let’s take electrical vehicles for example. The higher costs of electrical vehicles are a big deterrent because of the up-front costs for consumers. But the operating cost of electric for the user is less than traditional vehicles, making them attractive to consumers.

Green finance helps to bridge the gap. Electric vehicles is just one example in which green finance can play a role. Another is solar. Most green energy companies have the same issue with front-loaded costs, a similar situation to consumers and electric vehicles. Green financing is a lot more important for the green industry than to the traditional industry in the way that it would be able to provide financing at the early stages of investments, which would resolve the most concerning issue for companies that would like to be green.

Global and national policy and regulatory efforts are ongoing to create a sustainable financial system, and there is a growing awareness among the private sector that green investments are win-win situations. From your perspective in the commercial sector, what would you suggest in terms of policy prescriptions—globally or domestically in the US—that would help promote green finance?

There is a lot that can be done and different approaches, but policies and regulations can act as the last mile prescription. Industry understands that they need green finance and financial institutions have an interest to do green financing, so the question is how to finish the last mile and to connect the dots for the two players.

I’m not a policy maker so I’m not sure what would be the right policies to implement. But one that I see has been helpful is the tax credits for solar farms from my experience. And from the NEV side, while it has seen subsidies applied industry-wide, providing green financing options—tax credits or attractive interest rates—might be a better approach. In most examples for greening industries, the issue is the front-loaded costs and if we can be creative about finishing the last mile, then that would go a long way.

Another part of this is recognizing the green contribution. In the solar space, there are solar renewable energy certificates and there are carbon credits, which are both mechanisms that recognize green contributions. This will help green industries, like the NEV space, mature. Again, there are many ways to explore different policies to promote green industries via green finance, and when the last mile is achieved, with stakeholders connected, then the system will start to work.

What historical figure do you most admire and why?

There are many admirable figures in history. George Washington was a great example – not because he was the best or most decisive US president, but because he put the well-being of the institutions and others above himself.

And in the same vein, I am most touched by our former Chairman Lu Guanqiu. Firstly, he was able to make everyone a hero. He used a lot of people who were not very well-educated including the farmers and he gave them power and encouraged them to become their own heroes. In addition, he had a slogan that said “making money is easy, but sharing that money is more difficult.” Thus, it is no surprise that Wanxiang donated 100% of its assets to set up a charitable foundation. Chairman Lu was always humble and had a strong faith in giving back to the society. He was quite ahead of his time in working to benefit others through entrepreneurship.

Paulson Institute Announces the Finalists for the 2019 Paulson Prize for Sustainability

The Paulson Institute announced today the three finalists for the 2019 Paulson Prize for Sustainability. These projects, based in Shenzhen, Guangzhou, and Ordos are recognized for providing innovative, market-based solutions to promote low carbon growth in China. The winner will be announced in Beijing on November 21st at the Bloomberg New Economy Forum.

Launched in 2013, the Paulson Prize is awarded annually to a project in China that provides an innovative, scalable, and market-based solution at the intersection of economics and the environment by the Paulson Institute and Chinese partners. The Prize aims to support China’s transition to a low carbon economy. China is the largest carbon emitter in the world, and serves as a model for other countries seeking solutions to promote economic growth while being conscious of protecting the environment.

This year, the Paulson Prize received a record number of submissions, doubled from last year. The increase reflects growing awareness around the Paulson Prize as well as China’s increased focus on sustainable growth and urbanization.

The independent jury committee, chaired by former Chicago Mayor Richard Daley evaluated submissions against the Prize criteria that measures the overall environmental impact, creativity, financing models, and improvements to quality of life. The judges also stressed the scalability of the submissions to ensure that the projects could be replicated in other parts of China and internationally. In September, the committee visited the finalists to tour and evaluate the merits of the projects in making their final determination.

Projects from the cities of Shenzhen, Guangzhou, and Ordos were selected as the three finalists of the 2019 Paulson Prize.

For more information, please visit paulsoninstitute.org/prize.

Shenzhen Ecological Energy Park (Shenzhen, Guangdong)
The Shenzhen Ecological Energy Park was built to be an industry-leading waste-to-energy facility that uses advanced technologies to lower harmful emissions and eliminate the need to use fossil fuels for power generation by turning waste directly into electricity. In 2018, the project saved more than 360,000 tons of standard coal.

This project also represents an innovative solution to waste management, a process that most people would rather have located away from their homes. The Energy Park is not an industrial eye-sore, but rather an ultra-modern facility that serves the community in a variety of ways. With beautifully landscaped grounds, engaging public education space, and a visitor center for eco-tours, the facility is today a gathering place for the community.

Balancing the need for clean energy and efficient waste management in a location that fits into any city or town, the Energy Park’s clean incineration technology makes waste-to-energy opportunities a possibility for communities far beyond Shenzhen.

Project Double Million: Plastic Waste Recycling and Reprocessing (Guangzhou, Guangdong)
Project Double Million uses advanced technology from Kingfa Technology Co., Ltd to recycle plastic waste into high-performance reprocessed plastic for use in new consumer products, such as electronics, textiles, home appliances, and automobiles. Most of the plastic recycling techniques today can only produce low-end plastics that never return to their original form. This project’s technique is innovative in that it processes plastic waste that can actually return to its near-original quality, significantly reducing the amount of new plastics that must be produced.

Using Kingfa’s technology and a steady stream of recyclable goods, this model is replicable anywhere in the world and promises impressive results. The project in Guangzhou, for example, has produced more than one million tons of eco-friendly high-performance reprocessed plastics, saved three million tons of oil, 1.4 million tons of standard coal, 50 tons of water, and reduced overall carbon emissions in the area. As the world combats plastic waste, this project offers a real, replicable solution to an emerging environmental crisis.

Triple-Carbon Circular Economy Project (Ordos, Inner Mongolia)
The Triple-Carbon Circular Economy Project is reversing the loss of arable land due to desertification in Inner Mongolia by working with farmers to implement a sustainable model with economic and environmental benefits. First, farmers plant a sand shrub forest, then waste from the shrubs is used for biomass thermal power generation (wood burning), producing 180 million kWh of electricity and eliminating 120,000 tons of carbon dioxide emissions each year. Gas discharged from the power generation process is then used to grow spirulina, a type of blue-green algae that is considered a health supplement.

The project grows exponentially as the shrub forest continues to expand, increasing raw materials to burn, therefore increasing the power output capacity and the spirulina production. To date, the project has covered 667 square kilometers of desert, generating annual revenues of US $19 million (RMB 130 million). With 600,000 square kilometers of water-bearing deserts in China, there is a significant opportunity to replicate the Triple-Carbon model on a much larger scale.

 

About the Paulson Institute
The Paulson Institute is a non-partisan, independent “think and do tank” dedicated to fostering a US-China relationship that serves to maintain global order in a rapidly evolving world. Our focus on US-China is dictated by the reality that it is the most consequential bilateral relationship in the world. We often operate at the intersection of economics, financial markets, environmental protection, and policy advocacy, in part by promoting balanced and sustainable economic growth. Founded in 2011 by former Treasury Secretary Henry M. Paulson, Jr., the Institute is based in Chicago with offices in Washington and Beijing.

About Tsinghua University
Tsinghua University was established in 1911. With the motto of “Self-Discipline and Social Commitment” and the spirit of “Actions Speak Louder than Words,” Tsinghua University is dedicated to the well-being of Chinese society and world development. At present, the University has 14 schools and 56 departments with faculties in science, engineering, humanities, law, medicine, history, philosophy, economics, management, education, and art. The University has now over 25,900 students, including 13,100 undergraduates and 12,800 graduate students. As one of China’s most renowned universities, Tsinghua has become an important institution for fostering talent and scientific research.

Deborah Lehr on the Importance of Green Finance

As countries struggle to implement their climate change commitments, one of the biggest challenges is finding the necessary financing. Green finance is a growing trend as countries seek innovative ways to attract private sector capital to finance these commitments. The development of carbon markets, an increase in green lending, a focus on sustainable infrastructure, and innovative uses of fintech to finance sustainability are all providing new and innovative access to capital.  

China, the largest carbon emitter in the world is also the boldest in the development of a green finance infrastructure. In a recent All About the Green podcast episode from the Institute of International Finance, Deborah Lehr, Executive Director and Vice Chairman of the Paulson Institute, explains why green finance stands at an inflection point in China and the global implications.

“It is essential to promote practices and policies that support a low-carbon economy if China is to reach its goals on climate,” says Lehr. The Chinese have an ambitious agenda for green finance, which if they succeed, could serve as a model for other countries. In addition, China has stated that it plans to ensure that infrastructure development along the Belt and Road (BRI) countries is handled in a sustainable manner. This is essential as the planned development along the BRI, if not promoted in a green manner, could result in carbon emissions higher than those in China. There are also concerns that China continues to finance projects that would not be considered a green investment in most of the rest of the world, such as coal fired power plants.

This scenario is one of many across the world where decisions to invest in green finance are equally balanced between the need to meet goals on low carbon emissions while ensuring continued economic growth. Learn more and listen to this dynamic podcast. Available now.

China Essential to Success on Climate Change: Hank Paulson Speaks at Bloomberg Global Business Forum

(Photo: Bloomberg/Flickr)

 

“Climate change is the most formidable, catastrophic, absolute certain risk to our economic security and social stability,” said Hank Paulson, Chairman of the Paulson Institute, at the 2019 Bloomberg Global Business Forum in New York City.

Speaking in conversation with China’s Special Representative for Climate Change Affairs Xie Zhenhua and moderated by The Carlyle Group Co-Founder David Rubenstein, Paulson commended the “amazing” progress that China has made in addressing its dirty air, water, and soil. However, it is vital that China not let up on its efforts to reduce emissions, which are currently twice as much as those of the United States and Europe combined. Given this scale, China is the most important player in the global campaign to reduce emissions.

“China’s leadership on climate change is absolutely essential,” said Paulson, “if China doesn’t succeed, we have very little chance of mitigating these long-term risks.”

Investing in the environment can also be a profitable endeavor. Paulson cited one report which found that opportunities in environmental goods and services could be worth up to $1 trillion in China alone. In addition, China has taken steps to create vehicles to attract private capital, becoming the second-largest issuer of green bonds, which help finance the transition to a cleaner economy. One of the hurdles in the growth of green bonds, however, is that there is no universal definition of “green.” Unlike in the United States and Europe, for example, a clean coal plant is still considered a green investment in China. China is reconsidering this designation, which will bring it more on par with the commonly accepted criteria of green investments.

Furthermore, Paulson advocates free trade for products and services that can help mitigate climate change, “When I was Treasury Secretary, I pushed very hard to eliminate the tariffs on environmental goods and services.”

“In weak economies, often what you see is the environment gets shortchanged.” —Henry M. Paulson, Jr.

China has been on a positive path in reducing its carbon emissions, but there are concerns that its vigilance might be slipping as the economy weakens. Emissions have been rising in the last two quarters, a reverse of the previous trend. “In weak economies, often what you see is the environment gets shortchanged,” said Paulson. Yet if China is to stay on track for meeting its climate change goals, it cannot afford to let up on its stance of reducing emissions.

Just as China’s actions are important at home, it is critical as a global player. China’s Belt and Road Initiative (BRI) reaches across 126 countries, and Chinese President Xi Jinping has said that the BRI should have a green focus. With China providing much of the financing for infrastructure development along the Belt and Road, including for coal-fired power plants, Paulson encouraged China to set the strictest environmental standards possible. The Paulson Institute is supporting a green BRI through promoting green lending principles for development along the BRI. “Having really strong standards can make a very big difference,” according to Paulson.  If the infrastructure development along the BRI is not handled in a sustainable manner, the emissions from the 126 countries could be larger than those of China.

The Bloomberg Global Business Forum is an annual event that convenes the most important global leaders from the public and private sectors to address these threats from global warming to economic prosperity and examine the opportunities for solutions. 

Full Video

China’s Growing “Green” Engagement in MENA

(Photo: Anton Petrus/Getty Images)

 

By Ossman Elnaggar

In recent research conducted by the Paulson Institute, it is clear that China is playing an increasing role in the expansion of “green” finance throughout the Middle East and North Africa (MENA). Using a combination of power politics, financing and infrastructure development, the country is becoming a driving force in the region’s transition to green development especially in clean energy. It is no surprise that a number of MENA countries have aligned their sustainable development strategies therefore with China’s Belt and Road Initiative (BRI) in order to leverage Chinese firms’ expertise as well as financing to promote green economic growth. It remains to be seen how successful China will be however in changing the behavior of these countries over the long term to become more sustainable.

Through targeted and strategic investments, China has been able to take a stake in many of the major renewable energy projects in the region. And more important, it has positioned Chinese companies, mostly state owned enterprises, to benefit as suppliers or developers of these projects as a condition of the financing that it provides to support these efforts.

One early investment by the Silk Road Fund, a government established fund to promote development along the Belt and Road, is the fund’s acquisition of a 49% stake in ACWA Renewable Energy Holding, (the renewable energy arm of Saudi Arabia’s ACWA Power). This deal makes this fund a major shareholder in a portfolio of clean energy projects that adds up to a sizeable 1668MW of generation capacity and provided access to projects across the MENA region.

It was not the first time ACWA Power and the Silk Road teamed up. Most notably, these parties teamed with Harbin Electric (a Chinese enterprise engaged in the research and development, manufacturing and construction of power plant equipment) to act as the project developer for the 2400MW Hassyan Clean Coal Power Plant in Dubai which has been under construction since 2016. It is the first clean coal power plant in the Gulf Cooperation Council region.

In addition to being part of the consortium acting as the project developer, Harbin Electric also acted as the Engineering, Procurement and Construction (EPC) contractor along with General Electric. Financing for this project was provided by the Industrial and Commercial Bank of China (ICBC), Bank of China, Agricultural Bank of China, China Construction Bank and the Silk Road Fund. This groundbreaking project, which is the second biggest power plant under China’s BRI umbrella, shows how Chinese firms are involved throughout the value chain and not solely in the financing of these projects. Nonetheless, it is a major investment for the region.

China’s portfolio of clean energy projects in the region continues to expand. ACWA Power has a stake in some significant projects like the Noor Solar Power Station in Morocco, which is the world’s largest concentrated solar power plant, and the Mohammed bin Rashid Al Maktoum Solar Complex in the United Arab Emirates (UAE), which is one of the world’s largest renewable energy project based on an independent power producer model. Through their investment in ACWA Power, China now has a stake in these major projects.

More recently, in April 2019, Shanghai Electric Generation Group signed an EPC agreement for the DEWA (Dubai Electricity and Water Authority) 700MW concentrated solar project (CSP). The DEWA and ACWA Power, in collaboration with Shanghai Electric, will undertake the 700MW CSP portion of a 950MW solar project in Dubai. The ICBC is the mandated lead arranger and is aiming to approve a $1.5 billion loan. This project will allow the ICBC to support the three major Chinese power equipment suppliers, Shanghai Electric, Dongfang Electric and Harbin Electric in their efforts to expand globally. In addition to ICBC, Bank of China and Agricultural Bank of China will also play an important role in the financing of the project. The three will provide almost 80% of the debt and the total investment for this project is $3.87 billion.

China is now a growing power in the region’s renewable energy market, which has helped Chinese companies at a time when its own domestic market for renewables is growing through a restructuring. As MENA governments including Saudi Arabia, Egypt, the UAE, and Qatar make diversification of their energy mix a core part of their economic growth strategy, China’s financing, design, procurement, construction, commissioning, hand over, and development services will continue to be in high demand. In fact, these projects are becoming a part of the BRI’s “North Africa Power Corridor”, which places great importance on the development of energy infrastructure in Egypt, Algeria, Tunisia, Morocco and Sudan.

In addition, Saudi Arabian and Emirati leadership have been actively recruiting Chinese participation in their own sustainability plans. Through this symbiotic relationship, Chinese companies have been able to establish a strong foothold in the region, and will play a crucial role in further developing these countries’ clean energy generation capacity. As an increasing source of carbon emissions and a region traditionally reluctant to move away from fossil fuels, China’s activities could have an important and significant impact on economic growth and lower pollution rates in the region.

Ossman Elnaggar is currently a senior at the Indiana University’s Kelley School of Business. He is a Paulson Institute Green Finance Center Research Intern where he is focusing on China’s sustainability drive in the MENA region.

This article was first published in The Diplomat.