In its 11th Five Year Plan, China has prioritized the development of alternative and clean energy, and overseas investors and multinational corporations are paying attention.

"We plan to establish a fund especially for investment in China's energy-saving and new energies sector, because of their high market potential and increasing business opportunities," says a senior executive at Japan's Nomura Securities' China business planning department.  "China is a major energy consumer.  As laws governing renewable energies becoming more optimized, the country's new energy market will see rapid development, and we want to be involved with this process."

Icelandic bank Glitnir's director and chief representative in Shanghai, Zhu Jiang, commented that Iceland's experience and geothermal power, along with related technology, will help the bank's Chinese investments.  "Glitnir mainly invests in food products, sustainable energy, and coaster supplies.  When making new energy investments, we particularly focus on the development of geothermal power.  At present, almost all electricity in Iceland is generated by geothermal power.  We have already invested in China's first geothermal-generated central heating system in Shaaxi's Xianyang.  We expect more collaboration with the Chinese government in this regard."

As a member of the World Bank Group, International Finance Corporation is very optimistic about China's new energy investment and development.  The firm is in talks with many groups conducting energy projects in China--primarily those focusing on hydropower, wind power and biowaste power.  The company's China investments official, Sun Hao, attributed China's drive to develop renewable energy to a variety of economic, environmental, and political factors.  "Renewable energy can ease the pressure of high oil prices, optimize local resources and reduce over-reliance on imports.  Energy sufficiency rates would rise. Also, value-added products  resulting from renewable energy production can cultivate sales revenues; waste from biowaste power generation can be used as chemical fertilizer, for example. 

"As the world's second biggest emitter of carbon dioxide, and the biggest emitter of sulfur dioxide, China suffers from acid rain in 25% of its rural zones.  Two third of China's big cities fail to comply with the World Health Organization’s minimum air pollution standards. The World Bank estimates that environmental pollution will bring  bring direct economic losses totaling 8 to 12% of China’s annual GDP.  On the level of policy, the Chinese government has strengthened the incentives being offered to new energy development; this has attracted more foreign companies to invest in the country's new energy sector.  In 10 years' time, a more mature and optimized policy and regulatory environment will usher in a golden age in the development of clean energy."

Foreign investors, particularly multinational companies, are also interested in China's new energy sector because of the opportunities it presents for supplying equipment and technology to China, and to support mainland firms' overseas listings.

Caterpillar (China) Investment Co Ltd said that the company's strategic target in the future will be coal bed gas.  "Coal bed gas generation requires we developed equipment, technologies, and commercial operations.  Whether this energy can be promoted in China depends in large part of its research and development.  We hope to provide more technology and equipment to coal bed gas in China."

Industry observers note that China's new energy sector is in its infancy, and faces both challenges and opportunities. Many mainland energy firms seek listings at home and abroad, and overseas free-flowing capital is expected to enter the sector and cultivate high investment returns resulting from those listings.