China’s carbon-neutrality target establishes a direction for realizing a zero-carbon China and will greatly support the drive toward ecological civilization and green, sustainable, and high-quality development. It will also be a strong driving force for revolution in the energy sector. In addition, the carbon-neutrality goal will activate the market and encourage more long-term value investors to focus on zero-carbon development and invest in zero-carbon assets, projects, and technologies.

In this report we identify seven key investment areas for China’s zero-carbon transition: resource recycling, energy efficiency, demand-side electrification, zero-carbon power generation, energy storage, hydrogen, and digitalization. These zero-carbon technologies are currently at different phases in terms of market expectations and industrial maturity. They therefore face different challenges and opportunities, which require different policy and market enablers to become more bankable. The market size of these seven areas will reach nearly ¥15 trillion (US$2.32 trillion) by 2050. Meanwhile, from 2020 to 2050, there will be about ¥70 trillion (US$10.8 trillion) in infrastructure investment leveraged directly or indirectly.

We analyze the trends and market sizes of these technologies while envisioning a development pathway for these clean tech solutions. Additionally, we provide policy and investment recommendations for each area according to its development stage and role in the zero-carbon economy.

Zero-carbon China will be the new direction of long-term value investment, thanks to the global trend of zero-carbon development and transition, as well as the Chinese government’s increasingly clear strategic goal of zero carbon. Considering that zero-carbon China is still at an early stage of development, the government should introduce related policies and measures in the seven investment areas and continuously improve the investment environment. Investors should also strengthen their understanding of zero-carbon investment sectors and expand their capabilities in order to be fully prepared for these new opportunities and reap the value returns.