Is China's Climate Reality an Opportunity for Apple?

As the effects of climate change become more prevalent throughout the world, including Antarctica, where ice is melting at a much faster rate than scientists have once predicted, many nations are being forced to shift their focus away from the traditional growth model of unbounded development powered by dirty fossil fuels.

One interesting example is China, a country with massive amounts of air pollution, but also a world leader in solar power production. Would you guess that a country featuring the below urban skyline would actually have a more ambitious clean energy plan than many other industrialized nations?

A few months ago, a Chai Jing, a well-known Chinese journalist, released a documentary called "Under the Dome", which documented the severity of China's pollution and the effects of the smog on the health of their citizens. The film reached 100 million views in China alone, and was compared to Rachel Carson's classic, "Silent Spring" and "An Inconvenient Truth", the groundbreaking documentary about climate change released by Al Gore in 2006. Unfortunately, it became so popular, that the Chinese state finally banned the documentary and had it removed from China's digital video platforms. The country has a very strict censorship policy, and the fact that this video was even allowed to stay up for so long, and that Jing was commended by the government's environmental minister, is an indication that China is facing the fact that they need to take action to improve the health of their citizens and contribute to the global mission of saving humanity from the devastating effects of climate change.

In November 2014, U.S. President Obama and Chinese counterpart Xi Jingping reached a history climate pact, in which China agreed to increase it's use of zero emission energy sources by 20% and peak their emissions output by 2030:

 

 

Will this non-binding pact actually reflect the reality of the Chinese economy? If the solar targets are any indication, then we are likely to see a huge transformation in China's energy mix in the next decade. Their 2015 goal for new solar projects are a massive 17.8 GW. This target could potentially inject 21 billion yuan ($3.4 billion) into China's economy, according to Bloomberg New Energy Finance, and the stocks of many Chinese solar companies rose immediately after the announcement.

Solar producers within China's borders aren't the only companies competing for profits through this solar boom. On Tuesday, Apple announced that they are partnering with SunPower to build 40 megawatts of solar PV projects in China’s western Sichuan province. While this isn't a huge project that will have a significant impact on China's economy, it is the first time that Apple is investing in solar development outside the United States.

While Apple and SunPower aren't the first U.S. companies to try to expand into China, they will have quite a challenge, as the Chinese solar manufacturers have a foothold in the market. Last year, First Solar abandoned their plans to install a 2000 megawatt plant in Inner Mongolia, which would have been the largest solar plant in the world. The Chinese government never came to an agreement on purchasing the power, and a short comment from a SunPower spokesperson explains it succinctly : 

“Due to the market environment, we aren’t going to pursue the Ordos project further.”

Will these large U.S. companies be able to overcome the protectionist market forces which favor domestic production of solar panels? More importantly, will China be able to reach their ambitious solar goals while relying primarily on companies within their own borders?

While there are many questions, one thing is clear: the solution to China's climate reality lies in the sun.