NORTHAMPTON, MA / ACCESS Newswire / November 5, 2026 / Max Lulavy | Responsible Investing Research Analyst
John Lin | Chief Investment Officer-Emerging Markets Value Equities and China Equities
Eric Liu | Co-Head-Asia Fixed Income

Few expected China to make such fast progress on clean energy. How can investors benefit?

From the haze that once blanketed Beijing's skyline to the coal-fired power plants across northern China, the environmental costs of the country's industrial boom were plain to see for years. China is the world's largest emitter of greenhouse gases and, for some time, was widely perceived as a major obstacle to global decarbonization.

Yet China has now emerged as an unexpected engine of the energy transition. It leads the world in renewable deployment and clean-energy manufacturing. Today, the sheer scale of its domestic shift and technology exports is creating opportunities for investors who look beyond conventional perceptions about China's green credentials.

The Old Narrative Is Changing

China is still the world's biggest CO₂ emitter. It produces nearly twice as much CO₂ as the US, the world's second-largest emitter, and several times more than Europe. For years, China-the world's second-largest economy-resisted setting absolute reduction targets. Without its cooperation, global decarbonization targets were nearly impossible to achieve.

But China has defied the skeptics. Through a top-down policy commitment, China's emissions likely peaked in 2025-about five years ahead of schedule-and are projected to fall to 17% below peak levels by 2030 and 50% by 2050, dramatically narrowing the gap with the developed world (Display). China's pledge to reach carbon neutrality by 2060 no longer seems like a pipe dream.

China Is Aggressively Cutting Emissions from a High Base

_{Past performance and current analysis do not guarantee future results.
Gt: gigatons
As of July 31, 2026
Source: BloombergNEF}

This commitment was on full display in China's recent 15th five-year development plan (Display). Clean energy development has become a national priority amid efforts to bolster domestic energy security.

Focus on Domestic Energy Security: China's Five-Year Plan (2026-2030)

_{For illustrative purposes only
TW: terawatt; TWh: terawatt hours
As of July 26, 2026
Source: The State Council of The People's Republic of China}

Renewables Grow in New Energy Mix

As these plans play out, China's energy mix is transforming. The use of coal for power generation has plummeted since 2010, while renewables and nuclear power have grown rapidly (Display). In 2024, non-fossil-fuel sources overtook crude oil in primary energy consumption for the first time. Renewables plus nuclear accounted for about 20% of the total in 2024, up from 9% in 2010, while coal's share fell to about 53.2%. Between 2024 and 2030, China alone will account for about 60% of the world's renewable power generation capacity growth.

Power: China's Renewable Build-Out Outpaces Targets and Global Peers

_{Past performance and current analysis do not guarantee future results.
*Data on coal, oil and natural gas not available for 2025
As of December 31, 2025
Source: Barclays and International Energy Agency}

Leading Position in Renewable Technology

Meanwhile, China's manufacturing prowess supports the global energy transition, with its technology dominating wind and solar supply chains (Display).

China Is the Primary Manufacturing Hub for New Energy Technologies

_{Past performance and current analysis do not guarantee future results.
PV: photovoltaic; RoW: rest of world
As of November 12, 2025
Source: Barclays and International Energy Agency}

Cost is a key differentiator. Chinese wind turbines are between 10% and 40% cheaper than those of global competitors, according to BloombergNEF data from June 2026. It's little surprise that China's offshore wind costs fell by 17% from 2022 to 2025 to about $63 per megawatt hour-about half the cost in the UK. As cost pressures increase in many markets, we believe falling costs of Chinese clean energy products are a double-edged sword for investors. Low costs create fierce domestic competition, while also helping to strengthen China's long-term leadership in clean energy supply chains and markets from Chile to Vietnam.

Asia's Energy Push Benefits China

Emerging markets (EM) are reinforcing China's role, particularly in Asia, where many economies remain dependent on imported fossil fuels. For these countries, lower-cost Chinese renewable technologies help support energy resilience, reduce import exposure and accelerate regional deployment.

The impact of the Middle East conflict this year illustrated the urgency. As energy costs surged, more than 40% of global reactive measures to spiraling oil prices came from Asian economies, according to the International Energy Agency (IEA) (Display). This suggests that the region is most exposed to energy-shock volatility-and most in need of energy security.

Emerging Markets: Quest for Energy Security Drives Renewable Growth

_{Past performance and current analysis do not guarantee future results.
GW: gigawatts.
*Combined cycle gas turbine
Left display as of May 12, 2026; right display as of April 2025
Source: Bloomberg and International Energy Agency}

Lower construction and operating costs are accelerating deployment without relying solely on subsidies, making Chinese manufacturers especially appealing. Solar and wind account for most projected electricity capacity additions in EM countries through 2050, according to the IEA.

Investing in China's Energy Transition

China's role in the energy transition story deserves attention from investors. In our view, energy-transition leaders often sit at the intersection of structural growth potential and improving profitability. Companies tied to grid infrastructure, power electronics, industrial upgrading and clean-energy supply chains could benefit as China pursues energy security, technological leadership and decarbonization simultaneously.

But structural growth doesn't guarantee profits. In fact, the low costs that have cemented its global leadership position have squeezed profitability for China's renewable manufacturers. Years of rapid capacity expansion in solar panels and batteries have pushed supply well ahead of demand-a dynamic known in China as "involution." The result: falling prices, intense competition and thinner margins, even as demand for renewables grows.

In these conditions, we believe some of the more compelling investment opportunities may lie further upstream. Materials producers benefit from the build-out without necessarily facing acute overcapacity. Where supply is limited by geology, permitting, processing capacity or long development timelines, producers may keep pricing power even as equipment-makers struggle. In other words, part of the opportunity may shift from the companies making renewable equipment to those supplying what goes into it.

In our view, investors should search across a broader ecosystem of suppliers, component makers and infrastructure providers to identify companies trading at discounts relative to their long-term earnings potential. Even within manufacturing, some Chinese companies have been able to scale renewables to increase volume while shoring up margins. And in traditionally "dirty" Chinese industries-such as aluminum or copper manufacturing and mining-select companies are shifting toward renewables to improve both their environmental and cost profiles.

For fixed-income investors, the build-out of grids and electrification infrastructure to connect renewable power to regional demand also creates an array of financing opportunities. Selectivity remains critical as policy, overcapacity and geopolitical risks continue to evolve.

Finding Durable Return Streams

To be sure, China's ambitions face obstacles. Grid and storage investment must keep pace with renewable deployment for new capacity to displace fossil fuels, while government demand for baseload energy and reserve capacity could prolong reliance on coal. For clean-technology manufacturers, trade barriers could further pressure profitability-a reminder that leadership in deployment doesn't automatically translate into attractive investment returns.

Just as Beijing's haze has largely lifted in recent years, China's energy transition is bringing new investment opportunities into sharper focus. By searching for capital discipline, technological advantages and differentiated business models, we believe investors can identify companies positioned to turn China's green surprise into durable return streams.

The views expressed herein do not constitute research, investment advice or trade recommendations, do not necessarily represent the views of all AB portfolio-management teams and are subject to change over time.

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