China’s Permanent Green Energy Fund and The Europe China Foundation have signed an exclusive agency agreement in Tianjin, which would allow The Europe China Foundation to find investors for the PGEF outside of China. The groundbreaking agreement which would guarantee to the investor a minimum of 8% dividends, has wet the appetite of major banking institutions in the west, and has American and Dutch bankers vying for the chance to be the exclusive broker in the project. The PGEF along with other private and governmental partners has already rolled out an ambitious plan to take part in the building of more than 17134 waste recycling plants all over China. Plants are already up and running in Shaanxi Province. The 200 Billion dollar plan would not only contribute significantly to China’s UN Millennium Development goal to cut the intensity of its CO2 emissions by 40-45% by the year 2020. But it would also boost the now lagging Chinese economy by allowing an almost unlimited amount of foreign investment in RMB. The Europe China Foundation, Europe’s premier NGO working with the PRC’s Central Government, as well as State Owned Enterprises and Corporations, has been chosen by the PGEF –a collaboration of the top 6 national energy companies in China, to be their exclusive representative outside the PRC. The agreement is said to be the first of its kind in that it provides a platform for investors outside China both, corporate and private to invest directly in a government-backed Chinese fund and reaping the benefits of the RMB, specifically guaranteed dividends of 8% minimum. The significance of this agreement cannot be undermined; “ …if you think about it, the Chinese economy is largely an extension of ours,” said Bastiaan Van Gent, Vice-Chairman of the Europe China Foundation. “ …for the last 30 years China has essentially been the manufacturing arm of the developed world; almost 40% of their GDP comes from exports, making us major contributors to their economy. Yet till now they’ve kept us from participating actively in it. This step to open their internal markets to Foreign Investment is an opportunity for China to have a real partnership with the major world economies, and it will solidify them as a world economic power,” he said. This innovative fund formula, which offers investment terms of between two and ten years, is loosely based on an equation that involves a government guaranteed budget of $200 Billion USD for the entire project, allocated over a period of an estimated ten years, along with State and provincial subsidies which the PGEF would receive. Instead of running the mammoth project based on the government disbursement timeline, the PGEF would offer the opportunity to outside investors to finance the project in order to exponentially cut down the time of completion; thereby jumpstarting operations in all new plants; each one with an average annual income of at least $6.5 Million USD generated from the sales of the recycled waste byproducts such as crude oil, building materials, etc. All of this would translate into fat gains for the top national energy companies in China, and guaranteed dividends of at least 8% to the investors. Currently, the fund which has already 23 plants operating in Shaanxi province, is looking to make a dent on China’s more than 7million metric tons of CO2 emissions per year, by building a total of 17,134 plants nationwide. While garbage alone is not China’s only source of pollution, landfills do constitute the major source of greenhouse gases, underground water pollution and the spread of viruses. What’s more, incineration from landfills produces hazardous gases such as methane and, dioxin which has been called “the poison of the century.”
The new clean technology PGEF will be using, called Sanitary Waste Recycling (SWR) will help do away with landfills by taking the whole process indoors. Additionally, SWR only requires a space of 1/10 of the size of a traditional landfill. SWR will also eliminate all the polluting gases and fluids that come with traditional incineration and the entire process of recycling the refuse will take only 2 to 3 hours from start to finish. PGEF’s use of this technology not only has environmental implications on the side of pollution but it would impact China’s much larger goal of ‘going green.’ The SWR process would turn organic waste into fertilizers; which would directly improve the quality of food in China. Additionally, all other types of waste can be made into useful raw materials for paper, fuel block and building materials. Success of the fund will be measured not only in how much capital it can raise, but how it can impact the landscape of investment options for international investors big, and small, who until now have had virtually no entrance into the RMB market. The Chinese hope these types of fund models with government guarantees can become a reliable choice for investors and at the same time impact the local economy in a big way. Success of this fund would also put the construction of these waste recycling plants on over drive, a concept not foreign to the Chinese. China’s announcement to the UN of its goal to cut CO2 emissions by 40 or 45% left the climate change community perplexed and wondering how the largest and fastest growing nation in the world could achieve such a feat. Clearly, moving fast and putting projects on overdrive, is something the Chinese do with ease. Whether it be cutting down pollution, or boosting the economy, China is always quick to find and act on swift solutions. There’s every indication that this fund model is a solution to two of China’s most poignant issues and, one which they will surely duplicate through partnerships like this one with the Europe China Foundation. Robert Balkenende de Vos, Chairman of the Europe China Foundation said that “ This partnership between a State-controlled Fund and ECF is the first of its kind but will not be the last. China’s development has been impressive and offers enormous possibilities to European companies seeking growth outside their own territory. Chinese (state-owned) companies are also looking for European partners, and seeking new investment opportunities such as joint ventures with solid and professional companies in the EU. This agreement between ECF and the PGEF opens the gate to all kinds of business opportunities for European companies in China which were not possible in the past.”
Contact info: Europe China Foundation Ltd. Robert Balkenende de Vos 23 Holybourne Avenue London Great Britain www.eurochina-gov.com
Published on Aug 23, 2012
China’s Permanent Green Energy Fund and The Europe China Foundation have signed an exclusive agency agreement in Tianjin, which would allow...