Promoting carbon-neutral PE/VC is promising
On March 20th, Hillhouse founder and CEO Zhang Lei said at the 2021 economic summit of the China Development Forum that he is helping to achieve the goal of carbon peak and carbon neutrality. On the one hand, market-oriented PE/VC institutions have a lot to do: On the one hand, they are pursuing environmental, fair, and social long-term values through continuous exploration of optimal resource allocation. On the other hand, we should choose peers with a great view of the landscape, and through continuous innovation, we can achieve a win-win situation of social value and economic value under the goal of green sustainable development.
The theme of this forum is “China on a New Journey of Modernization”, focusing on promoting high-quality development and building a new development pattern, discussing China’s economic and social development in 2021 and the development direction of the next five years, involving technological innovation and green transformation. Themes such as rural revitalization.
“For the low-carbon transformation, the ultimate solution must come from continuous technological innovation. Hillhouse is hoping to encourage and attract more innovative investment institutions through our long-term financial support for technological innovation and green technology Participate in and support the development of green and low-carbon technology to form an innovation aggregation effect.” Zhang Lei said.
The following is the speech record:
Dear guests, friends:
I am very pleased to discuss with you the important issues of promoting green development and helping to achieve the goal of carbon peak and carbon neutrality during the spring equinox.
Today, the world is in an important historical period of transition from high-carbon to low-carbon and net-zero carbon. While promoting the “green recovery” of the economy in the post-epidemic era, it has also promoted the development of many industries including energy, manufacturing, technology, and consumption. The reconstruction of the value chain, the promotion of higher quality, fairer, and green and sustainable development will be a long-term common issue for human society.
In this direction, market-oriented PE/VC institutions have a lot to do: On the one hand, they are pursuing environmental, fair, and social long-term values through continuous exploration of optimal resource allocation. On the other hand, we should choose peers with a great view of the landscape, and through continuous innovation, we can achieve a win-win situation of social value and economic value under the goal of green sustainable development.
As an innovative industrial investment institution, Hillhouse has regarded the concept of green and sustainable development as an important guarantee for its long-term development since its establishment. Throughout the investment cycle at all stages, we have attached great importance to environmental, social and corporate governance (ESG) factors as an indispensable investment decision-making standard; at the same time, through forward-looking industry research, we will continue to increase our commitment to new energy, Investment layout in fields such as green and low-carbon technologies.
On the one hand, we invite professional organizations to carry out Hillhouse’s own carbon inspection work, and plan to launch a “carbon credit”. Starting from me, we will accelerate our own operations to reduce carbon and achieve our own “carbon neutrality”; on the other hand, We have also established a dedicated climate change investment team and launched a special green fund. At the same time from 2In 020, we are committed to promoting the construction of academic research platforms such as climate change, establishing the Industry and Innovation Research Institute, and planning to support the cultivation of talents in the field of climate and new energy. We have been on the road in promoting green development and practicing the concept of “carbon neutrality”.
A few days ago, Hillhouse Industry and Innovation Research Institute and Beijing Institute of Green Finance and Sustainable Development jointly released the report “Towards 2060 Carbon Neutrality-Focusing on Opportunities and Challenges on the Road to Decarbonization”. We found that China faces more difficulties and challenges in achieving carbon neutrality than developed countries. The developed countries in Europe and the United States take 40-60 years from the peak of carbon emissions to the promised carbon neutrality, while China takes about 30 years to complete this process, and therefore faces greater challenges. . Mainly include:
1. my country’s energy demand has not yet reached its peak. In 2019, China’s per capita primary energy consumption is about half of that of OECD countries, and per capita electricity consumption is 60% of that of OECD countries.
2. Industrial energy accounts for a high proportion. China’s electricity consumption structure is particularly special, with industrial electricity accounting for 67%, while industrial, commercial, and residential electricity consumption in OECD countries is more balanced, accounting for 32%, 31%, and 31%, respectively.
3. The power supply structure is dominated by coal, making transformation difficult. According to the statistics of the China Electricity Council, thermal power accounted for 72% of China’s power generation in 2019, and the power sector’s carbon emissions accounted for more than 30% of the country’s total carbon emissions. The task of achieving a low-carbon transition and ultimately achieving net zero is very difficult. .
4. Decarbonization technology in transportation, industry, construction and other sectors still needs breakthroughs;
5. Regional and industry development is not balanced, fairness issues are prominent, and so on.
However, we believe that China’s carbon neutrality is feasible and can bring multiple benefits. In fact, China, as a developing country, has been actively taking its own responsibilities in tackling climate change and reducing carbon emissions. According to official data, as of the end of 2019, China’s carbon intensity was about 48.1% lower than that in 2005, and non-fossil energy accounted for 15.3% of primary energy consumption, fulfilling my country’s foreign commitments by 2020 ahead of schedule. In the same period, my country’s GDP grew by more than 4 times. This shows that policy actions to address climate change will not only not hinder economic development, but also help improve the quality of economic growth.
Therefore, achieving carbon neutrality can bring many new economic growth points, create more high-quality employment and entrepreneurial opportunities in the low-carbon field, and bring multiple benefits such as improved economic competitiveness, social development, and environmental protection. China’s carbon neutrality may require millions of billions of investment and decades of continuous efforts, which will also shape a higher-quality economy and employment, a more beautiful ecological environment, and more advanced science and technology. This work of the century, which will benefit the future, is worthy of our all-out efforts to realize it.
IWe are also happy to see that some new green technologies and models are constantly emerging in the fields of electricity, transportation, industry, new materials, construction, agriculture, negative carbon emissions, and information communication and digitalization, giving birth to important investment opportunities.
When the green transformation becomes the greatest certainty of tomorrow, it will effectively guide a large amount of social capital to shift to the carbon neutral field, and the time is right for green equity (PE/VC) investment. As a VC/PE organization, we must participate in such a big event. We also call on more partners to join in supporting the historical cause of green and low-carbon technological development.
Before the Spring Festival of the Year of the Ox, we also issued the industry’s first “Carbon Neutrality Proposal” to the corporate partners of Hillhouse Investment. For enterprises, low-carbon transformation is a historical opportunity to break development inertia and respond to environmental changes, and it is also a historical opportunity to take the initiative to reshape core competitiveness. Therefore, advancing “carbon neutrality” is not only a key measure for companies to respond to industrial changes, but also a strategic choice that affects the future development of the company, and will lay a key advantage for the company’s long-term sustainable development. We hope that the companies supported by Hillhouse Investment will embrace changes, take the lead in action, proceed to advance their own “carbon neutral” plan, turn challenges into opportunities, and view transformation as opportunities, through collaboration with suppliers, customers, partners and other stakeholders. Work together to accelerate the low-carbon transformation of operations.
After the proposal was issued, we received positive feedback from many companies. We said before that “carbon neutrality” will “force” enterprises to make low-carbon transitions. Now what we see is that more and more enterprises are taking the initiative to seize the historical opportunity of “carbon neutrality”. We have every reason to believe that the full bloom of innovation and entrepreneurship is likely to become an accelerator for China’s low-carbon transformation.
In fact, we have always firmly believed that for low-carbon transformation, the ultimate solution must come from continuous technological innovation. Hillhouse hopes that through our long-term financial support for technological innovation and green technology, we will encourage and attract more innovative investment institutions to participate in and support the development of green and low-carbon technology, and form an innovation aggregation effect.
In the fields of “green new infrastructure” such as new energy technology, materials, and processes, Hillhouse has laid out the upstream and downstream industries of photovoltaics, new energy vehicles and chips in accordance with the “carbon neutral” technology roadmap. Adhering to the long-term investment philosophy and supporting the key links of green emerging industries, we hope to become an important participant in promoting the overall prosperity of the industrial ecology.
Of course, in addition to the incremental innovation of emerging industries, the stock transformation of our huge traditional industries is the basis for the overall low-carbon transformation of the economy and society, and it is also of more practical urgency. Hillhouse has always adhered to the “dumbbell theory” in investment practice, and strives to become a fusion and innovation medium between technology companies and the physical industry. While helping cutting-edge technology companies find landing scenarios, it promotes the transformation and upgrading of the physical industry.
For example, in industries like agriculture, it is easy to ignore or even forget during the rapid development of the Internet for a long time. butIn fact, digitization and intelligence can quickly inject great vitality into it, making this industry that many people think will not change over the years. An agricultural technology company we invested in, through research and development, manufacturing, and promotion of advanced unmanned agricultural technology, digital operations and fine management of all links of agricultural production. By the end of last year, their smart agricultural products and technologies have served nearly 10 million farmers and 780 million mu of farmland in 42 countries and regions around the world. While increasing the value of farmers’ production and the efficiency of the agricultural industry, they have also promoted agriculture. The “low-carbonization” of China provides a good sample of enterprises for rural revitalization.
In short, green development must be inclusive and warm, so that more people will have a sense of gain, growth and happiness, and low-carbon transformation must also be investment value, industrial value, employee value, and social value. A win-win situation. On this road of continuous innovation, we look forward to “Do Good, Do Well” with more colleagues to make the world a better place. thank you all!