China is seeking cleaner and more efficient forms of energy as soaring oil and coal consumption poses an increasing threat to the environment and surging prices threaten to undermine economic growth. The world’s second-largest oil consumer behind the US is increasingly turning to European and US companies to tap renewable sources of energy such as wind and solar power, and considering incentives for foreign investment. But natural gas and nuclear energy is likely to dominate the market for clean energy sources in China in the years to come because the alternatives are still too costly, a Chinese-European business summit in Geneva heard.
Fu Chengyu, chairman and chief executive of China National Offshore Oil Company (CEO), or CNOOC, said China’s energy sector holds vast opportunities for European companies and there have been numerous examples of successful joint ventures in the oil industry, although he conceded that opaque government regulations are still discouraging some potential investors.
"Europeans like to stress the risk factors, but there are many mind-boggling opportunities in mainland China and in fact, no one can ignore them," said Vincent Lo, Chairman of Shui On Group. Lo, a property tycoon in Hong Kong, pointed to the company’s joint venture with French cement maker Lafarge SA (12053.FR), saying such agreements are still a good way of tapping China’s lucrative markets, especially those of western and northeastern China.
"For example, the cement market is extremely divided and is crying out for consolidation," Lo said, adding it is better to join forces than miss out on such opportunities - even though European companies can’t fully control their partners in China. Though calls for the privatization of government-owned Chinese companies have increased recently, joint ventures are likely to remain key to relationships between Chinese and foreign companies in the energy sector.