Chinese investment in European renewable energy: Review and case study analysis

Abstract

Over the last two decades, China has been rising as a global leader in the low-carbon energy industry, injecting high investment into various renewable energy sectors. The country has been facing challenging consequences of a rapid-growth economy that has caused severe environmental damage. The increasing urgency of environmental concerns, paired with the newly gained awareness of the Chinese public on the topic, are contributing to the central government’s growing interest and affiliation towards renewable energies. Furthermore, the problem of energy supply and the need to reduce dependency on fossil fuels have become core objectives of Communist Party leaders who perceive renewables as a strategic tool to combine both economic growth and sustainability goals. This research aims to analyse Chinese outward foreign direct investment (OFDI) in the European renewable energy sector by examining the historical development of this phenomenon. Starting with a depiction of Chinese OFDI’s evolution, the first chapter will also analyse the role and size of renewables inside the European Union together with the related energy policies, while highlighting the connection with Chinese OFDI. It will further focus on the actors involved in the investments, as well as their motives. The second chapter will explore the geographical distribution within Europe of such OFDI, the volume of investments, and entry modes, offering an assessment of the opportunities and potential risks for the countries involved. Lastly, the paper attempts to connect the previous literature on the topic with a case study in order to provide a clearer, practical dimension.