After China released its new five-year plan this month, Jean-Philippe Desmartin at Edmond de Rothschild Asset Management, discusses the firm's aim to develop renewable energy and how, in view of the Middle East conflict, it will accelerate the “green energy” transition.

In an interview with this news service last week, Jean-Philippe Desmartin (pictured), head of responsible investment at Paris-based Edmond de Rothschild Asset Management discussed China's five-year plan. Running from 2026 to 2030, the plan prioritises a “green transition” by accelerating the large-scale use of renewable energy via the development of wind and solar power, along with nuclear and hydropower, and e-fuels.

The country also plans to accelerate the adoption of electric vehicles and green fuel shipping. China is emphasising the importance of ensuring energy security, and reducing dependence on imports by boosting domestic renewable production, something that the Middle East conflict has made even more critical. It is also prioritising investment in the grid and energy storage.

Desmartin acknowledged that China has already done a good job in developing its renewable energy production. While it still relies on fossil fuels, it produces more than 80 per cent of all solar photovoltaic panels, half of the world’s leading electric vehicles and a third of its wind power.

Middle East conflict
Strikes on Middle Eastern oil and gas infrastructure, together with the near-closure of the Strait of Hormuz, have heightened global energy security concerns. Desmartin believes that the Middle East conflict, which has caused oil prices to surge, will also accelerate the “green energy” transition. “The higher the cost of oil, the more the energy transition can be justified,” Desmartin told this new service.

“Europe has a big capacity for hydropower. France is ahead on renewable energy production, with 70 per cent of its electricity coming from nuclear energy power,” he continued. Around 95-97 per cent of France’s electricity is generated from low-carbon sources, notably nuclear, hydropower, wind and solar. “Renewables in the UK also provide for the majority of the nation’s electricity. Spain and Portugal have a lot of renewable energy capacity. Fifty per cent of Spain’s electricity is generated by renewables, notably by solar power,” he said.

Desmartin sees the biggest “green energy” opportunities in the development of solar power. “The cost of solar power has fallen by about 90 per cent since 2010, clearly making it competitive with fossil fuels. Grid investment and investment in the development of sustainable infrastructure is also important,” he said.

Desmartin highlighted that Brazil has one of the world’s cleanest energy mixes. Eighty-nine per cent of its electricity comes from renewables, primarily hydropower, supported by a growing wind and solar sector.

Although India is a big oil importer, making it vulnerable to the Iran conflict, Desmartin said it has developed its renewable energy capacity considerably, driven by growth in solar and wind power. “Pakistan will also suffer less now, as it has been developing its solar capacity for the last four years,” he added. Japan is another big oil importer, mostly from the Middle East, but it has been developing its own energy supplies too, he said.

His stance is shared by Swiss private bank Lombard Odier; the bank said that the conflict in the Middle East has raised the need for more diverse energy supplies and more secure supply chains, pushing sustainable solutions further up national agendas. “As geopolitical tensions meet rising energy demand, the momentum behind renewable technologies is set to accelerate further, reinforcing our convictions in sustainable energy. Long-term investment opportunities are emerging in sustainable infrastructure, including electrification and nature-based solutions, as governments and investors prioritise resilience," the firm said in a note.

In an interview with this news service this month, Edmund Shing, global chief investment officer at BNP Paribas Wealth Management, also noted that the Iran conflict has increased the need for energy security, and accelerated the “green energy” transition.