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Tickers in this Article: STP, YGE, JASO, GE, CCJ, BTU, ABB
Whenever you read about environmental topics in China, the news is almost always bad. Whether it is problems with air quality in Beijing or water quality in the provinces, there is no shortage of bleak reports about the degradation of nature within China's borders.

This may not be the full picture, though. True, China has a lot of polluting industries and generates a considerable amount of electricity from older coal-burning plants. The country also has the challenge of figuring out how to provide power, heat, and transportation to a huge population with increasing needs. But China also has considerable financial resources and a political structure that can more easily mandate and advance specific technologies.

With that in mind, it may not be too long before a green China is possible.

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Where Will The Juice Come From?
China is already notable for its leadership in the solar power industry. The world's largest solar panel maker, Suntech Power (NYSE:STP), is Chinese, as are other companies including China Sunergy, LDK Solar, Trina Solar, Yingli (NYSE:YGE), and JA Solar (Nasdaq:JASO). The irony, though, is that while China is the leading producer of solar panels, it is not a major consumer yet. Solar power plants are being considered (and in some cases, constructed) in places like Inner Mongolia, but solar power just is not cost-effective for much of China yet. (For more, see Spotlight On The Solar Industry.)

Nuclear power is a better bet for China's baseload needs for the foreseeable future. It seems unlikely that very many companies listed on U.S. exchanges will play a major role in building nuclear plants in China, though General Electric (NYSE:GE) could stand to benefit. What seems like a better bet to me, though, is North American uranium producers like Cameco (NYSE:CCJ), Denison Mines, Paladin Energy, or UR-Energy could see a more lively export market, as China is not notably endowed with uranium deposits.

For better or worse, coal is likely to continue to be the main source of electricity in China for many years to come. While China has many large national coal companies like China Shenhua, there could certainly be room for companies like Peabody Energy (NYSE:BTU) to prosper as well, whether from thermal coal or met coal. In fact, I think it is fairly clear that Peabody's efforts to build coal assets in Australia is targeted at serving China's future needs. Here could be an opportunity for greener tech - Shenhua is moving ahead with CO2 capture and storage projects, and I expect the Chinese government to mandate more of these in the future.

Girding the Grid
Generation is not the only place where China can green up in the near term. A lot of power is wasted between the generator and the end user. There is a sizable market in China both for ongoing build-out of new power transmission and upgrading older networks as well. As leaders in the field, investors would do well to investigate ABB (NYSE:ABB) and Siemens as both are likely to be booking a lot of business around the world in the coming years from power distribution systems.

Moving From 8-Volt To V-8
Last and not least, automotive power is another significant source of pollution within China where technology could help. Here the story is most likely to be about batteries. Though I have written in the past about A123 Systems as a leading battery technology company, China's own BYD could prove to be a major mover in building up China's battery-powered transportation fleet.

The Bottom Line
By coming later to the development party, China has the advantage of leapfrogging a lot of outdated, unnecessary and polluting technologies. Much like the advent of cell phones has allowed many countries to almost completely skip copper wire landline networks, China can jump ahead with more advanced and efficient power generation systems, factories and mitigation technologies. Looking ahead at the likely future demand for power in China, and the sizable social costs of pollution, this is a "China story" that might actually work out for investors. (For more, see Investing In China.)

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