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Morgan Stanley and others pick stocks that could benefit from China's climate goals

Published Tue, Dec 28 20216:18 PM EST

Evelyn Cheng @chengevelyn

For analysts in Greater China, one of the big investing themes for next year is finding companies that could benefit from Beijing's push to reduce carbon emissions. There needs to be technological advancement, as simply cutting back on fossil fuels or using other incentives to reduce carbon emissions will not be enough — and will even shock the economy, said Peng Wensheng, chief economist and head of the research department at Beijing-based investment banking giant CICC. "The key to achieving lower carbon emissions is relying on technological progress. Otherwise, the economic impact will be rather large," he said in Mandarin, translated by CNBC. Peng was speaking in October at the media release of CICC's latest outlook report, a thick book of more than 400 pages outlining China's need to innovate — out of long-term necessity and to keep up with competition from the United States. It's not clear how consistently China will pursue its goal of reaching carbon neutrality by 2060. A coal shortage and high power needs in the last few months have increased fossil fuel demand. An official said earlier this year that coal dominates China's energy use and the country must rely on it for now. But in the long term, analysts expect China will remain committed to reducing carbon emissions, and companies with the technology to support this goal will benefit. CICC didn't share stock picks, but here are some from other investment analysts keen to play the trend: Fangda Carbon New Material Shanghai-listed Fangda Carbon New Material is one of Morgan