BERLIN — Covestro has signed several power purchase agreements (PPAs) for renewable energy with Chinese producer CGN New Energy, the German chemicals group said on Tuesday.

Under the agreements, which take effect in January 2023, the Covestro Integrated Site Shanghai is to buy around 300-gigawatt hours of green power annually from CGN's wind and solar farms in the town of Lenghu in Northwest China's Qinghai province.

"We believe PPAs for renewable energy will become increasingly competitive if you take into consideration future carbon costs and environmental benefits," Yun Chen, head of Covestro site in Shanghai, told Xinhua News Agency on Tuesday.

By using renewable energy, the German plastics specialist is seeking to reduce its carbon dioxide emissions in China by around 126,000 metric tons annually.

"Covestro aims to become climate neutral by 2035 and is systematically converting its production worldwide to renewable energies to achieve this goal," Covestro CEO Markus Steilemann said. "On the way to achieving this, we have reached a new milestone with this agreement."

The company's Shanghai site is already partly supplied with renewable energies and is expected to use more than 300 GWh of solar power from Northwest China this year.

In July, the German company broke ground on two new production facilities in Shanghai.

Next year, the company's sites in Guangzhou and Foshan in South China are to start using renewable electricity from CGN's offshore wind farms in Guangdong province.

Xinhua