Barely a week goes by without new evidence of the greening of China. This is great news for the planet—but some people say it’s bad for the U.S.
Are they right to worry?
What got me thinking about this was a phone conversation the other day with Bill Gross, the brilliant and tireless entrepreneur who is the chief executive of eSolar and a founder of electric-car startup Aptera.
Bill was calling with great news for eSolar, a Pasadena, Ca-based firm that makes software and equipment for utility-scale solar thermal power plants. This weekend in Beijing, eSolar announced a deal with a Chinese electrical-power manufacturer to build at least 2 gigawatts (2,000 megawatts) of solar thermal power plants over the next 10 years, beginning with a 92-megawatt plant that will break ground this year.
“China is really moving fast to implement as many green technologies as they can, to become experts at them and to scale them up,” Bill told me. “It’s a statement that China is thinking about clean energy for the long term.”
I’m hearing this more and more. Tulsi Tanti, who runs a big Indian wind power company called Suzlon, told me last month in Copenhagen that China is his biggest market. My blogging colleague Jesse Jenkins (at The Energy Collective) has written about a report from the Breakthrough Institute, where he works, called Rising Tigers, Sleeping Giant (available here as a PDF) that argues, among other things, that:
Asia’s rising “clean technology tigers” – China, Japan, and South Korea – have already passed the United States in the production of virtually all clean energy technologies, and over the next five years, the government’s of these nations will out-invest the United States three-to-one in these sectors.
It also says:
If the United States hopes to compete for new clean energy industries it must close the widening gap between government investments in the United States and Asia’s clean tech tigers and provide more robust support for U.S. clean tech research and innovation, manufacturing, and domestic market demand.
I’ve been stunned to learn about the sheer volume of wind, solar, mass transit, nuclear and more efficient coal-burning projects that have sprouted in China in just the last year.
We are either going to put in place a price on carbon and the right regulatory incentives to ensure that America is China’s main competitor/partner in the E.T. revolution, or we are going to gradually cede this industry to Beijing and the good jobs and energy security that would go with it.
Note Friedman’s use of “competitor/partner.” That’s the question, isn’t it: Is China a competitor or partner or both?
Obviously, that depends on precisely what China is doing; no single China investment in clean tech can be called typical. But let’s look at the question through the prism of this weekend’s eSolar deal. Interestingly, eSolar already manufactures in China—it buys its motors and gear boxes from a contract manufacturer in Shenzhen. The company is also supplying its solar thermal technology to India through a key partner, the Acme Group. So, like most any big company, eSolar has a global supply chain and a global customer base. Other clean tech startups like First Solar, which makes solar PV panels, and Coda Automotive, an electric car company, also manufacture in China. (For details, see Todd Woody’s story about First Solar and my blogpost about Coda.)
According to Bill Gross, eSolar’s most valuable asset is the software which enables its equipment—fields of mirrors known as heliostats—to efficiently focus the sun’s rays on water, creating an intense heat that vaporizes the water and creates steam to drive a conventional electricity-generating turbine. The company has been operating a plant in Lancaster, Ca., which impressed delegations of Chinese officials who came to visit last fall.
“They had been looking all over the world at every solar thermal technology, to find one they can bring into China,” Bill said. “We’ve been producing electricity for six months, so we have very reliable day by day data.”
Interestingly, China’s Penglai Electric made the deal with eSolar is less time than it is taking the U.S. Department of Energy to decide whether to provide loan guarantees for a similar plant that eSolar wants to build in New Mexico with NRG Energy, a firm power generation firm. One of the advantages that the Chinese have over the U.S. is that they can move fast.
Another is that the Chinese government can will things to happen. (“Not in my backyard” is not a cry often heard when the backyards are in Beijing or Shanghai.) Yet another advantage is China’s massive government subsidies, which some clean energy boosters in the U.S. use to argue that our government is not doing enough. See the following from Rhone Resch, president of the Solar Energy Industries Association, as quoted in The Times:
“In China, 80 percent of the entire cost of a factory and worker training is paid for by the government,” Mr. Resch said. “Malaysia will give you a 10- or 20-year tax holiday.”
He praised Mr. Obama’s $2.3 billion tax credit program, but said its 30 percent credits were not nearly as generous as China’s.
Think about that for a moment, though. If eSolar and First Solar and Coda Automotive do business in China, and get a piece of those subsidies, how is that bad for the United States? Doesn’t it mean that the Chinese government is subsidizing U.S. companies and U.S. jobs?
In the case of eSolar, the China deal will enable the company to become profitable almost immediately, Bill told me. In fact, there’s a chance that if the company does more deals, it won’t need a loan guarantee from the U.S. government to go forward in New Mexico. That’s good for American taxpayers.
At the risk of sounding unpatriotic, I have to say that I wonder about the whole “global competitiveness” argument around clean technology. For one thing, without massive government subsidies, the U.S. is unlikely to become a center of “green manufacturing” for products that can be shipped easily from place to place. (Huge and heavy products like wind turbines are another matter.) What’s more, is it really such a bad thing if China or India are able to generate “green jobs” faster than we are. There’s no question that they need the jobs more–per capita income in China is about $3,000, and in India it’s about $1,000.
I asked Bill Gross by email: “Should Americans be worried about the rise of clean tech in China? Do you view China as a partner to the U.S. or a competitor or both?” He replied:
I think China doing this is a great thing for us. First of all, as a California-based company, this creates jobs in the United States. Second, this is one earth, so a project anywhere that is renewable is a great project. But finally, we need bold leadership across the planet to take renewable energy seriously, and if China does that, and we all emulate that, that’s not just a good thing, that’s a great thing.
Maybe we need the trumped-up equivalent of a “space race” with China to motivate Congress to get moving and put a price on carbon. But we shouldn’t. As Bill says, this is one earth.