This is the third and final installment of a Q&A with John Thompson of the Clean Air Task Force. Previously we talked about Canada’s leadership in CCS and the problems posed by focusing on CCS liability in advance of scaling the technology. In this last part of the Q&A, Thompson outlines his vision of the benefits available to the American CCS agenda by collaborating with Chinese utilities and oil companies.
For context on how quickly China is emerging as a hothouse of CCS pilots, a recent report from Bloomberg New Energy Finance (BNEF) estimated that China is home to nearly one-third of active pilot-scale CCS projects globally, many of which are focused on carbon use. China, after all, coined the term carbon capture use and storage (CCUS), notes BNEF, adding that China offers US utilities a test bed with lower labor costs, lower regulatory hurdles, ultra-fast construction timelines, ample capital, and an appetite to learn from the West.
To spur EOR, how can we bring down carbon capture costs?
There’s where we think China comes in. China has very low‑cost capture technology, but they have no or little EOR experience. Texas and the Gulf states have lots of EOR experience, but to get more oil from their mature fields will require anthropogenic CO2. We see a huge opportunity to partner with China here, to bring lower‑cost Chinese CO2 capture technology to the US. A bigger supply of lower-cost CO2 will in turn help capture more of our oil. In turn, we can export EOR technology back to China.
CATF recently hired a new staff person in Texas to develop this vision, Dr. Frank Chou. He’s a 30-year veteran of various refining and chemical companies, most recently Shell. Our aim is to develop links between China and the Gulf states region as a way to promote carbon capture in both countries. China builds projects at twice the speed of the US, and at a fraction of cost. If we can harness these global synergies, we have the potential to really drive down costs globally.
How far has this collaboration gone?
We’ve already brought AEP into partnership with Huaneng, and linked Duke with Huaneng as well. I mentioned Southern Co’s Plant Radcliff earlier: the technology there is a TRIG gasifier, developed in Mobile, Ala., by KBR and Southern Co. That technology is being built in China first, in a small, 120‑megawatt power plant about two hours from Hong Kong. That operational data will help refine the design as Kemper is built.
How has China become a leader in low-cost carbon capture?
We’ve all heard that ‘China builds one coal plant a week’. That may or may not be quite true at the moment, but they’re building at an incredible rate (see chart below), and much of the capacity is at the cutting edge of coal technology. They’re building an advanced coal gasification plant about once a month, where the US has only a handful.
It’s no different than China’s experience with factory manufacturing: there are economies of scale taking place that lower the cost to build advanced coal plants. For example, there’s a plant called Shidonkou, outside of Shanghai. They’re capturing CO2 at about $30 a ton. That same project in the United States would probably be double or triple that cost.
And then there’s the potential appetite in China for EOR. We estimate they have the potential, easily, to build 30 gigawatts of CCS capacity to supply EOR in China. Yet right now, there’s maybe only one EOR project there. With more know-how from the US, there’s huge potential for that number to grow.
But why would China be better able to solve the problem of scaling up carbon capture than here?
The math suggests that China may be able to build CCS on power plants using EOR with little or no incentives. In China, they refer to EOR-CCS as ‘CCUS’ where the ‘U’ is for utilisation.
Keep in mind the value of CO2 for EOR purposes is set by the global price of oil. So whether you’re in Texas, Norway or Beijing, you’re basically paying the same global price for oil and that price establishes the same economic value of the CO2 used for EOR regardless of where you are doing it. On the other hand, capture costs do vary by region and country and in China they’re a fraction of the costs elsewhere.
So, if you buy CO2 for EOR at roughly the same price in China and Texas, but your China capture costs are a third or half what they are in Texas, you may be able to do EOR‑CCS in China on power plants without any extra economic incentives, without any need for a price on carbon.
That’s not true in Texas yet, given today’s cost of capture. To develop power plant CO2 sources, you’re either going to need some kind of incentive or deep reduction in the cost of capture technology.
But we can lower capture costs with China’s help. We can harness that global synergy to scale up 30 gigawatts worth of CCS for EOR in China in a matter of years. That scale of development lowers costs of capture technology globally. Building that much CCS first in the West would take decades. China is a really significant strategic opportunity that we’re trying to exploit.
So a lot of what we’re trying to do in China is break down the barriers between Chinese CO2 suppliers and Chinese oil companies, because the oil companies have the knowledge. They understand the geology but they don’t produce the CO2. If we can create US-Chinese business partnerships, the transfer of technology both ways could take years off the time when CCS is widely deployed.
At the outset, I mentioned that for me, CCS can also mean ‘Copy Canada’s Successes’. Someday, it could also mean ‘Copy China’s Successes’ too. China could be the key to creating global synergies that allow us to develop CCS technology with little or no subsidies, and no price on carbon.
To John Thompson, CCS is an acronym with more than one meaning. To anyone in the Global CCS Institute’s community it means ‘carbon capture and storage, or sequestration.’ As director of the Coal Transition Project at the Clean Air Task Force, Thompson’s career is committed to accelerating the development of technologies to help cut greenhouse gas emissions from coal. He sees other possibilities for the three-letter acronym too.
On eyeing the progress being made by Canada, Thompson quips that the US might benefit if we took the acronym to mean ‘Copy Canada’s Success.’ He contends our northern neighbor has gotten the mix of incentives, policies, and industry concentration just right, so that programs are gaining momentum, at a time when US efforts are off-again than on-again.
China offers another variant of the acronym: ‘Collaborate with China’s System.’ Thompson sees huge potential gains for the US by collaborating with China, as its huge energy sector continues to binge new coal-fired power plants. With its deep capital resources, fast construction timelines, and willingness to demo cutting edge carbon capture systems.
My introduction to Thompson’s views came in New York last fall at the Institute’s roundtable for Climate Week. Intrigued by his vision of the promise of cross border collaboration, I spoke with him more recently at greater length to learn more about his take on CCS in the US, Canada and China. I’ve broken down our conversation in three parts. This first part, below, touches on US and Canadian efforts. In Part II, due tomorrow, Thompson opines on the barrier posed by a premature focus on CCS liability. In Part III, due Wednesday, he outlines an ambitious collaboration his organisation is developing between utilities and enhanced oil recovery (EOR) players in the US with their peers in China.
There is a lot of criticism saying that CCS efforts in the US are foundering. You’ve suggested we look to the north for a better way. Why?
It’s my version of CCS: ‘Copy Canada’s Successes.’ There are three things that Canada has done well that are key to making CCS work. One is incentives — the carrot part. For example, Alberta has put C$2 billion on the table to move a number of projects that will probably sequester about five million tons annually of CO2 by 2015. Some of those are going to break ground in 2012 or even this year.
The second thing: they’ve done regulations right, in a way that provides a reason to do CCS. These aren’t final, admittedly. But they’re taking shape. In the fall, Canada issued draft federal regulations that will set, for the first time, CO2 emission limits on coal plants. These rules set emissions at the level of an uncontrolled natural gas plant — so, call it a 65 per cent reduction. The key thing is you have to meet that standard whether you’re a new or an existing plant. But if you’ve certified that you’re going to put on carbon capture and storage, you can meet the new standard in 2025. That timing is important. It sets up an achievable standard — what I call a ‘partial capture’ level — and offers enough time to actually get the planning and construction completed. That’s a really good formulation that the US could learn from.
Then the third thing that they’ve done right is what I call the ‘nucleus’ of a CCS industry: the ICO2N network, which brings together coal, oil sands, and power utilities, all of whom have a strong interest in developing CO2 capture and storage in Canada.
What makes for a CCS nucleus area?
Look, this is no different than the car business. If you wanted to start manufacturing autos 50 years ago, you needed a lot of other industries assembled around you, to give you the component parts, the engineering services, and so on. It’s not quite a perfect analogy, but with CO2 there is a similarity.
For a one‑off CCS project, that’s an approach that can be done once, practically anywhere. But if you really want to do two or three projects, you need to create a community of skills and resources that is more sustainable, to build pipeline infrastructure, develop regulatory knowhow, nurture a critical mass of specialized engineers and geologists, and so on.
It’s the combination of incentives, rules, and an industry nucleus that make up the ‘secret sauce,’ so to speak, that we need to be replicated elsewhere around the world for CCS to thrive.
Some have said the US experience has suffered for being spread too thin, with projects in the South, Midwest and Northeast. Does the concentration of resources help?
Yes. Creating a density of projects in a certain area facilitates other things, like pipeline development, or developing regulations and regulatory expertise that enable projects to move ahead.
I think the Department of Energy has put forward something like US$8 billion over the years on CCS projects in various locations. But imagine if you had focused all that money, say, in Texas, where there’s a lot of EOR. You might have seen a faster, bigger bang for your buck. Canada, for its part, is concentrating more of its efforts in its middle section, though there are other projects farther afield.
Here in the US, we have a similar nucleus in the Gulf states, where oil and CO2knowhow are deeply rooted. What’s the potential there?
[We] just hired Dr. Frank Chou, a 30-year veteran of the petrochemical industry, in Texas to facilitate what we call the Gulf States-China Initiative. Think about Louisiana, Alabama, Mississippi, Texas: they’re all places with either a lot of oil fields, a lot of EOR — or a lot of potential EOR — and a lot of expertise. You have many of the key resources in place, such as the Texas Bureau of Economic Geology. You have companies like Denbury that build pipelines. You have a billion tons of CO2 injected over the last 30 years in the Permian Basin alone. There is a lot of real, hands-on experience there, ranging from the drilling, to the pipeline, to the monitoring.
It’s interesting to look where US CCS integrated projects are happening at the highest rate. There was a lot of flurry in the Midwest, initially, over the last 10 years, but it’s really been places like Mississippi and Texas where the projects are actually breaking ground. You have the Kemper Plant in Radcliffe, Miss., Southern Co.’s 582 megawatt IGCC plant with 65 per cent capture that broke ground last December. And there’s Summit Power’s Texas Clean Energy Project, too, which looks to be on track to break ground next year.
Both of these plants are globally important. Kemper is a big deal: this isn’t a pilot-scale project. It’s the real deal, a full-scale IGCC plant, approved by the Mississippi Public Service Commission to be funded out of the utility’s rate-base. And, it’s selling the CO2 for use in EOR, via a pipeline being built by Denbury. Likewise, TCEP’s model is all about commercial viability, by converting some of the CO2 into urea and other chemical by-products, and selling the remainder of the CO2for EOR.
This ends part I of my chat with Thompson. Tomorrow he discusses how worries over liability of CO2 storage are putting the cart before the horse.
I’ve been watching China’s ascent in cleantech for a couple of years. In that time China’s potential to leapfrog the U.S. has gone from talk to substantive examples of leadership. Even so, I’ve been surprised by the increasing frequency with which China is pushing ahead in new fronts of cleantech development.
Earlier this week, the latest surprise came from energy secretary Steven Chu, who’s been talking up China’s green progress in an effort to boost Washington’s resolve on clean tech policy.
In a talk at the National Press Club, with characteristic forceful clarity (PDF of slides), Chu illuminated the growing list of sectors where China’s emerging leadership threatens U.S. players, and added leadership in supercomputing as the most recent Sino-superlative. China’s success in these technologies represents a “Sputnik Moment” for the United States, Chu said.
“When it comes to innovation, Americans don’t take a back seat to anyone — and we certainly won’t start now,” said Secretary Chu at the event. “From wind power to nuclear reactors to high-speed rail, China and other countries are moving aggressively to capture the lead. Given that challenge, and given the enormous economic opportunities in clean energy, it’s time for America to do what we do best: innovate.”
China’s ascent to the top of the list for supercomputing speed reveals a new front in this race. Last month China’s Tianhe-1A, developed by Chinese defense researchers, became the world’s fastest supercomputer, with a performance level of 2.57 petaflop/s (quadrillions of calculations per second, for all the geeks in our audience, based on a standard test), substantially eclipsing the U.S. DOE’s Cray XT5 “Jaguar” system at Oak Ridge national labs in Tennessee, which runs at 1.75 petaflop/s. Third place is also held by a Chinese computer.
Supercomputers may seem long way from grid-competitive solar panels, long-range electric car batteries, or other cleantech gizmos, but advanced computational simulation is the keystone of most leading-edge scientific research, including nuclear energy, nanotech and materials science, proteomics and other advanced biotech applications. Basically, any very advanced science these days needs big computing horsepower. Leadership on the fastest-computer league tables has been traded off many times, between U.S., Japanese and European computing centers. China is a relative newcomer to the race, but is clearly the new elite.
Chu highlighted several crucial technologies — mostly in the areas of power generation and transportation — where China is already outpacing U.S. efforts, adding the U.S. must innovate or risk falling far behind. The following is from the DOE:
• High Voltage Transmission. China has deployed the world’s first Ultra High Voltage AC and DC lines — including one capable of delivering 6.4 gigawatts to Shanghai from a hydroelectric plant nearly 1300 miles away in southwestern China. These lines are more efficient and carry much more power over longer distances than those in the United States.
• High-Speed Rail. In the span of six years, China has gone from importing this technology to exporting it, with the world’s fastest train and the world’s largest high-speed rail network, which will become larger than the rest of the world combined by the end of the decade. Some short distance plane routes have already been cancelled, and train travel from Beijing to Shanghai (roughly equivalent to New York to Chicago) has been cut from 11 hours to 4 hours.
• Advanced Coal Technologies. China is rapidly deploying supercritical and ultra-supercritical coal combustion plants, which have fewer emissions and are more efficient than conventional coal plants because they burn coal at much higher temperatures and pressures. Last month, Secretary Chu toured an ultra-supercritical plant in Shanghai which claims to be 45 to 48 percent efficient. The most efficient U.S. plants are about 40 percent efficient. China is also moving quickly to design and deploy technologies for Integrated Gasification Combined Cycle (IGCC) plants as well as Carbon Capture and Storage (CCS).
• Nuclear Power. China has more than 30 nuclear power plants under construction, more than any other country in the world, and is actively researching fourth generation nuclear power technologies.
• Alternative Energy Vehicles. China has developed a draft plan to invest $17 billion in central government funds in fuel economy, hybrids, plug-in hybrids, electric and fuel cell vehicles, with the goal of producing 5 million new energy vehicles and 15 million fuel-efficient conventional vehicles by 2020.
• Renewable Energy. China is installing wind power at a faster rate than any nation in the world, and manufactures 40 percent of the world’s solar photovoltaic (PV) systems. It is home to three of the world’s top ten wind turbine manufacturers and five of the top ten silicon-based PV manufacturers in the world.
• Supercomputing. Last month, the Tianhe-1A, developed by China’s National University of Defense Technology, became the world’s fastest supercomputer. While the United States — and the Department of Energy in particular — still has unrivalled expertise in the useful application of high performance computers to advance scientific research and develop technology, America must continue to improve the speed and capacity of our advanced supercomputers.
Next page: Two research areas where the U.S. still leads
When the World Economic Forum and Accenture launched their latest look at global progress of smart grid technology, the authors selected Tianjian, China, for the debut.
The China debut caught my eye. Is it a signal that U.S. leadership in smart grid is giving way? There’s been much worry that the U.S. is losing its edge in clean technologies born here. It’s already happened with solar photo voltaic technology, which is dominated by China. Other sectors — such as e-car, battery and wind technology — are re-centering there, too.
In the smart grid space, the U.S. is a natural leader, given our huge energy appetites and how similar the smart grid is to the Internet.
“As the largest per capita consumers of energy in the world, the United States has both the opportunity and the responsibility to be at the forefront of this revolution,” said Bob Gilligan, GE Energy’s vice president of digital energy, in a statement as part of the WEF event.
Yet as its China debut suggests, the report makes clear that whatever head start the U.S. may have had, it’s being challenged by ambitious programs elsewhere. The report maps out the surprising scope of international efforts. For instance, while Washington committed $4.5 billion into smart grid as part of the stimulus, Beijing committed some $7.3 billion.
The question isn’t so simple as U.S. versus China, of course. China’s key focus isn’t to develop exports, at least not yet. Rather, it’s racing to build out its national grid to keep pace with rapid urbanization and economic growth. And it’s not alone. Newly wealthy India and Brazil, together with Kenya, according to the WEF’s report, are plowing funding into smart grid work to build infrastructure fast, as well.
That said, and unlike China, some other economies are more explicitly focused on developing smart grid technologies for export, the WEF found. These include South Korea, Japan and Singapore. Their plans dovetail nicely with domestic efforts to cultivate green technology industries and lower national energy use.
In Europe, billions are flowing into the sector as part of strong national commitment to build out renewables, roll out e-cars and lower the carbon intensity of the power grid.
To be sure, the sky isn’t falling. According to the WEF’s survey, the U.S. is tied with Europe as leaders in these technologies. Plus in fast-emerging markets like China and India, much of the money being poured into grid technologies is simply to deliver basic services, rather than cutting edge digital systems.
U.S. efforts are gaining speed too. While U.S. public funding in smart grid projects trails that of some other regions, private investment — led by utility spending — is slated to hit $7 billion this year, the WEF estimates. As much as South Korean and Singaporean players may hope to export smart grid gizmos to the U.S., big tech juggernauts here such as GE and IBM are already hustling to sell U.S. expertise into those and other markets too.
This context is worth remembering as the U.S. smart grid rollout goes through some early growing pains. We’ve already seen some barriers to early projects and anxiety is on the rise over the vulnerability of the smart grid to cyber-risks. These problems aren’t unique to the U.S., of course, and by fixing them, the U.S. smart grid could yet set standards and define the technologies, others will emulate.
A video of the discussion on the report by the WEF and Accenture can be seen here. The Q&A following the presentation is worth catching, given the caliber of attendees — including Duke Energy CEO Jim Rogers — and the thoughtful the discussion of the challenges facing the U.S. rollout.
President Obama is touting alternatives to foreign oil, research funds are flowing into renewable energy and venture capital is again surging into the clean technology sector. But the shift to clean energy is still a long way off. As established startups move towards building their first commercial facilities, some are struggling to find the funding to scale up. They’ve exhausted much of their venture capital and can’t yet satisfy the strict risk terms of traditional lenders.
The struggle to find funds to commercialize innovative clean technologies is turning into what industry insiders call the “valley of death,” delaying implementation of wind, solar power, low-carbon fuels, and systems that make energy use more efficient. To build their first full-scale facilities, clean technology startups can require up to 100 times more capital than new software or biotech companies. “Instead of dying for lack of $5 million, clean tech startups can stall and die for the lack of $50 million or $500 million,” says Greg Neichin, vice president of Cleantech Group, which tracks market trends. It may be easier to invent green technologies than to finance their commercial production.
Consider GreatPoint Energy. The Cambridge, Mass., company has raised $150 million in venture capital and strategic investor funding since 2005 to develop a process that converts coal into cleaner burning natural gas and that can capture and store its carbon dioxide emissions. Big companies, including AES Corp., Dow Chemical, Peabody Energy and Suncor Energy, lined up early to invest and team up with GreatPoint. Now that the process has been proven on a pilot scale, GreatPoint needs another $200 million to $400 million to build a plant big enough to prove the technology will work at commercial scale. That’s more than many venture capitalists are willing to risk. And because the technology is still evolving and GreatPoint’s business model is untested, project financiers and private equity investors lack the experience to assess the project’s risks…
Beijing has big plans to curb pollution and start a cleantech industry. But the global recession and looming trade frictions will test its resolve
The Sun-Moon Mansion, Himin Solar Energy's headquarters in Dezhou
China’s unprecedented growth in recent years has come at a terrible price. Two-thirds of its rivers and lakes are too polluted for industrial use, let alone agriculture or drinking. Just 1 in 100 of China’s nearly 600 million city dwellers breathes air that would be considered safe in Europe. At a time when arable land is in short supply, poisoned floodwaters have ruined many productive fields. And last year, ahead of most forecasts, China passed the U.S. to become the world’s largest source of greenhouse gases.
The immensity of these troubles has produced a result that may surprise many outside China: The nation has emerged as an incubator for clean technology, vaulting to the forefront in several categories. Among all countries, China is now the largest producer of photovoltaic solar panels, thanks to such homegrown manufacturers as Suntech Power (STP). The country is the world’s second-largest market for wind turbines, gaining rapidly on the U.S. In carmaking, China’s BYD Auto has leapfrogged global giants, launching the first mass-produced hybrid that plugs into an electrical outlet. “China is a very fast follower,” said Alex Westlake, a director of investment group ClearWorld Now, at a recent conference in Beijing.
GOVERNMENT SUPPORT
Understanding they are in a global race, China’s leaders are supporting green businesses with policies and incentives. Beijing recently hiked China’s auto mileage standards to a level the U.S. is not expected to reach until 2020. Beijing also says it will boost the country’s share of electricity created from renewable sources to 23% by 2020, from 16% today, on par with similar targets in Europe. The U.S. has no such national goal.
While most environmentalists applaud these developments, China watchers are voicing two very different sets of concerns. Some question whether China will really stand by its ambitious targets and are worried by signs of backsliding as the recession in China’s key export markets drags down economic growth. Another group, interested mainly in America’s own industrial future, fears that China’s growing dominance in certain green technologies will harm budding cleantech industries in the U.S. After all, China’s emergence comes just as the Obama Administration is trying to nurture these same types of ventures, hoping to generate millions of green jobs. Many of these U.S. businesses will have trouble holding their own against low-price competitors from China.
Beijing’s green intentions will soon be put to the test. China is in the midst of the biggest building boom in history. A McKinsey & Co. study estimates that over 350 million people—more than the U.S. population—will migrate from the countryside into cities by 2025. Five million buildings will be added, including 50,000 skyscrapers—equal to 10 New York Cities. And as quickly as new offices and houses multiply, they are filled with energy-hungry computers, TVs, air conditioners, and the like, sharply increasing demand for electricity, which comes mainly from coal-powered plants.
Environmental groups say it is therefore critical that Beijing promote rigorous, greener standards. And to some degree, that’s happening. A government mandate states that by the end of next year, each unit of economic output should use 20% less energy and 30% less water than in 2005. Portions of Beijing’s $587 billion economic stimulus package are earmarked for cleantech. On top of that, in March the Finance Ministry unveiled specific incentives to spark solar demand among China’s builders. Included was a subsidy of $3 per watt of solar capacity installed in 2009—enough to cover as much as 60% of estimated costs to install a rooftop solar array.
USING WASTE HEAT
Steps like these will help Himin Solar Energy Group in Dezhou, Shandong Province. Founded in 1995 by Huang Ming, an oil equipment engineer turned crusader against the use of fossil fuels, the company is the world’s largest producer of rooftop piping systems that use the sun’s rays to heat water. Its eye-catching headquarters, the Sun-Moon Mansion, showcases these heaters, which Himin cranks out in immense volumes—about 2 million square meters’ worth each year, equal to twice the annual sales of all such systems in the U.S. Because its water heaters sell for as little as $220, they are becoming standard in new housing complexes and many commercial buildings across the country.
Broad Air Conditioning, based in Changsha, Hunan Province, is also set to profit as Beijing pushes toward its green targets. By using natural gas and so-called waste heat from other machines and appliances instead of electricity, Broad’s big chillers can deliver two to three times more cooling per unit of energy than a conventional unit. In a similar fashion, Haier, headquartered in Qingdao, Shandong Province, combines low-cost manufacturing and a variety of advanced technologies to create affordable, energy-sipping refrigerators and other appliances. During the 2008 Beijing Olympics, Haier supplied more than 60,000 such devices for visiting athletes and tourists to use.
As these and other domestic players bump up against technological obstacles, they can draw on the expertise of many of the world’s top multinationals. In return for access to its domestic market, Beijing asks such companies as General Electric (GE), DuPont (DD), 3M (MMM), and Siemens (SI) to share their technology, help upgrade their China-based supply chains, and spread industrial processes to make manufacturing more efficient. These aren’t simply green practices, says Changhua Wu, Greater China director of the Climate Group, a consultancy in London that partners with companies to combat climate change. “They’re best practices.”
GE, for example, has transferred expertise to Chinese partners in everything from wind turbine construction to the building of low-pollution factories. At the Beijing Taiyanggong power plant, waste heat from the combustion process is recycled, resulting in around 80% efficiency, more than double the rate of most conventional power plants in the U.S. The bulk of GE’s sales of turbines for power plants in China are the ultra-efficient models. David G. Victor, a Stanford University professor who has studied China’s electric grid, says some of the coal plants being built there are “much more advanced than those we see in the U.S.”
Wal-Mart Stores (WMT), which buys some $9 billion worth of goods in China each year from some 20,000 vendors, infuses its supply chain with the latest ideas about energy efficiency. For example, Chinese factories that work with Wal-Mart are obliged to track vast quantities of data on energy use and make the information available for audits. “Many Western companies can’t track their own energy consumption,” says Andrew Winston, consultant and co-author of the book Green to Gold.
TORPEDOING U.S. SOLAR?
China’s early achievements in cleantech owe a lot to collaborations such as these. The benefits: China cleans up its own pollution, and the government-backed initiatives in solar and wind help drive down the cost of renewable energy systems in countries around the world.
But there is a downside. The rock-bottom prices for made-in-China green technology could make it impossible for cleantech ventures in the U.S., Europe, or Japan to compete. How, for example, will they go up against Suntech Power, based in Wuxi, Jiangsu Province, the world’s lowest-cost manufacturer of standard solar panels? The U.S. boasts plenty of advanced technology. But any efforts by Washington to nurture this sector could be quickly undercut by a flood of Chinese-made solar panels. Such a deluge is likely if there is a big increase in public subsidies for rooftop solar systems. “What [that would] do is create 10,000 Chinese jobs,” says Roger G. Little, chief executive of Spire Corp. (SPIR), a leading U.S. maker of manufacturing equipment for photovoltaics. “If we import all the [solar] modules, it will obliterate U.S. manufacturing” in this area.
A similar scenario exists in the much heralded area of electric vehicles. BYD, headquartered in Shenzhen, started selling its first plug-in hybrid, the F3DM, last year. It beat Toyota (TM) and General Motors (GM), both of which are developing such “plug-ins,” and hit the market with a price tag they probably can’t match: just $22,000. Henry Li, a BYD general manager, says the company will roll out a version of the car in the U.S. in 2011. Chevy’s answer to this car, called the Volt, is expected to cost about twice as much and won’t be out until next year.
How did BYD pull off this coup? Part of it is just being the new kid on the block. Today’s automobiles, with their advanced combustion engines, are the most complex mass-produced goods ever made, assembled from thousands of highly engineered parts provided by a web of suppliers. It’s difficult for a Chinese startup to compete on such a sophisticated playing field. But the emergence of a new, green-vehicle category clears the way. BYD was able to break in by leveraging its background as a battery maker. When it ran into technical hurdles, the company could draw on a deep pool of inexpensive, well-trained talent at China’s top engineering schools. BYD is also a leader in pure electric vehicles, the logical next step. The government is now putting some muscle behind BYD’s push. It is heavily subsidizing electric-car sales in about a dozen cities—in a stroke, making China the world’s biggest market for such advanced vehicles. Its goal is to boost domestic output of battery-powered vehicles to a half million per year in 2011.
How Washington and the beleaguered U.S. auto sector might respond to a wave of inexpensive electric vehicles from China is difficult to predict. And it is also unclear how China’s cleantech efforts in cars, energy, and other areas will be affected if key markets such as the U.S. and Europe don’t recover quickly from the recession. Chinese makers of solar photovoltaics, including Suntech, export about 98% of their production. They have been battered this year by a collapse in demand in Germany, Spain, and Japan, China’s top markets for solar gear. Suntech’s factories are currently running at half of last year’s capacity.
Even inside China, academics and business executives say Beijing needs to do more to bolster cleantech initiatives and make them recession-proof. For example, without better information on how such policies as the current Renewable Energy Law are to be enforced, “many of the terms are meaningless,” complains Himin’s Huang. And even when the terms are clear, companies don’t always adhere, says Zhou Weidong, the Guangzhou-based China director at the Business for Social Responsibility, a global consultancy promoting sustainable business practices: “Paying penalties is cheaper than complying with the law in many areas.”
At times, it seems as though Beijing is pedaling in the wrong direction. Late last year, China’s Environmental Protection Ministry loosened review standards on potentially polluting industrial projects. In an economic crunch, “environmental protection is downplayed to second, or third, or even fourth priority,” observes Guo Peiyuan of SynTao, a corporate social responsibility advisory firm in Beijing.
While acknowledging there has been some backsliding, most China watchers say the government is unlikely to stage a full-throttle retreat. Too much of its export growth is contingent on meeting strict environmental regulations. And Beijing recognizes that Chinese society can’t tolerate much more environmental degradation. The World Bank estimates damage from pollution—everything from decimated fisheries to premature human death—saps nearly 6% of China’s gross domestic product each year as well. For economic reasons alone, it will be difficult for China to turn back the clock.
To John Thompson, CCS is an acronym with more than one meaning. To anyone in the Global CCS Institute’s community it means ‘carbon capture and storage, or sequestration.’ As director of the 
