09 June 2011

China Leads in Cleantech, But Partnership Provides US Opportunties

Chris R. Brown
There are a number of credible voices on China and cleantech on Twitter.  One you may have overlooked is Chris R. Brown (@chrisrbrown).  He writes the China Solar Energy blog.  I recently interviewed Chris for The Green Skeptic.

Chris worked as a China policy analyst for US Naval Intelligence and the Defense Intelligence Agency and, later, as an analyst and researcher with Gerson Lehrman and Ergo Advisors.  He is now an independent consultant and freelancer. He holds a Master's in China Studies from the University of Washington, where he focused on Xinjiang, Kyrgyz language, Uyghur culture, and China energy issues.

We both recognize there are opportunities for the US and China to cooperate and collaborate on cleantech innovation. What are some of the opportunities with the best potential in your view?

Two opportunities with the best potential are: 1) US-China joint cleantech research and 2) US companies selling manufacturing equipment to Chinese PV module, cell makers. 

There has been a surprising amount of money both governments have pledged to research.  They have set up the $150 million US-China Clean Energy Research Center (CERC) that will support cleantech research on both sides of the Pacific.   

The best example of a US company profiting from China's commitment to cleantech research is Applied Materials and its Solar Technology Center in Xi'an.  It's the largest non-government solar energy research facility in the world. Several of the top Chinese PV companies are gearing up for increased production and companies that sell equipment used in manufacturing will do well.

I am less optimistic about US companies getting involved in China's domestic solar projects.  The country's solar market is still extremely small and major projects have run into difficulties.  I had high hopes for the First Solar utility level solar PV project in Ordos, Inner Mongolia and the eSolar CSP project in Yulin, Shaanxi.  The First Solar project is still live though behind schedule.  The eSolar project, however, seems to be dead in the water.

What advice do you have for US companies that want to work in China?

First find a strong, reliable partner.  There are layers of relationships that need to be maintained from the provincial government, provincial party leadership, municipal government, municipal party, sometimes provincial NDRC office and, with higher profile cases, national level NDRC and the utility companies.  Having a Chinese partner who you can trust is huge for maneuvering this complex web of relationships.

Another thing to keep in mind is that China should be treated as a collection of smaller countries in terms of energy policy.  This is why "Is China ahead of the US in developing clean tech?" is such a tricky question.  In level of investment, yes; in actual implementation and having grid-connected solar wind electricity, no.    

What are some of the Chinese companies you are watching?  How about US companies with a big China upside?

I am very interested in successful US-China partnerships.  One of my favorites is the ENN and Duke connection.  They have agreed to jointly work on solar projects in North Carolina and there are rumors they will be working together in Nevada on utility-level solar projects.

I watch Suntech closely.  I am particularly interested in their setting up a manufacturing plant outside of Phoenix, Arizona.  Why would a Chinese company set up manufacturing facilities in North America rather than taking advantage of the cheaper labor, property cost in China?  Suntech says that they are positioning themselves for a greater share of the future North American solar market. 

Santa Clara-based Applied Materials is doing interesting things in China.  They are one of the companies that sell manufacturing equipment to the Chinese PV cell and module makers.

What are your thoughts on China's pollution problem? Do you think China can continue to build its new green economy on the "back" of dirty air, water, and resource exploitation?

First of all, I wouldn't say China is particularly 'green'.  The current Beijing government is concerned with one thing - regime survival.   Energy is a problem because the Party's legitimacy rests on maintaining their high rate of economic growth. 

Lack of energy will cripple the economy and possibly lead to unrest.  China's growth rates since the early 70's have been the main piece of evidence the CCP has to prove that its strategy is working.  A slump due to energy shortages could seriously erode the Party's power.  So, Beijing is looking for any type of energy.  Yes, they are investing in solar but they are also investing in coal, nuclear.

Beijing is concerned about pollution but only when it could cause instability.  In some parts of the country, pollution has become serious enough that the central government takes it seriously but only when it is a health issue.  Being 'green' as some sort of global, save-the-planet consciousness doesn't interest them.

Who wins the cleantech race, China or the US? Does it matter?

Several studies over the last year or so have shown that China is investing more money in cleantech than the US.  There doesn't seem to be much debate there.  The people who say China is not winning the cleantech race point to the non-existence of a domestic solar market.  Chinese PV companies are geared for export. 

So, some say China is just cleverly taking advantage of the subsidies the rest of the world is pumping into cleantech to artificially prop it up since nowhere has grid parity. 

These same critics say that projects like First Solar's utility-level PV plant in Ordos, Mongolia are Potemkin Villages meant to fool the world into thinking China is 'green'.

Critics say China will never be serious about developing a domestic solar market while coal is so cheap. 

I disagree.  China is serious about developing a domestic solar market but implementation is a problem.  Beijing is serious about developing a solar market, first and foremost, because it would prefer to consume its own PV products.  China recently released its 12th 5-year plan and developing a domestic solar market is an important part of the plan. 

What's next for Chris Brown?

I am working with US and Chinese companies to facilitate cooperation and exchange.  I spent years analyzing China as a potential threat in the US intelligence community.  Now my big goal is to work to help the two sides profit while strengthening the world solar market.

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