The Green Leap Forward 绿跃进

This is a repost of my final column at Center for American Progress that was also reposted on Climate Progress, and an adaptation of excerpts of my recent full written testimony before Congress.

Foreign governments’ and businesses’ frustration and disgruntlement over China’s restrictions on trade and foreign investment is reaching fever pitch. First it was Jeff Immelt, the chief executive of General Electric in a speech in Rome earlier this month raising the question of whether China “want[s] any of us to win, or any of us to be successful.” Then it was the chief executives of BASF and Siemens together with German chancellor Angela Merkel in an exchange with Chinese Premier Wen Jiabao last weekend in Beijing, who all reportedly used pointed language to call China’s restrictive foreign investment and trade policies to question. These complaints, while valid, point to a larger problem here in the United States—we give the Chinese government leverage by not giving companies valid market alternatives.

There has been particular attention on Chinese government policies in the clean energy sector that favor domestic companies and products over their foreign counterparts. This is a new industry and represents a rapidly growing market for foreign firms. But there is also a widely held notion in the international business community that clean energy should be more open to foreign competition since it doesn’t raise the same national security concerns as tightly held industries such as defense or telecommunications.

Despite a substantial 19.6 percent rise in foreign investments into China over the first six months of this year, there is still a growing question whether China is using industrial policy beyond legitimate means of promoting domestic development of fledgling industries, and actively shutting out foreign competition so as to cultivate national champions. After all, China’s Medium-to-Long Term National Plan for Science and Technology Development, or S&T Plan, released in 2006, does explicitly call for the “the country’s reliance on foreign technology [to] decline to 30 percent or below.”

The frontlines of this debate lie in the Chinese government’s policies to promote homegrown innovation, or “indigenous innovation” as it is called. The National Indigenous Innovation Accreditation Program, initially announced last November, directs Chinese government agencies and provincial governments to procure products listed in a newly created product catalog covering six categories from companies that meet certain criteria. The release had foreign businesses up in arms. Foreign companies rightly charge that the criteria used to determine whether or not a firm’s product qualifies for the catalog discriminates against their products and excludes them from potentially lucrative Chinese government procurement contracts.

Excellent overviews of the details surrounding these government procurement guidelines are available elsewhere, but several points are worth bearing in mind. First, what the Chinese government is doing is More »

July 30th, 2010 | Tags: China, energy, environment, innovation, international trade, policy, protectionism | Category: innovation, policy | Leave a comment

Two weeks ago I testified before the U.S.-China Economic and Security Review Commission, or USCC, a specialized body created by the U.S. Congress to “monitor, investigate, and submit to congress an annual report on the national security implications of the bilateral trade and economic relationship between the United States and the People’s Republic of China, and to provide recommendations, where appropriate, to Congress for legislative and administrative action.”

The hearing was about China’s policies to promote green technologies, and was actually held in Toledo, Ohio, a city struggling economically due to its long-standing codependence on nearby Detroit’s ailing auto industry, but which also sees some sort of future in clean energy technologies.

Below is my oral statement, which lasted just 7 minutes long.

I also submitted 13 pages of written testimony, available here (pdf, as submitted to the USCC and has footnote citations) or here (html, repost on Climate Progress). I encourage the reader to read the full testimony as it allowed me to go much more in depth on specific things.  The first part of the testimony may be familiar to faithful readers of this blog; it is primarily an adaptation of a chapter I wrote for a larger Center for American Progress report called “Out of the Running?” that provides an account for China’s comprehensive approach to developing its “new energy” sector.  The latter part is more original stuff, as I (i) make the case for how China’s clean energy push is in fact consistent with its overall economic reform , e.g. Scientific Development, reduction of excess industrial capacity, natural resource price reform, western development, boosting domestic consumption, and Going Out strategy; (ii) describe China’s activities in innovation and R&D and its desire to create, not just produce, energy technologies of the 21st century; (iii) address criticisms that China’s “indigenous innovation” policies are protectionist in nature by pointing out the myopia of such observations from a US (or EU for that matter) policymakers point of view; (iv) provide thoughts about what the proper U.S. policy response should be.

My Oral Statement:

Download the full written testimony (pdf)

Good morning and thank you for the opportunity to testify before this distinguished commission on China’s policies to develop clean energy technologies.

My name is Julian Wong and I am a Senior Policy Analyst at the Center for American Progress Action Fund. I speak before you today after having spent the past two and a half years of my professional life almost exclusively devoted to analyzing China’s energy policies. Three months ago, I led a delegation of senior staffers from the Center, along with key Senate staffers from Ohio and other important districts, to Beijing and the surrounding area to look at China’s advances in clean energy.

In a Washington Post op-ed last year, two esteemed business leaders, venture capitalist John Doerr and General Electric CEO Jeff Immelt, said More »

July 29th, 2010 | Tags: China, energy, environment, innovation, policy, United States | Category: innovation, policy | Comments (1)

In this post, originally published in Harvard Asia Quarterly. I draw the connections among food, water and energy systems in China and make the case for the urgent need for more integrated approaches to resource management.

Related posts:

• Watergy: China’s Looming National Security Crisis
  
• China’s New Water Efficiency Targets (and Implications for Food and Energy)

China’s rapidly growing economy is very quickly testing the limits of its resource constraints. While China is home to a quarter of the world’s population, it is endowed with disproportionately less arable land, oil and water.

Such natural resources are vital to any nation’s ability to be self-sufficient, but China’s predicament is especially dire not only because of its large population, but also its rapid urbanization and climate change, both of which will exert more intensive demands on food, energy and water supply. Yet, other than recognizing that water is essential for agriculture, the discussion of each resource constraint is often conducted in isolation, without paying heed to the inter-linkages of food, energy and water systems.

The Example of the Yangtze River
China’s Yangtze River (pictured right) is the third longest in the world and stretches over 6,000 kilometers from the Qinghai Plateau in the west towards the East China Sea at Shanghai. Throughout China’s history, it has played a central role culturally, socially, and economically. It is the unofficial dividing line between China’s north and south, flows through deep gorges in Yunnan Province that have been designated as a UNESCO World Heritage Site, and serves as the lifeblood upon which much of China’s agricultural and industrial activity has depended on to the present day. All told, the Yangtze River system produces 40 percent of the nation’s grain, a third of its cotton, 48 percent of its freshwater fish and 40 percent of its total industrial output value.
The Yangtze has now become a victim of its own success. With China’s rapid economic industrialization over the past three decades, the Yangtze has evolved from a source of life and prosperity to a symptom of the limits of China’s unabated economic pursuits. It has become a depository for 60 percent of the country’s pollution, making it the single largest source of pollution in the Pacific Ocean. The Yangtze is also home to two massive and highly controversial hydraulic projects—the Three Gorges Dam, the world’s largest hydro-electric power facility, and the South-North Water Diversification (SNWD) project (see map illustration below), an unprecedented, multi-decade effort to channel water from the water-rich south to the arid north—each a symptom of a larger ill. The former project points to China’s struggles to maintain energy security and desire to use cleaner sources of energy in a carbon-constrained world, while the latter points to its sheer desperation to address a gross imbalance in the distribution and use of water resources across the Chinese sub-continent.

Neither project comes on the cheap; the Three Gorges Dam bore a price tag of US$30 billion and the SNWD project is projected to cost twice that. Both projects have caused, or will continue to cause, the dislocation of hundreds of thousands of citizens and the significant alteration of landscapes, including the destruction of arable land. Needless to say, both projects have required, or will require, massive inputs of concrete, steel and energy. Together, Three Gorges and SNWD point to a fragile interrelationship between energy, water and food. Beyond the Yangtze, the “food–water–energy trilemma” represents a looming and complex threat to China’s economic stability and national security.

Watergy
Climate change now stands front and center of energy and environmental agendas around the world. In virtually every case, More »

July 9th, 2010 | Tags: agriculture, biofuels, China, energy, environment, food, food-water-energy nexus, hydro, water, watergy | Category: agriculture, biofuels, hydro, water | Leave a comment

Its been busy and its time to play catchup on some of the work I’ve been doing in recent weeks.  Let me start by republishing a recent conversation I had with Derek Thompson of The Atlantic, originally published here.

DT: My readers are always asking how climate change legislation in the U.S. could impact China’s energy policy. In broad strokes, how is China moving on green energy already?

Me: It’s across the board. In China they have for several years already realized that their direction is not sustainable. They have undertaken some of the most ambitious programs in energy efficiency and renewable energy deployment in the world. They’ve created medium and long term plans and set national numerical targets, such as producing 100 to 150 Gigawatts of wind energy by 2020. There is a national goal of reducing energy consumption per unit of GDP over the 2005 to 2010 term by 20 percent. In the run-up to Copenhagen they promised to achieve a 40 percent reduction in carbon intensity.

Have they kept up with their promises in the last few years?

Well, we saw great progress between 2006 and 2008. But the financial crisis forced them to respond with a stimulus package that allocated a lot of money to infrastructure projects that had the result of stimulating heavy industry. That caused energy efficiency to decrease. But the central government has taken that setback very seriously.

We’re having trouble convincing lawmakers to pass significant energy legislation in the States because many of them don’t see an upside in aggressive legislation. What good does China see in all these energy plans?

Five things. The number one concern is energy security. China is already a net importer of coal, despite conventional wisdom that they have abundant coal resources. That’s because a lot of the supply is in remote areas while the demand is more on the coast, and there’s inadequate logistics capacity to move the coal around. Also, they already import 50% of their oil. Their auto market is the biggest in the world, yet it’s just getting started. Car penetration rates are a fraction of the U.S. As it continues to grow, China will see increased demand for petroleum products.

Second, pollution is a factor. Local pollution incidents create social disruption that has led to citizens’ unrest. This is important because the Chinese’ mandate in power is predicated on social stability. Three, China sees the investment in green tech as a driver of innovation and economic growth. They need to conserve resources and are looking for less resource intensive sources. Fourth, tech innovation will create jobs and lift the nation. Fifth, they feel international pressure to start acting on mitigating climate change and they want to be seen as a partner in this field.

What evidence have you seen that China is acting on these bold plans? More »

July 8th, 2010 | Tags: China, energy, environment, policy | Category: policy | Leave a comment

State Council presses for accountability for urgent energy conservation measure; NDRC issues 12-point circular to deepen economic reform.

If China is to achieve its 20 percent reduction in energy intensity in the current five year period, it will have to undertake some drastic actions in the months that remain.

And drastic action is just what the Premier has ordered.

Last month, the central government announced that energy intensity for the first quarter of this year rose 3.2 percent (from what baseline is not clear, although the press is saying its from Q1′09 rather than Q4′09).  This represents a reversal of a downward trend-the first time since first half of 2006 that energy intensity has actually risen.  This news also comes in a month after it was announced that China’s first quarter GDP grew by a remarkable 11.9% year-on-year, signaling that a recovery from the financial crisis is in full swing and stoking fears of inflation.

At the end of 2009, the government reported that China had achieved a 14.38 percent reduction in energy intensity from 2005 levels, putting it slightly behind pace (16 percent) to achieve its 2010 target of 20 percent.  That said, no one I’ve spoken to about China’s energy intensity numbers understands how the government arrives at its statistics.  Recall previous guest post on this issue, and this more recent reflection.  At best, China is at 8 percent energy intensity reduction, folks tell me.  But whether its 8 percent or 14 percent, the admission by the government that energy intensity has started to go up means that it will be extremely difficult under any circumstance to hit that cherished 2010 target.

The rise in energy intensity is attributed to the resurgent heavy industry sectors that were the beneficiaries of the economic stimulus program.  So much for all that hype about China having the greenest stimulus in the world.  (As I recently pointed out, the reality about China’s “green stimulus” is much more complicated.)

But now, Premier Wen and the State Council have apparently had enough.  In a nationally televised videoconference, Premier Wen used very strong language, saying that energy conservation is a “fundamental national policy” that concerns the “survival and development of the Chinese people.”  Government communications have gone on to attribute Premier Wen as using the vivid metaphor of needing to use an “iron hand” (”采取铁的手腕“) to eliminate backward heavy industrial production capacity.

Wen went on to describe seven broad points of urgent action (in Chinese).  These seven points were a subset of 14 points outlined by the State Council (in Chinese), which consist of the following headings:

1. Strengthen the sense of urgency and responsibility for energy conservation. More »

   

   June 2nd, 2010 | Tags: China, economic restructuring, energy efficiency, energy intensity, environment, heavy industry | Category: energy efficiency | Leave a comment

My blogging has been irregular as of late due to heavy commitments with my day job, but to compensate, I hope my blog readers have also been following my regular tweets at @GreenLeapFwd.  Today,The Guardian named me among the “Top 50 Twitter climate accounts to follow“, and #4 among climate bloggers.  A great honor!

I am equally thrilled that my colleague and uber-prolific blogger, Joe Romm, also made the list, coming in #1 among climate bloggers.

Thanks to my Guardian and followers who helped shape Guardian’s list.  Twitter has allowed me, in my many moments of insane busyness, to still share links on the latest energy, environmental and climate news on or from China.

But that’s not excuse to getting back to some serious blogging…

Follow The Green Leap Forward on Twitter if you aren’t already (and while you are at it, on Facebook and LinkedIn as well)!

May 11th, 2010 | Tags: China, energy, environment, twitter | Category: information strategies | Comments (1)

A Look Under the Hood at China’s High-Speed Rail Investments, originally published here.

We took the high-speed CRH3 train that runs between Beijing and Tianjin. Technology for the CRH3, assembled in China, was originally derived from Siemens’ Valero line of train technologies.

President Dwight D. Eisenhower put a down payment on the U.S. economy in 1956 by signing the National Interstate and Defense Highways Act. This wise investment in a modern, transformative transportation infrastructure—in the form of 41,000 miles of interstate highways—enabled the rapid movement of people and goods across the nation and was vital to our astounding economic progress for the next 50 years.

Today, it is China that is leading the world in a key next-generation transportation technology: high-speed rail. China has already built 4,000 miles of rail featuring trains with average speeds of 120 miles per hour or greater, and the country plans to build an additional 10,000 miles of high-speed rail connecting all of China’s major cities by 2020.

CAP experts experienced the high-speed rail firsthand during our recent fact-finding mission to China. We took the train from Beijing to Tianjin, reaching a top speed of 205 mph and covering the 73-mile journey—roughly the distance between New York and Philadelphia—in less than 30 minutes. Stepping off the rail platform, it was hard not to get the feeling that China is racing ahead in investing in mass public transit infrastructure while the United States is lagging behind in the race to develop clean energy industries.

China’s $300 billion investment in high-speed rail

China already boasts a rail network that, including both standard and high-speed rail, is more than 53,000 miles long. And China plans for that network to reach 68,000 in 2012 and 75,000 by 2020. All of China’s provincial capitals have been connected by rail since the 1960s, and unlike the United States, rail is already a major mode of intercity passenger transportation.

Inside the train operator’s cockpit of the CRH3. In its less-than-30-minute journey from Beijing to Tianjin, the train has a maximum speed of 330 kilometers per hour (205 miles per hour).

The country began planning its nationwide network of high-speed rail in the early 1990s. And China began implementing a series of six “speed-up” campaigns in the late 1990s to modernize its existing rail infrastructure by increasing the speed and capacity of its lines. It also plans to build new passenger-dedicated high-speed rail lines. Indeed, the centerpiece of China’s Medium- to Long-Term Railway Network Plan is a new national high-speed rail grid overlaid onto the existing rail network. The new grid would consist of four north-to-south corridors, four east-to-west corridors, and two additional More »

May 4th, 2010 | Tags: China, energy, environment, high-speed rail, highway infrastructure, mobility, transportation | Category: transportation | Comments (1)

Hydropwer accounts for the overwhelming share of China’s alternative energy mix, but is perhaps also the one of the more controversial alternative energy options due to the ecological and social impacts of dam construction.   This guest post by Peter Bosshard, policy director of International Rivers Network, examines China’s growing pains in its increasing role as an exporter of hydropower technology and expertise.

A few years ago, Chinese dam builders and financiers appeared on the global hydropower market with a bang. China Exim Bank and companies such as Sinohydro started to take on large, destructive projects in countries like Burma and Sudan, which had before been shunned by the international community. Their emergence threatened to roll back progress regarding human rights and the environment which civil society had achieved over many years. However, new evidence suggests that Chinese dam builders and financiers are trying to become good corporate citizens rather than rogue players on the global market. Here is a progress report.

In December 2003, China Exim Bank approved $519 million in loans for the Merowe Dam in Sudan (pictured right). It thus helped kick off a project which would displace more than 50,000 people from the fertile Nile Valley into desert locations, and for which the Sudanese government had failed to attract funders for many years. China Exim Bank also provided support to projects in Burma which no other funder was prepared to touch. “The Bank specializes in financing projects that no other financial institutions would fund”, International Rivers and Friends of the Earth warned in July 2004.

Chinese dam builders wasted no time rolling up the international market. Low costs, access to cheap loans and a big portfolio of domestic projects make them attractive partners for clients around the world. We are currently aware of at least 216 dam projects in 49 countries which have some form of Chinese involvement - and counting. The president of Sinohydro recently estimated that his company controls half the More »

March 31st, 2010 | Tags: China, energy, environment, hydropower, Peter Bosshard | Category: hydro | Leave a comment

Yesterday on March 4, my colleagues and I finally released this long-awaited report “Out of the Running?  How Germany, Spain, and China Are Seizing the Energy Opportunity and Why the United States Risks Getting Left Behind” (picture of the report cover, pictured right).   As the title implies, it is a survey of how three countries with very different political economies are each adopting comprehensive policies to develop their clean energy sector in a way that the United States isn’t.  The table of page 5 of the report really sums it all up.  Germany, Spain and China have comprehensive and coherent and long-term approaches to developing their clean energy industries, while all the United States has for the most part are state-by-state and temporary policies.  The result?  The United States ranks only 19th in the world in clean energy product sales as a proportion of GDP compared to Germany at third, Spain at fourth, and China at sixth.

The report was launched at a major event co-sponsored by the Center for American Progress and Apollo Alliance on March 4th (conference agenda here) in which I spoke on a panel, walking through the main elements of the report.  The report was picked up by the New York Times.com, which featured a few nice quotes from me.

I re-post the chapter on China below (look at the full report for an equally thorough examination of Germany’s and Spain’s policies).  The first part of the chapter looks at China’s accomplishments thus far across the clean energy value chain of innovation, manufacturing, deployment, exports and job creation.  The second part takes a closer look at the policy tools, using the three-pillar framework of market creation, financing and infrastructure that I have previously articulated in a conference at RETECH 2010 last month (but also take note in that lecture that I point out that the fourth and fifth pillars of information transparency and international collaboration will be important for China’s future development of its clean energy economy).   Here’s the China section: More »

March 5th, 2010 | Tags: China, energy, environment, finance, infrastructure, policy | Category: capital and finance, policy, uncategorized | Comments (2)