The following is the complete transcript, modified and supplemented for completeness and readability, of the closing speech that the author of this blog (pictured below) delivered on November 11 at the JUCCCE Clean Energy Forum in Beijing.
We are at war. A world war. But unlike World War I or II, this is not a war about military tanks, but it’s a war about gas tanks. This is not a war about military strength, it’s a war about political strength, and innovation. This is not a war about conquering territories, its about conquering our addiction to fossil fuels. And unlike the first two wars, we are all fighting from the same side. We are engaged in a global energy and climate war. We have essentially, through our reckless consumption of the earth’s natural resources, provoked an unanticipated response in the world’s climatic system. We have essentially pitted Mother Nature against Mother Nature, and we are all caught in the middle.
So what now?
We need a serious restructuring of the way we organize our energy system, implement new rules and policies, and adopt new ways of using energy. We need to, as Rob Watson says, change transform “ego-nomics” into “eco-nomics,” and we do this by appropriate adapting human laws to the immutable laws of nature.
So how do we get there? How do we achieve the innovation to meet the energy-climate challenge? We need an smart and well informed mix of regulatory and market mechanisms. There is no single silver bullet, but I believe that over the past two days of discourse, we have collectively started forming a framework for the array of solutions, a full complement of many green bullets to get the green revolution under way. I see three themes emerging from our discussions: innovation, information, and empowerment.
Some say we need to keep pressing on the technology front. I would like to suggest the use of a broader term. We need to keep pressing on the innovation front. For where “technology” refers to, essentially, new machines, and often associated with high tech, expensive and complicated machines, “innovation” includes all that, and much more. It includes low-cost and low-tech machines that may be boring and unsexy, but are just as effective, such as soil meters that measure nitrate content or solar water heaters. It includes putting all these machines in the context of the operating environment, adopting a holistic, whole-systems approach to implementing not just single technologies, but a set of complementary technologies, like is required in an integrated smart grid, electric vehicle infrastructure or smart urban planning. It includes non-technological innovation, such as financial innovation, social innovation or even cultural innovation. With a broadened definition of innovation, therefore, it suggests that an alternative model to the one-way flow of finance and technology from developed countries to the developing countries exist. It suggests a role for an increasingly innovative society such as China’s to contribute certain systems it has developed at low costs and large scale, such as solar water heaters and drip irrigation, as Jim Brottcher of Focus Ventures mentioned just earlier. It suggests that we really see international cooperation as a joint effort, as the “J” and “C” in JUCCCE implies. We heard Marc Porat, the founder of four green businesses and who has found many innovative and interesting forms of innovation in China, make the case for two-way green trade. So perhaps its time to stop thinking so much about “technology transfer” and to think more about “innovation exchange”.
The second theme is information. Bringing the right information to the fore is crucial to help policymakers, the private sector and society as a whole to make the right energy and environmental decisions. We need to debunk false assumptions brought about by murky data, reduce information asymmetries that lead to inefficient decisions, and dispel ignorance about certain energy realities that creates a deep rooted inertia to reshape our energy future. We need platforms for data reporting, for statistical analysis and benchmarking, so as to empower all stakeholders to take action. This brings us to the next theme.
The third theme of empowerment is what really ties everything together. It is about mobilizing stakeholders to do what they can to reshape their environment, to engage, to innovate, to deploy and to monitor and to refine and to innovate some more. It certainly relates to getting the right information in their hands. But it is also about creating institutional and organizational structures to encourage both individual and collective action, giving that extra push for people to act with that information in their hands. With respect to energy decisions makers in government or industry, we need collaborative knowledge and innovation exchange, the facilitation of which is the very mission of JUCCCE. With respect to civil society and the younger generations in particular, the use of social media, creative educational programs can be effective tools in catalyzing action.
For the remaining time, let us revisit the main messages of each panel session, and keep the three themes of innovation, information and empowerment in mind.
Debunking the Myths
We kicked off the conference with a session on the facts and on the importance of getting the right information to the right people. It is impossible to come up with the right solutions with the wrong data. And it to jointly cooperate, you also need trust, and it is hard to trust with misunderstandings and misinformation. Mark Levine of the Lawrence Berkeley Labs helped us distinguish several key myths from realities about China’s energy industry. Things are not as bad in China as popular opinion holds. At the same time, however we heard from Li Junfeng, who somberly set out the real challenge-moving away from China’s firmly entrenched coal energy structure. That is no myth. Because, as Steve Papermaster of PACT said, that policy and investment decisions take time to trickle down through the system, we need to act with haste, but we need to make such decisions on an informed basis. The China Energy Databook by the LBL and the JUCCCE Energy Blueprint (a web-enabled framework for turning analysis into action, mapping out transformation in energy use with global, multi-sector cooperation) are other bodies of work that will help us overcome a lot of information asymmetries and help policymakers, scientists and entrepreneurs come up with sounder strategies based on good data and information.
Our first sitdown panel was on the topic of government cooperation. Mr. Papermaster observed that as a cross-border NGO, JUCCCE is uniquely positioned, and not straight jacketed in the way government bodies are, to promote sustantive international collaboration. Mark Ginsberg of the U.S. Department of Energy described the various forms that US-China collaboration is taking place, from the Asia Pacific Partnership to the Strategic Economic Dialogue to green buildings. But we are all in this together, and collaboration cannot be confined to the governmental level. Such collabroation has to take place at all levels, at the governmental, university and civil society level, says Jiang Zhaozhu, of NDRC.
So what areas should cooperation focus on? Secretary-General Li Junfeng acknowleged the importance of dialogue-based cooperation, but urged parties to take the extra step for technology cooperation. Mr. Jiang identified cleaner coal solutions and second generation biofuels and energy efficiency as important areas for collaborative innovation. Tom Tolarkson of California emphasized social innovation, in the form of strengthening energy education, basic research capabilities and information dissemination. Truly then, I believe that we are pressing forward with innovation in the broadest definition of the word. And today’s presentations on urban planning and electric vehicle systems make this case even stronger.
Implications of the Widening Energy Gap
As the rate of urbanization worldwide, and especially in China increases, we are witnessing an increasing energy demand gap between urban and rural areas. This has enormous implications and it is important that we address the role of buildings in our energy consumption patters. LBL, as described by Mark Levine, has started modeling work to show how we can decelerate energy demand in industry and buildings, while Marc Porat described how some of his business ideas are creating more sustainable materials for construction. Mr. Porat strongly suggests that China take a quantum leap to strive not just for incremental increases in energy efficiency in buildings, but to aim for loftier Net Zero Energy goals. Jonathan Woetzel, in his presentation of the McKinsey Report on “China’s Carbon Cost Curve” suggests that passive design is a key lever in greening the construction industry. Considering the rapid pace of construction in China, we need such bold targets.
Towards Cleaner Coal
We had a session on cleaner coal. Mr. Fang Jianguo talked about the various pollution problems at various steps of the coal supply chain, and emphasized the importance of international collaboration for cleaner coal. Dave Mohler of Duke Energy helped us understand that carbon capture and storage, or CCS, is not a single technology, but a system of four technologies involving capture, transport, storage and verification. CCS is controversial, lets not kid ourselves. It is expensive and very geologic specific, and so the ability to replicate and scale is a key concern. We need to better understand how we can accelerate IGCC and CCS up the learning curve so as to be able to implement these solutions at the “Chindia” price, as Vinod Khosla would say. Perhaps the solution lies in recognizing Mother Nature as the ultimate inventor. Calera, as we hear Brian Curtis describe, is engaging in biomimicry of corals to sequester carbon dioxide in sea water, and subsequently make sustainable bricks in a creative doubly play. Another potential game changer is a novel coal-to-liquids process that Accelergy is developing. It has built a collaborative alliance and are engaging in R&D in China. Details on their technology are a trade secret at this stage, but we heard from Rocco Fiato that the company engages in a process with a substantially lower carbon footprint. I, for one, am looking forward to hearing more, and do hope that it also has a lower water footprint compared to conventional CTL.
An interesting question on lack of IP protection in China was posed to the panel. Panel moderator Sung Ming, of the Asia Pacific Clean Air Task Force observed that such fears were often overstated, and that especially with credible Chinese companies, IP protection is a non-issue, with Accelergy’s JV with ENN being a case in point. I tend to agree. History shows that IP protection is a function of an economy’s maturity, and as China develops and innovation flourishes, there is no reason to believe that IP protection will not correspondingly strengthened, as Chinese companies begin to rollout their own valuable innovations that they themselves would want protected.
We had a most interesting panel on the topic of Smart Grids. As we know, JUCCCE has launched a Smart Grid Initiative. We learned that a more efficient, optimized grid that allows for two-way travel of electrons and information is a linchpin to a renewable energy revolution. As Bredan Herron of CURRENT Group described, we have much to optimize for a grid with an efficiency of 11%. There are many components and aspects to a smarter grid. Bother Dave Mohler of Duke Energy and Peter Corsell of Gridpoint emphasized that any approach to redesigning the grid must be made at a holistic network level with the end-game in mind, integrating software with hardware, providing information and control to end users and electricity providers. We must think of utilities as not selling electrons per se, but of selling energy services. Utilities, in turn must think of not only supplying ubiquitous, cheap and reliable power, but also power that is clean and efficient.
We need to recognize, however, that there are differences in smart grid initiatives in the U.S., versus those in China, as Hu Xue Hao and Bai Xiao Min of Chinese EPRI and Henry Yu of IBM made clear. China’s initiatives focuses more on transmission and less on distribution as it does in the US. It focuses on Automatic Meter Reading, not Advanced Metering Infrastructure. There is an emphasis on larger scale renewable energy generation. And rural electrification initiatives in China also pose unique grid connection challenges. It is important for cross-border collaborators to appreciate these nuances in approaches.
Kickstarting Local Solar Deployment
Solar PV power offers a lot of potential to cleaning up our energy system. As Ma Xuelu, representative of Baoding City’s Solar Energy Demonstration City describes it, solar is truly the “harmonious energy.” China is now the world’s leading manufacturer of PV modules, but unfortunately, it exports 95% of its production. As Li Junfeng points out, the time is now right in China to actively promote PV, and the government has launched a two pilot projects, one in Ordos, Inner Mongolia and another in the island of Chongming near Shanghai (with a tariff of RMB4/kWh established). Gao Jifan of Trina Solar explained how there are misconception of PV that must be dispelled; PV is neither as costly nor is its manufacturing process as energy intensive as some critics believe. Grid parity is achievable within 5 years, and the energy payback for PV can be as low as 2 years, while the lifespan of solar panels are 30 years. Mr. Gao, Ray Sun of Applied Materials, and Zhang Boxun of Suntech recommend a host of things to kickstart local solar deployment. Apart from the private sector working on increasing PV efficiencies and lowering the cost per watt, the government should consider preferential tariff policies for solar, resolve interconnection issues with the grid, encourage net metering, and even exploit higher values of use, such as in the higher end real estate market.
As someone who has been looking at the solar industry as well, I would add my two cents, and suggest that because installation costs account for roughly half the costs of adopting PV, that seeking ways to standardize and optimize installation processes represents a viable opportunity for cost reduction. The applicability of financial innovation employed such as companies like SunEdison in the US can also be introduced over time to China so as to reduce the upfront investment of solar to the end-user, and help transition to a mentality of purchasing clean energy services rather than expensive solar panels.
Ramping Up Renewables
It is clear that we need to ramp up the mix of renewable energy. We need to remove the stumbling blocks, such as the supply chain constraints, as Gerald Paige described in the wind industry. The nurturing of a domestic clean tech manufacturing industry, a push towards self sufficiency in low carbon/cleantech such as the efforts in Baoding, as its mayor Meng Xiangwei has championed, is a good reason to be optimistic, and to realize Matt Targett’s vision of renewable energy making a non insignificant impact on displacing coal.
The efforts to green our cities are in many ways the ultimate challenge in China. The folks at McKinsey have demonstrated very clearly the unstoppable trend of rural to urban migration. 400 new cities over the next 15, 20 years. We must have a positive outlook on urbanization, not see it as a threat, according to Stefan Lehman of UNESCO. We need to move away from the building level and to on an urban, city scale.
We hear of many Greenfield ecocity projects and given China’s unique migration patterns this is surely important as brand new cities get established on bare pieces of land. But there is also a huge stock of existing urban infrastructure that will have to support more and more people. The examples of Xiamen and Urumqi provide leading examples of two cities of very different circumstances and demographics and stage of economic development on their way to making this transition. Worth taking not is how both projects focus on not just hardware, i.e. infrastructure, but software, i.e. CDM financing, social arrangements, institutional arrangements, psychological motivations. We need both the hardware and software to fully empower the city’s residents.
Another example of software was introduced by Anne Niederberger of Policy Solutions. She talked about how her organization is designing a scientific system of urban productivity benchmarking based on ISO standards that can provide report cards to mayors trying to transition their jurisdictions to low carbon cities. Again this is about bringing information to the forefront of decision making through feedback systems. And as we know, mayors and other government officials will soon have their promotion prospects evaluated by energy and environmental criteria. And today, we see how JUCCCE is working with mayors across China to empower them with the knowledge and tools to deploy clean energy solutions in their cities through the official launch of the JUCCCE Mayoral Training Program.
Ms. Niederberger proposed the formation of a JUCCCE task force on urban productivity. I second that proposal.
Green Development and infrastructure
Panelists of the Green Development and Infrastructure panel highlight the cognitive dissonance involved in focusing our sustainability efforts just on the design and construction of buildings. We need to look both upstream at the land development, site selection stage, as Stanley Yip of ARUP points out, and also downstream with respect to ongoing operations of a building as David Hathaway points out, and as Warren Smith of the Venetian described that their company is doing for their casino operations. Xu Wei of the Chinese Academy of Building research also told us of how, in developing China’s green building codes, concepts of upstream and downstream considerations have been considered.
Other than new fabrication, we should consider precision modular pre-fabrication for economies of scale and waste reduction, and also re-fabrication, i.e. re-purposing existing buildings, to conserve embodied energy.
Separately, brownfields present not only an opportunity to rehabilitate, but to rejuvenate by converting them into cleantech hubs. Jon Scharfman of Unviersal Paragon told us of how China can learn from the Baylands example of converting industrial wasteland into cleantech manufacturing facilities.
Transportation must be tackled at a systems level. There is little substitute for intelligent urban planning, integrating mass transit and pedestrianization as major mobility options, as Dr. Yang Fuqiang of the Energy Foundation reminds us. Another systems level innovation is the introduction of the electron economy concept as we have heard from Arthur Wang of McKinsey and Marshall Towe of Better Place. Its not just a transportation solution, its an entire energy ecosytem built on a arrangement of electric vehicles (EV), batteries, smart grids, renewable energy sources of energy. There is also a role for biofuels as we wait for the costs of EVs to come down and EV infrastructure to be built. Biofuels can be used without engines changes and little other infrastructure investments other than a biofuel distribution network.
In the Greening Industry panel, we learnt about a few rigorous frameworks for improving energy performance in heavy industry. Lynn Price of Lawrence Berkeley Labs told us of the Top 1000 Energy Consuming Enterprise Program, a top-down nationwide program introduced in 2006, and Terry Fry, Sr. of Nexen and Chen Jianghua, Exec. Director of National DSM Instruction Center shared with us development of the Industrial Demand-Side Management Procedures Manual for China, a joint international collaborative effort between US and Chinese organizations, which is currently being reviewed by NDRC.
Companies like TCP, Tetrapak and Haworth are leading the way in the lighting, packaging and furniture industries, respectively to optimize performance and efficiency and help their downstream customers improve their supply chain carbon footprint. Ellis Yang of TCP announced the development of a
Super-Compact Fluorescent Light”, to be unveiled to the market in 18 months and that will provide 20-30% in efficiency improvements over the current CFL technologies. TCP, Tetrapak and Haworth all also lead by example by reducing their upstream carbon footprints through energy efficiency and/or renewable energy measures.
As we head towards a financial downturn, lean manufacturing will take on greater importance as waste reduction means costs savings, emphasized Marc Cotter of Haworth.
Show Me the Money
Three venture capitalists discussed the opportunities and challenges facing the Chinese cleantech environment. Ira Ehrenpreis of Technology Partners highlighted the fact that 75% of cleantech investments so far have been in solar and biofuels, meaning that many other cleantech sectors have been neglected. He highlighted the green buildings sector, which contain a lot of subsectors (such as sustainable materials, energy systems, etc.) as filled with opportunity. Gary Risechel of Qiming Ventures used the solar industry as an example to demonstrate his point that what China succeeds in is not necessarily cutting-edge, innovative technology, but low-cost manufacturing. Mr. Rieschel believes that a strengthening of protection of foreign intellectual property would be a move that would spur domestic enterprises to innovate so as to compete with foreign enterprises. Jim Boettcher of Focus Ventures took a different view, describing the abundance of innovation he had seen coming out of universities such as Tsinghua, especially with regards to cleaner coal and battery solutions. Consistent with the broader definition of innovation, Mr. Boettcher described a low-tech, low-cost innovation involving drip irrigation modeled after ancient irrigation techniques that have broad applications for the agricultural sector.
In the face of a capital shortage in this financial crisis, forum delegate Yvonne Li of Ecological Investments challenged the panel to consider ihow, in this challenging environment of tight capital, alternative financing models could be created. The Chinese government could, for instance, through an environmental bond, raise large sums of to channel towards clean energy projects [GLF: the idea being that being government-backed, the investment risk would be lower compared to VC investments, making it more acceptable to investors. A precedent fot this exists in Europe]. Venture capital could reinvent itself to offer alternative financing instruments to the high-risk venture equity type of investment that limited partners are shying in away from in this environment, whether it is some variation of project financing or debt financing so that cleantech venture capitalists can continue to apply their cleantech industry insight to such financing deals which are usually the domain of banks which do not necessarily have the same level of industry knowledge as venture capitalists. A San Francisco-based financier called MMA Renewable Ventures comes to mind.
Finally, the proposal to form a task force to explore the possibility of connecting capital and enterprises from both the U.S. and China to form a venture-entrepreneurial ecosystem was mooted.
Building Consumer Awareness and Volunteerism as Social Innovation
Education is required at all levels for it is education that truly empowers. Today we heard about Roots & Shoots, the JUCCCE “Green Lights for All” Program and Greennovate and how they are educating the next generation of environmental activities, getting them “hooked for life.”
Web 2.0 is shaping public opinion. JUCCCE’s CFL lighting program, an effort to replace inefficient incandescent lightbulbs with efficient CFLs through the mobilization of school children in Shanghai, is considering using web 2.0 to monitor the performance and effectiveness of their program, while Alvin Wang Graylin of mInfo described how his company’s initiative, the Green Hero Mobile Campaign, engages mobile users across China to talk about and get recognized by for their green efforts.
A final panel that was not formally on the agenda but that was assembled staged opportunistically in a very fitting way involved a group social entrepreneurs. Xiaoyi (Sheri) Liao described her efforts with Global Village of Beijing to reconstruct sustainable eco-villages in earthquake-struck areas of Sichuan. She emphasized the need to harmonize three different kinds of energy–materials, body and spirit. Rich Brubecker [of All Roads, Crossroads, and Cleaner Greener China fame] described his efforts to replicate his volunteer organization, Hands On, in various cities across China. Dianne Geng of Rural China Education Foundation told of her organization’s efforts to promote environmental education in southern Shanxi province. Forum chair, Peggy Liu, proposed the establishment of a platform for the various volunteer organizations for collaboration, apprenticeships and knowledge sharing.
So we can see, the themes of innovation, information and empowerment run through the many solutions that forum panelists and delegates are engaging in.
The Stone Age did not end because the world ran out of stones. We just found more intelligent ways to do things. Similarly, we cannot wait for the world’s oil, coal and natural gas, these so called fuels from Hell, to run out before we transition to the fuels from Heaven, i.e. wind, solar and water.
We are engaged in a war that we cannot afford to lose, because our existence depends on it. To come full circle and quote Rob Watson again, we must disabuse ourselves from 18the century thinking, 18th century ego-nomics, and really rally the forces of our innovative spirit to develop and deploy and scale clean energy systems, whether technological, financial, social or even cultural.
The conference has come to an end, but our work has barely begun. Let us leave these halls with a renewed and urgent sense of mission. Let’s rethink energy, and reshape the world.