China's Innovation Model and its Role in the Global Clean Energy Market
This is slightly dated by now but I want to be sure this is posted for posterity’s sake. In mid-May I participated in a panel discussion at the China Environment Forum at the Wilson Center here in Washington, DC. The topic of discussion was “Decarbonizing King Coal: Growing U.S.-China Clean Technology Cooperation”, and my fellow panelists Ming Sun of Clean Air Task Force (pictured right) and Albert Lin representing Future Fuels, LLC (pictured left) had very interesting perspectives on the role of “clean coal” in China’s energy future. (And that’s me in the center of the pic.) The focus of my presentation was to provide a more macro look at China’s innovation capacity in clean energy technologies. The whole sessions can be accessed at this archived webcast.
For the convenience of readers, I am pasting my presentation outline (as prepared, but not necessarily delivered) here: Read the full story
How to Deal with Chinese Green Protectionism: A U.S. Perspective
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 Read the full story
Of Solar Tech and Chicken McNuggets: My Testimony Before the U.S.-China Commission
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.
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 Read the full story
Pacific Bridges: Steven Chu and John Holdren May Shape U.S.-China Energy Relations
GLF has been traveling and getting a little caught up on side projects, but let’s play some catchup. Let’s pick things up with two specific appointments by President-elect Obama which have implications for U.S.-China energy relations–one being the 1997 Nobel Prize Laureate Dr. Steve Chu of Lawrence Berkeley Labs (LBL) as the new Secretary of Energy, and the other being Dr. John Holdren, physicist and energy technology policy professor at Harvard and Director of the Woods Hole Research Center (whom yours truly had the pleasure of meeting in the copy room as a policy intern there way back in 2003) as the White House science & technology adviser.
Besides being a director of LBL, Dr. Chu (pictured right) is also a professor of physics and molecular and cell biology at Read the full story
JUCCCE Clean Energy Forum--Closing Summary
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: Read the full story
David Tyfield [Part 2 of 2]: Middle-Class Aspirations and IP Protection in China
This is the second post of two covering an interview with Dr. David Tyfield (pictured) on the topic of international collaboration in low carbon innovation. The Green Leap Forward had the opportunity to interview Dr. Tyfield before a live audience of about forty attendees at an event hosted by the Beijing Energy Network on October 29 in Beijing. The first post focused on questions posed by The Green Leap Forward, and this second post summarized Dr. Tyfield’s responses to questions posted by the viewing audience.
GLF would like to especially highlight his response below on intellectual property protection in China.
Q: Have you done any thinking on the relationship between low carbon innovation and the aspirations of the middle class, because what I see and a lot of us see is that the middle class in the West aspires to cars and we’re seeing the same thing happen in China.
DT: We haven’t done any size of work or research on it. My thoughts in particular would be on the issue of mobility rather than energy as far as the most obvious example of aspiration and the aspiration to cars and holidays. What I would say is that this goes back to what i was saying about the biggest obstacle being, in a sense, political will. Political will doesn’t just come from government; its a much more dispersed phenomenon. I don’t think I’m a pessimist, perhaps I call myself a realist. The people don’t look for alternatives until they are forces to. Arguably, another positive to come out from the recession is that people from the West start to actually question the standard of living, the extremely indulgent, the highly carbon consumptive standard of living they have enjoyed for twenty, thirty years, in particular. And therefore they will start to look for alternative. Of course that is going to take a long time and the first inclination when someone loses something is to try to get it back. So that the initial political pressure will be to do everything they can to preserve their high carbon standard of living. But if that proves impossible, and I think it will prove economically impossible, then they will start to look for alternatives, and that is when aspirations will start to change.
In terms of the middle class situation in the west, they are in many ways the greatest culprits for high carbon standards of living. But its when an electric car actually comes on to the market and becomes someting that peopel rush out to buy, just like when the new Apple iPhone came out. When that kind of thing happens, this will be the forerunners for developing these markets more widely in the West. I dont; think we will see struggling single mothers on housing estates leading the way on green consumption. Read the full story
David Tyfield [Part 1 of 2]: Low Carbon Innovation in China
Dr. David Tyfield (pictured right) of Lancaster University in the UK is a critical realist of science and innovation policy. Cross-trained in molecular cell biology, philosophy of social sciences and the law, Dr. Tyfield brings an interdisciplinary approach to analyzing current trends in international collaboration in low carbon innovation. The Green Leap Forward had the opportunity to interview Dr. Tyfield before a live audience of about forty attendees at an event hosted by the Beijing Energy Network on October 29 in Beijing. This the first of two posts summarizing the hour long interview, with this first post focused on questions posed by The Green Leap Forward, and the second summarizing the Q&A session that was opened to the audience.
The Green Leap Forward (GLF): Here at The Green Leap Forward, we’ve previously talked about the need to look at innovation beyond just the technological, calling for disruptive systems over mere disruptive technologies. You similarly have an expansive view of “technology” and “innovation” beyond the way the media narrowly construes it. How would you define these terms?
David Tyfield (DT): I don’t think its just the media, but its the main thinking behind a lot of policy. We would want to distinguish between technology and innovation, where technology is just new kinds of machines. Innovation on the other hand is a much bigger issue than that and its not just the technical issue of introducing new machines. My background is in looking at science and innovation from a sociological political economic angle, which means we treat innovation as a social process. that means innovation is not just a question of great minds coming up with great ideas, not is it just about R&D spending. Its a much bigger process. In fact, a lot of important innovation does not involve technology at all. They can be social innovation, the kinds of processes or new kinds of organizational forms. For instance, the joint-stock company or limited liability company is a form of innovation.
Another important issue that we are interested about innovation is that once we start looking at it as a social process then we can start to recognize that there are many different possible trajectories of technological change, therefore there is also a question of choice between them. So there is a question of direction, and not just a question of how much innovation is happening but in which direction. And that opens up, in effect, all kinds of important political decisions that can be easily swept under the carpet.
In terms of the implications for low carbon innovation, this is very important. Because if we just limit our our consideration of innovation for low carbon to high technology, not only are we setting ourselves for some pretty difficult tasks, we also exclude ourselves from all sorts of other possibilities which could have profound influence on a shift to a low carbon system. In terms of what we mean by low carbon definition, therefore, the “low carbon” bit does not just refer to more efficient use of greenhouse gases. Its actually about any kind of innovation in this broader definition which contributes to a shift in social system that actually has, altogether, a lower carbon consumption. Read the full story
China to Hold Firm on Climate Change Policy Position
China releases comprehensive white paper on its climate change policy ahead of key international meetings.
Ahead of the high level technology transfer summit in Beijing next week; next December’s 14th Conference of Parties under the United Nations Framework Convention on Climate Change (UNFCCC) in Poznan, Poland, during which a general framework for a successor treaty to the Kyoto Protocol, which expires at the end of 2012, will be hashed out; and of course, Halloween, the State Council of the central government has released a white paper on climate change policy titled “Comprehensive Plan on Climate Change.” This white paper also comes on the heels of China’s submission of a viewpoint paper to the Ad Hoc Working Group on Long-term Cooperative Action of the UNFCCC on September 28
While the 11,000 word white paper reads like a kitchen-sink of domestic policies that may seem to ring hollow given the institutional limitations that China observers have come to be so familiar with, the document does provide a good summary of the specific policy programs that China has enacted so far and of future policies that we can expect. Above everything else, the timing of the release of this document is highly strategic, ahead of the above mentioned meetings, as the white paper also states in no uncertain terms various policy positions that seem to have the north and the south heading towards climate deadlock.
China’s position is clear. It wants developed countries to take the lead in curbing emissions and aiding developing countries to meet their low carbon aspirations by providing funding and technology. Let’s tease apart some of the verbiage that leads to this conclusion: Read the full story
Technological Innovation as a Panacea? Bah Hambug!
A discussion on technological innovation in China and its limits to achieving true sustainability.
I attended a talk on the role of innovation in combating climate change last week. 
The focus of the discussion was on technological innovation and the role of governments in channeling investments into technology across multiple sectors. However, much of Q&A session was devoted to how technological innovation is not enough—to achieve true sustainability, there needs to be social and policy innovation. But more on that later. Let’s first talk about innovation in China and relate that to sustainability.
It has been generalized that Chinese society today lacks the innovation. This is purely anecdotal, but perhaps the pharmaceutical industry buffs amongst you can confirm or correct the following account by a friend of an acquaintance that recently visited some India as part of his MBA program. According to him, the competitive landscape of the pharmaceutical industry in terms of China vs. India is going to result with a clear winner—India. The observation is that while both countries are big players in the generic drugs industry and thus heavily reliant on the expiration of global patents on drugs developed by the west, Indian companies actually channel some portion of their profits into R&D to develop proprietary drugs, whereas Chinese companies reserve all profits to their shareholders. The Chinese, in this case, perpetuate the generalization that they are better at reverse engineering and replication, but less savvy on the R and the D.
An excellent article comparing two emerging wind energy giants, Suzlon from India, and Goldwind from China, suggests a similar observation. Dr. Joanna Lewis observes that Suzlon’s success is the product of effective licensing of advanced foreign technologies and accessing global learning networks through the acquisition (and continued innovation) of proprietary technologies, whereas Goldwind’s success relies more heavily on licensing foreign technologies and a little less on innovation, which is restricted to tapping learning networks that are more local than global in nature.
In his book, China, Inc., Ted Fishman, analyzes the electronics (specifically DVD/VCD) market and hypothesizes that the penchant for reverse engineering and replication in the Chinese economy stems from a very practical urgency of satisfying the needs of the world’s most populous nation in the in a reasonably short amount of time and at a very affordable cost.
But as China searches for a more sustainable energy path, it is clear that the old way, or even current way, of doing things, or that old or current technologies, will not be enough. Radical, disruptive innovation (as opposed to incremental, gradual innovation) is necessary for the breakthroughs in cleaner ways of producing and using energy. Mere licensing, reverse-engineering and replication of technologies, means that China will be reliant on foreign countries for innovation and the development of proprietary intellectual property. Even then, how willing will foreign enterprises be willing to bring their state-of-the-art technologies to China if their intellectual property rights are not protected? The “China strategy” of many foreign companies is to bring to China technologies that are at least two generations behind in order to hedge against the risk of piracy.
There are interesting articles on the blogosphere about the innovativeness (or lack thereof) of the Chinese (check out this nicely written piece by Bill Dodson). I take the stereotypes for what they are—mere stereotypes. Without performing empirical studies, it is impossible to generalize, but for what this is worth, it looks like, according to the USPTO, the number of US patents granted to Chinese inventors are on the rise, increasing by 64% in 2006 (661 patents) with respect to 2005 (402 patents).
The Limits of Technological Innovation
Technological innovation is, as the guys at The Breakthrough Institute say in this paper, absolutely essential as the main driver to tackling climate change. The authors decry regulation-only approaches, and propose that any sort of cap-and-trade to curbing greenhouse gases serve as only a supplement to an ambitious US$300 billion U.S. government investment into clean energy technology research. One of the underlying rationales of this approach is that while regulation is effective in raising the price of carbon, only through massive investments in basic R&D can the cost of renewables and clean tech be simultaneously reduced. While I wholeheartedly endorse an aggressive public investment in clean tech, I postulate that technology innovation and cap and trade regulation by themselves will not be enough to set us on a green path.
First, sustainability can (and has to) be accelerated by social and lifestyle innovation. Energy and material (see second point below) conservation should be considered as hitherto untapped natural resources. Conservation and energy efficiency do not entail mere technological fixes; often, they simply require using existing technology in different, more efficient ways, implicating changes in behavior, lifestyle or even mentality. Due to inefficiencies and energy losses through transmission, every watt of energy saved is a more than watt of fossil fuel energy that does not need to be produced. I am not just talking about reducing one’s driving trips to the grocery store or replacing all the incandescent light bulbs in one’s house with more efficient compact fluorescent light bulbs. I am also talking about radical and integrative changes in our living arrangements, the way we think about how cities should be built and laid out (think ecocities), the way we think about reorienting our industrial supply chains so that waste from one chain can be converted into inputs for another, the way we can redesign our everyday household products to reduce toxic content and the amount of waste generated in their manufacture. In short, we need innovations that can close the loop on energy and materials flow in the innovative technologies that we deploy.
Second, technological innovation will only help us develop clean up the dirty nature of our current energy sources, but does not affect the way we use other stuff when we use energy. Even in a world of abundant, cheap and clean energy, I question if production and consumption patterns will truly be sustainable. The simple reason is this—while renewable energy sources are, by definition, renewable and inexhaustible, material resources such as copper, tin, pulp and the myriad of other commodities that support our increasingly urban lifestyles, are finite. Ramping up (even clean) energy supply, without additional consideration for how we design our everyday products or modification of our consumption habits, will accelerate the depletion of our non-energy natural resources. Take the automobile industry as an example–what good is a limitless supply of biofuels if the proliferation of automobiles leads to the exhaustion of all our steel resources?
Consider this blog post a teaser. After all, the raison d’etere of The Green Leap Forward is to track the social, policy and technological innovations in China in the field of sustainability, so keep reading!
Author’s note on the picture: While the lighted bulb supposedly represents technological innovation, note the irony in that the bulb is an incandescent light bulb, which is highly inefficient and is being phased out for energy conservation reasons in a small but growing number of countries, including China! Just one example of policy innovation for you!
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