New energy vehicles are one of China’s seven strategic emerging industries. Unlike its other “new energy” counterpart industries, NEVs, and electric vehicles in particular, are still waiting for commercial breakthrough.
China’s clean energy targets are usually just temporary placeholders. Targets for wind and solar power installed have been met, surpassed, and updated numerous times. New research from Bloomberg New Energy Finance (BNEF), however, suggests that China’s 2015 and 2020 targets for electric vehicle (EV) rollout will not be met due to “weak capability throughout the supply chain.” China has become a dominant force globally in wind and solar manufacturing and deployment; their supply chains are capable albeit recently consolidated with wavering demand in an oversupplied market. So why is that EV’s may not find similar success? Read the full story
The Green Leap Forward travels to Singapore to look at three start-up companies–Zeco, AmpleMotion and The Green Car Co.–trying to make Singapore’s electric transportation dreams come true, and ponders the road blocks that lie in the path towards a renewable electron economy.
Singapore and the Renewable Electron Economy Proposition
The electrification of Singapore’s transportation has received growing interest ever since it was reported that an international panel of experts pegged Singapore as an ideal place to launch an electric vehicle (EV) network. For anyone who’s lived here, it really doesn’t take an expert to recognize that the island-state has a number of things going for it: a contained urban area (the longest east-west stretch is just over 40 km and north-south stretch about 20 km), one of the most efficient and reliable electrical grids, sophisticated IT sector, ambitions to remain at the forefront of maintaining its already world-class transportation infrastructure, and a top-down policy environment which will ensure rapid deployment of a complicated and ambitious system once there is buy-in from the top. Moreover, the potential of sunny and tropical Singapore to harness its hitherto mostly untapped solar resources to feed into its grid completes the puzzle of the vision for a “renewable electron economy,” whereby everything in the economy essentially works of electricity generated by clean renewable power. Read the full story
Energy Price Reforms
NDRC announced that it would be removing price caps on coal from next year in a move towards a more market-driven price mechanism. This move comes at an opportune time when coal prices have dropped by 30 to 40% since the summer, but GLF points out an earlier post (see finding #4) on a recent MIT coal report that suggests the upstream coal industry has already moved towards a de facto market price system. Although the NDRC move “is a step in the right direction,” Huang Shengchu, president of Beijing-based China Coal Information Institute says in this interview that government macro-control is still needed to protect the rights of various coal stakeholdres in their contractual dealings with each other, accerlarate industry consolidation of the many small and inefficient mines and to set up a coal price index.
Separately, the proposed auto fuel price reform kicked in earlier than expected. So it turns out that the answer to our confusion (see earlier post) of how the government proposed to hike up taxes and keep fuel prices even was that they would adjust the base fuel price downward, predicated on Read the full story
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
Legendary investor Warren Buffet has had a busy, busy, busy week. (That’s one “busy” for each of the high profile deals he has made and he certainly deserves to take a seat after that, as pictured, if even for a brief moment.)
In the midst of a financial meltdown in Wall Street, Buffet’s Berkshire Hathaway made bold investments in Goldman Sachs, Constellation Energy (which has a nuclear energy storyline) and now BYD Auto, the Shenzhen-based maker of batteries and electric vehicles that this blog has profiled a few times. From Green Car Congress:
MidAmerican Energy Holdings Company, a Berkshire Hathaway Inc. subsidiary, will purchase 225 million shares, representing approximately a 10% interest, in China-based BYD Company Limited. BYD’s corporate focus is researching, developing, manufacturing and selling rechargeable batteries (Li-ion, Nickel batteries), automobiles, electric automobiles and related products. The investment is valued at 1.8 billion HK dollars, or approximately US$230 million. Read the full story
Consider this fact. March 29, 2008 was Earth Hour, a global campaign in which 50 million people across 370 cities and towns and 35 countries, including Singapore, switched off their lights for one hour starting at 8:00 pm to demonstrate a collective concern on the paramount issue of climate change. And guess what organizers of the Singapore F1Grand Prix, which would be the first night race ever, decided to do that very evening during Earth Hour?
Test the floodlights.
With Singapore, my hometown, hosting its first Formula One motor racing event ever this weekend, and China, this blog’s theater of operations, hosting its own F1 race in Shanghai in mid-October, The Green Leap Forward feels compelled to make a few preliminary observations about F1 and motorsports in general.
In this age of US$120 per barrel oil, a climate crisis and not to mention global financial meltdown, motor sports is facing a real challenge to stay relevant, to put it in very mild (read: courteous) terms. In noting the pathetic fuel (in)efficiency of F1 cars, Financial Times columnist Jonathan Guthrie notes (subscription needed):
Motorsport is balanced on a cusp where other previously praiseworthy activities – including smoking, elephant shooting and western military imperialism – teetered before becoming uncool. The problem is that performance car racing is as friendly to the environment as napalming virgin rainforest. The typical Formula One car does a flamboyant 3.8 miles to the gallon, generating enough heat to condemn whole families of polar bears to a long swim.
3.8 miles per gallon. That’s about 1.6 km per liter for those of us living in a metric world. This compares to 28 (urban driving) to 37 (highway) miles per gallon that a Toyota Corolla, one of the most popular cars on America’s roads, gets.
Renewables Report, in its own (but ultimately fruitless) inquiries with Singapore authorities on the financial and environmental logic of hosting the F1, echoes Mr. Guthrie and concludes in stinging terms:
As the cost of fuel rises, as geopolitical conflicts intensify over oil and other natural resources, the F1 and fossil fuel-based motoring sports will be viewed in the same light as socially unacceptable sports as, say, dog-fighting.
Couldn’t have said it better. When I relayed to an associate my intention of writing a critique of motorsports, he informed me that he was aware that F1 had gone “carbon neutral.” So I decided to do some digging on how green politics today were affecting F1 and its organizers, Fédération Internationale de l’Automobile (FIA).
A Campaign of Hypocrisy?
Apparently, F1 has been carbon neutral since 1997, according to this report. It’s a remarkable and almost unbelievable fact considering the fact that carbon offsetting has only in very recent years emerged into society’s consciousness, and even if so, usually just confined to those of the socially responsible. While it would be unjust to assume that just because FIA is in the business or burning petroleum that it is inherently incapable of social responsibility, it is difficult to imagine such an institution, or any organization for that matter, undertaking an action that directly affects its bottom line with no apparent collateral benefits, especially when it has done such a poor job in advertising such progressive actions so as to at least gain some CSR brownie points.
This opinion is reinforced by the somewhat hypocritical “Make Cars Green” campaign that it has recently launched to educate fans on softening their carbon footprint with respect to private car usage. The whole campaign ignores entirely the basic question of whether private vehicle ownership or usage is desirable or even necessary in the first place. It is almost as if it assumes that to buy and own an automobile is an inalienable right. No mention of public transit or better-designed cities to facilitate low-carbon mobility.
Next, it goes on to bellow certain principles such as “Don’t warm up your engines before starting off”, “Accelerate gently and keep your speed constant” and “Don’t idle your engines” that are just hilarious considering the practices of the source of these pieces of advice.
As part of their campaign, they have also promulgated a series of lofty global policy recommendations, but again, talk is cheap. Its easy to craft idealistic automobile measures on paper, but quite another to lead by example.
No Time for Baby Steps: The Need for an Electron Revolution
In the interest of fair and balanced analysis, however, it behooves this blog to mention some other green steps that FIA/F1 is undertaking. Motorsports has not been able to shield itself from the realpolitik of climate change that is beginning to fundamentally transform many sectors of the economy. Nick Fry, chief executive of Honda’s F1 team, which has apparently gone green, is quoted as saying:
Formula One historically has been profligate; it’s been a sport which has developed ludicrously powerful engines to really no fixed agenda, maybe running fuels that would never see the light of day. The amounts of money that the car companies are paying to compete in F1 are rewarded hopefully by victories, but that’s not sufficient. It’s got to incorporate technology or intellectual-property development or people development that can be fed back into the parent company.
Other than (reportedly) going carbon neutral and launching a (laughable) green campaign, FIA has officially announced plans to tinker with F1 racing regulations in ways that will allow it to become a test-bed for energy efficiency technologies of the incremental (as opposed to radical and truly transformative) variety.
This racing season, reports The New York Times, F1 cars have been using use fuels containing 5.7% biofuel, consistent with an EU directive for road cars by 2010, will not be subject to an otherwise meaningless 10-minute idling process that does nothing but burn petrol.
Starting in 2009, it will introduce the Kinetic Energy Recovery System (KERS), a form of regenerative breaking, which basically recovers energy that is typically lost in the process of braking (just think of the numerous tight curves along an F1 track that requires excessive braking and tire burning) and channels it back into the energy flow of propelling the vehicle. But read here for some stumbling blocks that KERS is facing.
And come 2011, there are proposal to downsize the engines of F1 cars and to also eliminate any technology R&D collaboration with major auto manufacturers that are only applicable to F1 racing and not to road cars, reports GreenCarCongress.
I would argue that will these are right steps in the right direction, they do not exactly reflect the urgency of the energy conundrum that currently confronts us.
The blog Green Thoughts and its “The Electron Economy” series of posts best explains why a shift to EVs is a superior technological option over, say, the use of biofuels or hydrogen. In short, electricity is the most efficient carrier of energy and electrical motors are far more efficient converters of energy than internal combustion engines. The sustainability proposition of electricity increases if the source of generating that electricity comes from renewable energy such as wind, solar and geothermal rather than fossil fuels. If FIA was truly sincere about leveraging motorsport as a laboratory for clean automobile technology, it would not be investing heavily in research into electric vehicles (EV) and batteries (which are an essential and currently performance limiting component of EVs). A move away from the internal combustion engine, which is highly inefficient, and towards a renewable electron economy, is what should steer automobile technology research.
Companies like Tesla Motors are ahead of the likes of FIA.
But doing away with private cars altogether, and taking advantage of a public transit network powered by electricity, however, would truly be worthy of the checkered flag.
P.S. For readers not familiar with American football or contemporary US culture, the reference to Michael Vick in the title, a former American football player can be explained here.
Earlier this spring this blog identified an upstart Chinese auto company called BYD Auto that is, despite is short operating history in the auto industry, introducing one of the most innovative automobile makes in the industry—a fully commercial electric car—ahead the likes of established auto giants like General Motors (and its flagship electric car make—the Chevy Volt). It was reported earlier this month that BYD Auto will start selling its fully electric E6 and plug-in hybrid electric F6DM models in Israel in 2009 (ahead of the commercialization of GM’s Chevy Volt, which will only start being produced in 2010).
Israel is a logical market choice, given Israel’s new embrace of the electric car revolution and its plans to, through Project Better Place (a groundbreaking initiative led by former technology-entrepreneur Shai Agassi) and the aid of tax incentives, build a nation-wide electric car network by 2011. In simple terms, such an infrastructure consists of plug-in electric cars supported by advanced battery technology, a network of recharge stations and battery exchange stations, and a smart grid fed with renewable energy.
I was initially skeptical of the true sustainability proposition of hybrid and electric car innovations. In a previous post, I argued that disruptive technologies, by themselves, offer little by way of sustainability if not integrated into the improvement of a greater whole at the systems-level. Thus, it is not enough to push the sales of fuel efficient cars if such a marketing blitz adds more cars on the road and further encourages urban sprawl. However, in that post, I did not discuss the potential for grid-tied plug-in electric vehicles (whether fully electric or of the hybrid sort) to transform our fossil fuel energy system into a renewable and cleaner one.
An Energy Crossroads
The green proposition of electric cars, especially the plug-in variety, is that by promoting the development of electricity generation and energy storage technology development (in the form of energy storage devices such as batteries), electric cars are not only reducing the need for gasoline, but also creates pull factors for the development of grid-connected renewable energy sources such as solar and wind energy by creating new electricity demand and provide energy storage solutions to address the problems of the intermittent nature of solar and wind power. In essence, individual electric cars, each equipped with their batteries, apart from serving as energy storage devices for the use of the car, could serve as energy reservoirs for the grid system, and even feed (and sell) back electricity to the grid if the vehicle is not in use.
Here then is a truly disruptive system, arranging discrete disruptive technologies (electric cars, advanced battery systems, a network of batter recharge stations, an integrated electricity grid) into a cohesive whole. The plug-in electric vehicle is symbolic of the energy crossroads between sustainable transportation and renewable grid power A more detailed explanation on how this renewable energy transformation is enabled by electric cars can be found on here on Better Place’s website.
It was initially unclear if BYD’s entry to Israel would be in collaboration with or competing with Project Better Place. Given the inter-operability of Better Place’s network (website: “Cars outside the Better Place model can re-charge their batteries as “guest vehicles,” so long as the driver acquires an easily-installed converter.”), it would make sense for BYD cars to take advantage of such infrastructure. A separate report suggests, however, that BYD might be building a competing infrastructure with certain Israeli partners. We shall see soon enough how this pan out.
Ahead of this Israeli market entry, BYD plans to launch the sale of grid-independent (i.e. non-plugged in) hybrid electric vehicle, the F3DM, later this year.
Big Cars, More Tax
On the transportation policy front, most of the traffic measures put in place for the Beijing Olympics have, as expected, proved to be short-lived. But the Beijing authorities continue to show their commitment to mass transit, reassuring that fares for public transportation will continue to be maintained at their current low levels to encourage use.
Separately, the Ministry of Finance is relying on tax measures to influence the auto purchases of consumers. Beginning September 1, taxes on bigger cars will be raised while those on smaller ones will be reduced (see diagram right for details). While the stated purpose of the higher taxes is to decrease fuel consumption and pollution, a closer look at the history of taxes on cars in China suggests that this may be more a protectionist move rather than a green one.
The Geneva-based World Trade Organization, based ruled against China this past July on its previous tax measure of preferential tax rates for domestically produced cars violated international trade rules. The newly revised tax rates do not explicitly single out foreign cars over domestic cars, but it just so happens that the smaller cars are mostly dominated by local manufacturers while larger cars are imported. The Economist wryly observes:
China’s new tax is canny. It cuts fuel use, reduces imports, benefits local carmakers and may help to improve air quality. It also prevents any more pesky calls from Geneva.
Gridlock in Chongqing: Is this what they call progress?
While one can take heart that what seem liked unabated proliferation of SUVs just a few years ago is giving way to a range of smaller, more fuel efficient passenger vehicles (see last post on my review of the Beijing auto show), the fact remains that China is adding some 20% or more vehicles to its roads per year. In fact, Jack Perkowski of Asimco Technologies points out that the growth rate of vehicle manufacture in China since 2001 has been somewhere between 20 to 50% per year. I had the chance to listen to Jack speak to a group of Tsinghua MBA students last Friday. Jack and his business exploits in China with his founding of Asimco in the early 1990s is featured in Tim Clissold’s bestselling book Mr. China. Jack himself is currently on a speaking tour to promote his book, Managing the Dragon (sharing same name as his blog), which talks about all the lessons he’s learnt in building a successful business in China and has already received glowing reviews.
Although Jack is very cognizant of China’s ecological challenges, he and I do not see eye-to-eye on the ecological challenges that the auto industry poses to China. During to the Q&A session, I expressed the profound pessimism that I felt as I walked away from the Beijing auto show just a few hours earlier. Even though there were small cars and hybrid cars and electric cars, etc., its clear that at the end of the day, all of this is GREENWASHING. The same companies that tout their hybrid or electric cars also sell gas-guzzling SUVs, which have higher profit margins. Even if every single vehicle sold from tomorrow onwards was a hybrid/electric car, the fact would remain that China would be putting at least another 20% new vehicles on the road each year, and not to mention the continued build out of highways all across the country. Oil consumption would not cease its upward trend, and neither would oil imports, creating a threat to both the environment and energy security. I then asked Jack what he thought of the apparent contradiction between China’s promotion of the auto industry and the the imperative to tackle its environmental and climate problems.
While Jack agreed that solving its environmental crisis was a matter of survival for China, he is convinced that China had no alternative but to continue to develop its auto industry and transportation links in order to grow its economy. “The Chinese want the freedom of owning their cars, just like Americans” he would say. Taking as a given that nothing was going to stop the development of the transportation industry in China, he acknowledged that the key question was whether China would do things differently, and started to rattle a few technological solutions such as clean diesel and some others that I frankly tune out. He ended by saying:
Both India and China will have to face the same problem; that’s 1 billion pus 1.3 billion people, a total of 2.3 billion people working on this problem, someone will figure it out. I’m a little more optimistic.
I just don’t see any solution in Jack’s response. First, let’s be clear that the promotion of China’s auto industry in the way that the US has works at direct cross purposes with any climate policies that China adopts. Not only do cars gobble up oil, but the manufacture of cars is a highly inefficient and energy intensive process that consumes loads of increasingly expensive mined metal commodities. Couple that with the mega-tons of asphalt and concrete needed to build and maintain city roads and intercity highways (and please remember that the cement industry is one of the most carbon intensive there is), you start to appreciate the enormity of the auto industry’s multiplier carbon effects.
I recently read Chapter 19 (“Sustainable Urban Transport”) of the landmark book, The Natural Advantage of Nations, which delved into statistics available on the Millennium Cities Database for Sustainable Transport. The database is not the most current (dated 2001), but it did provide some interesting insights into the relationship between wealth and car use. At this point, I will just lay out a few selected quotes that struck me:
Less prosperous Asian cities already have a rate of car ownership relative to wealth that is virtually equal to cities in Australia/New Zealand. Chinese cities, despite an average GDP of only US$2400, have almost the same rate of car ownership per dollar of GDP as Western European cities (11 compared to 13) which have an average GDP per capita of US$32,000.
[A]mongst high-income cities there are considerable differences in car use that are not explained by differences in wealth. For example, US, WEU [Western Europe] and HIA [High-income Asia] countries have average GDPs per capita that are almost identical, yet their car use varies by around a factor of six.
When lower- and higher-income cities are included together in cross-city comparisons,a moderate positive association between urban transport energy use, greenhouse gas emissions and GDP is observed. Amongst higher-income cities, however, there is no statistically significant relationship between energy use, greenhouse gases and wealth despite a wide range of GDP per capita…Explanations for such differences in transport energy use (and by implication CO2 emissions) are strongly linked to the modal share between private [i.e. privately owned passenger cars], public [subways, bus systems] and non-motorized modes [bicycling, walking].
While these observations are not a slam dunk, it does suggest a strong possibility of decoupling car ownership or use from per capital GDP. We should challenge the dogmatic assumption that cars = wealth. To be fair, this was not Jack’s assertion. He was making a more basic point that the development of China’s economy is dependent on the development of transportation infrastructure in general. This is hard to argue against, but what it easy to debunk is the notion that car ownership is a necessary indicator of national/municipal wealth and that technological solutions, by themselves, will help make transportation systems more sustainable.
Disruptive Systems over Disruptive Technologies
Bus-Rapid-Transit system in Beijing
The fact is that “disruptive technologies” such as plug-in electric vehicles or utlra-clean biodiesel engines are not going to make a difference. Time and time again, I have heard the rhetoric technologists and their unfettered faith that technology will save the day. Such an approach misses the forest for the trees. As my good friend Ivan Urlaub, Executive Director of the North Carolina Sustainable Energy Association likes to say, we need to employ whole systems thinking and create “disruptive systems” to really get at the heart of our climate challenges. Aside from improving vehicular design through battery, engine and emissions improvements, a more macro view on urban form must be taken. Rather than lay out a comprehensive prescription, I present my thoughts in a series of questions:
- How thoughtfully are road networks laid out?
- How compact and dense are buildings and people situated, so as to reduce the need and/or distance (and influence the form, i.e. from driving to cycling or walking) required for traveling and mitigate the propensity for urban sprawl?
- What is the best way of encouraging a shift of private to public and/or non-motorized modes of transportation?
- Can Chinese cities increase public and non-motorized options while discouraging car ownership and use through a Singapore-style real-time electronic road pricing and car quota systems (through the auctioning of certificates of entitlements ).
- How can mass rapid transit systems (i.e. subways and light rails) be effectively financed and implemented, as we’ve seen in Hong Kong, Singapore, Shanghai and now Beijing?
- What about bus-rapid-transit systems, which offer dedicated road lanes to public buses, that the cities all across China are considering?
- How can pedestrianization be encouraged, as has been done in the prominent retail districts of WangFuJin in Beijing, Beijing Road in Guangzhou, and Mong Kok in Kowloon, Hong Kong?
- Looking beyond single-cities, how can different cities and counties work together to create integrated and seamless inter-municipality/province public transit systems?
I am clearly just scrapping the surface here in terms of what forms disruptive systems would take in terms of sustainable transportation. But my point is, all the hybrid and electric vehicle technologies in the world will hardly make a dent if car ownership and use continue to increase, if oil (or coal, in the case of electric cars) continues to be burnt, and if roads and highways continue to be built out with reckless abandon. We need disruptive sustainable transportation systems implemented in China and the rest of the developing world if we are to avoid the mistakes made by my country, the US.