Reflection on the Seattle Trade Alliance's 2012 Cleantech Business Mission to China
American cleantech entrepreneurs are compelled to spit out facts and figures about China’s miraculous renewable energy achievements; Industry executives breathlessly recite the latest Chinese “production capacity” and “cost per watt” data at conferences and coffee shops from Seattle to New Jersey. As one of these entrepreneurs, I hoped that a visit to China would add context to the incredible statistics that summarize the Chinese cleantech juggernaut. Despite having heard and read much about China’s political, cultural and technological ethos, I was truly astonished by the things I witnessed in-person.
A Building Frenzy
It’s hard to reconcile the living contradiction that is China: a developing nation with world-class architecture and transportation infrastructure. To a newcomer, Beijing is unexpectedly modern. Progress is everywhere, plainly evident in the sleek, contemporary high rises that sprout like weeds out of the arid landscape. The urban wealth is similarly conspicuous, epitomized by the high-end cars that clog the city’s thoroughfares most hours of the day. (There are now 5 million cars in Beijing).
If Beijing is surprising in its modernity, Shanghai is shocking in its glamor. Straight out of a science fiction novel, Shanghai revels in futuristic, neon glory, its cosmopolitan spirit a result of centuries of international access afforded by its location on the East China Sea.
Our nighttime ride from the Shanghai airport to our downtown hotel was the highlight of my week. “How did they build that?” may have been the most used phrase during our 3-day visit to the sprawling city of 23 million people.
China’s two largest cities share a fascinating political and cultural rivalry that stretches back decades. Shanghai natives consider residents of Beijing, the seat of political power, to be uptight and bureaucratic. Beijingers view the residents of Shanghai, the financial capital, as shallow and materialistic. Despite any real and imagined differences, both cities confirm my suspicion that the United States’ infrastructure investments are woefully in arrears.
All Energy Sources Welcome
I took home a boatload of observations, facts, and figures from our meetings with Chinese government officials, cleantech entrepreneurs, and investors. My notes range from the ridiculous (“There aren’t nearly as many coffee shops in this country as our Seattle contingent would like” and, “I have never seen so many Seattleites in suits at one time”) to the truly enlightening (“The U.S. has nine cities with populations of greater than 1 million....China has 171”). This statistic floors me, and puts the Chinese energy industry into some perspective.
Despite having a land area similar to that of the United States, China is home to 1.3 billion people. China has done a remarkable job of elevating its citizens’ standard of living, reducing the poverty level from 85% in 1981 to 16% in 2005 according to the World Bank (poverty being defined as the number of people living on < $1.25/day). But, a voracious appetite for fossil fuels accompanies such modernization and urbanization. During the trip, I witnessed a scale of physical development truly immense. If I ever held any notion that China develops and deploys renewable energy technologies out of a sense of enlightenment, moral superiority, or environmental consideration, that notion vanished. China develops renewable resources out of fear and necessity, just as they expand coal and shale gas extraction domestically, pursue liquefied natural gas (LNG) resources in Australia and secure oil reserves in Africa.
Entrepreneurial Opportunities Abound
The pace of change in China has created seemingly limitless entrepreneurial opportunities, despite the restrictions imposed by a centrally controlled, authoritarian government. The need for clean energy, water and building technology (indeed, all technology) is vast and obvious. As we toured the country, I could almost feel the rush of entrepreneurs, investors and international technologies racing to get a seat at the table of the Chinese economic phenomenon. Twelve years ago, you could literally count private equity investors in China on one hand. Today, approximately 10,000 firms are registered as venture capitalists. If you find a way to short private equity firms in China, you might consider it.
Hope, Faith, or Despair?
For a few moments, a colleague and I fantasized about living and working in China at this unique moment in time. Then, we both realized that we could never subject our children to the country’s dreadful air quality. But China’s problems, and their impact on the rest of the world, extend well beyond smog.
I recall having a conversation, nearly a decade ago, with a friend and renewable energy expert about a weekend retreat he attended with other top scientific and environmental luminaries. He described a poignant scene in which, as these experts reviewed more and more scientific data, many of them begin to cry openly. They couldn’t help but conclude that we’re very unlikely to achieve the carbon reductions required to avoid catastrophe.
After visiting China, I can’t help but feel similarly. Yes, China has 287 smart grid projects currently underway. They are leading a PV cost reduction revolution and dominate the solar hot water industry. They are leading the globe in installed wind capacity. The list goes on. I witnessed China’s impressive investment in renewables, but I also saw smog-filled cities, polluted, anemic rivers, and mind-boggling traffic. More importantly, I know that despite unprecedented investments in clean energy projects, China has neither a commitment to, nor realistic prospects for, reducing carbon dioxide emissions anytime soon. The Chinese government, in its current five-year plan, pledges to reduce carbon intensity 17% by 2015 over 2010 levels. Reduced carbon emissions per unit of economic output are impressive, but we need actual reductions if we have any hope of forestalling a real climate crisis.
It’s difficult to see how China, and the world’s other major polluting nations, can combat climate change without significant, unforeseen technical, social, and political breakthroughs. Despite my dire assessment, I still feel compelled to work to accelerate the adoption of renewable energy technology in hopes of avoiding disaster for my children. We have no other choice. I saw this spirit in China, too, and I hold out hope that, together, we’ll innovate out of this terrible predicament.