Here Comes the Sun (and the Wind, Water, and Biogas): Opportunities and Challenges for U.S.-China Renewable Energy Collaboration
As the world's two largest economies, it is not surprising that the United States and China are the top two energy consumers and investors in clean energy development—although in 2009 China invested twice as much as the United States. Both countries have similarly strong motivation to promote renewable energy, namely diversifying energy portfolios, creating jobs, strengthening energy security, and reducing pollution. Given the size of U.S and Chinese energy markets, any substantial progress the two countries make in advancing renewable energy will provide global benefits, in terms of enhanced technological understanding, reduced costs through expanded deployment, and lower greenhouse gas emissions relative to conventional generation from fossil fuels.
At this December 2, 2010 China Environment Forum meeting, Derek Vollmer of the National Academy of Sciences (NAS) presented findings on a joint report by the U.S. National Academies and the Chinese Academy of Sciences and Chinese Academy of Engineering that reviewed renewable energy development and deployment in the United States and China. The report highlights prospects for collaboration across the research and deployment chain and suggests strategies that would facilitate more rapid and economical attainment of renewable energy goals. Additionally, Joanna Lewis of Georgetown University and one of the authors of the joint renewable energy report talked about on-the-ground wind power developments in China and in his role as discussant Bill Morin from Applied Materials highlighted the of impact China's renewable energy policies and investments have had on international business investments.
Derek Vollmer started off the presentation by introducing this bi-national scientific academy report The Power of Renewables: Opportunities and Challenges for China and the United States that reviewed renewable energy development and deployment in the two countries and highlighted prospects for collaboration. The report focused the electricity generation potential for wind, solar, and biomass as well as examined their environmental impacts, using life-cycle analysis to quantify GHG benefits, water consumption and land use. One of the strongest conclusions of the report, according to Mr. Vollmer, was that the technology needed for large-scale renewable power generation is commercially viable and ready for accelerated deployment, however current market and policy infrastructures impede this, he stated that we "can't simply talk about technology, because [it has] to be integrated into a market". He stressed that there also needs to be more holistic policy formation for renewables that entails looking not only at pure capacity, but also at overall generation, deployment, and ability to deliver power to areas that need it. These issues are common to both the United States and China and the report concluded that they hold promise for cooperation.
Joanna Lewis of Georgetown University started her talk by stating that China's growth rates in renewable energy have been the world's largest and that China has invested more than any other country in the world into clean energy infrastructure. These investments have been done at nearly unprecedented gigawatt scales in an effort to meet the national goal of fifteen percent renewable power by 2020. These renewable targets along with new carbon intensity goals have been the main political drivers of this massive investment into China's energy infrastructure. An additional intention of this investment has been to create a local manufacturing base to provide domestic economic benefits. Through heavy investment, China has become the number one manufacturer of solar panels and is gaining competitiveness in the wind industry as well. These industries have been supported with not only government investment but also local content requirements. The latter became a central controversy in 2010 due to a case brought to the WTO by the United Steelworkers Union. Moreover, in the clean energy technology sphere, foreign firms and governments have long complained about China's domestic subsidies, discrimination against foreign firms, technology transfer requirements, and Chinese monopolization of rare earth materials. Despite these disputes, Dr. Lewis argued that there are many benefits of expanded U.S.-China cooperation around renewable energy:
o Low-carbon economies will dominate in a carbon constrained world
o Economic growth, job creation, energy security, and pollution reduction will be facilitated and benefited from renewable energy policy and technology cooperation
o Such cooperation can be used to build mutual strategic trust between the two countries
o Cooperation can advance technological understanding, reduce costs, and bring about global climate benefits
Last to speak was Bill Morin of Applied Materials whose company opened the world's largest solar R&D center in Xi'an, China in 2009. It made sense for Applied Materials to locate this R&D center in China, according to Mr. Morin. He said that low-cost labor was not the main reason for China's competitiveness in renewables, more important was the country's significant manufacturing infrastructure and enabling policies that pushed the demand for solar power production. In contrast, the lack of U.S. policy commitment to low carbon development (e.g., lack of a climate bill that puts a price on carbon and sets renewable portfolio standards) has discouraged the creation of a renewable energy market. Thus, companies are less inclined to set up solar PV manufacturing plants in the United States.
Chinese clean energy policies and renewable targets have catalyzed a considerable volume of manufacturing capacity in China and thereby significantly lowered costs, which offers a global benefit. Namely that as prices go down solar power is beginning to reach grid parity with coal in some parts of the world, especially if externalities are incorporated.
Drafted by Peter Marsters and edited by Kexin Liu.