Will Greenwash gridlock mean green energy technology from China?
Don’t get me wrong, the United States needs “green energy” which can mean many things to many people. But today’s AFP coverage of China’s announcement that it “is planning a stimulus package worth 440 billion dollars to expand its renewable energy use” could permanently place it ahead of the US in sustainable energy and create a new energy dependency outside of the middle-east. (Click here to read the whole article).
Although the Obama administration is committed to renewable energy development and the American energy industry is responding with the promotion of initiatives like “clean coal” (click here to see the counter arguement), the expanded use of natural gas (such as with the T. Boone Picken’s Plan), a new look at nuclear energy, and modest investments in wind an soar energy… are we really going to achieve much relative to a broader Chinese initiative? It is not that the Chinese government is more capable of throwing money at the challenge, America will always lead in that realm, and rather it is their approach and culture relative to ours that is likely to lead to greater success.
Lack of development has its advantages. Large regions in China are still underpowered and under-resourced since development came in the opening to the west in the late 70’s and early 80s. Even as the Chinese energy industry expanded to meet the growing western demand for Chinese factories it has not kept up. Energy growth focused on coastal industrial regions and key inland population centers. But with a recent growth towards developing inland industry China has an opportunity to build a stronger national power grid than the US could ever dream of simply because one doesn’t exist on the scale that the US has had for years. It is possible that while we are still debating a national smart power grid required to share regionally abundant renewable energy like solar and wind, China could be implementing one on a large scale. Additionally resistance from legacy industries is removed from the equation. One of the greatest risks we face in an infrastructure like this is cyber-attacks from foreign governments, terrorists and malicious teenagers. The simple nature of an internet controlled smart grid system is that its openness and flexibility may be its greatest weakness. But in China where the entire country’s internet sits behind government control, often referred to the great firewall of china, could facilitate a smart infrastructure required to spread regional renewable energy across an entire country.
Subsidy…a way of life or an evil of government? Never before have companies been required to change entire business models on a scale like we are asking energy companies. For years they have lived on model based on the price of oil and coal spread across regulated rates, basically they were presented with minimal risk for moderate reward. Now they are asked to invest money in new technologies without knowing what the profit model will yield for years. Not that greed should control development, but if a company is put at risk for takeover or threatened with bankruptcy during a high risk period of 4-6 years, no CEO is likely to wholeheartedly champion a plan like this. As a CEO of a large company recently told me, “the only people I answer the board of directors, and they are focused on the value of the company in the short term.” Under our economic system of risk and reward companies will be asked to pass through extreme periods of risk prior to even knowing the potential reward but it will take courage or other means to get them to follow through. Going beyond our economic system, the threat of global warming poses a societal risk that doesn’t directly translate in to the need to accept this risk. In China it is possible for the government to subsidize the cost of transition and rates so that artificial profits can be achieved during a period of risk. I would think that $440B is likely to be part of this subsidized transition.
More than just the scale of investment that China is willing to put in to this effort, but with the advantages of a centralized government, a need for infrastructure development and a willingness to subsidize change places China in a position to be become the global leader in green energy. Their leadership if successful is not likely to lead rapid quality of life improvements in the US simply because the Chinese appetite for energy is so strong that for years they will consume most of innovations they are capable of achieving and any exports will simply drain money from the American economy and erode our quality of life.
Down but not out…this development in Chinese national environmentalism doesn’t mean that the United States can’t still be the leader. But if we want to be the leader we have to stop letting environmental NGOs and the energy industry both keep greenwashing us. NGOs have to understand that industry, by its very nature, needs a plan for profitability that may include transition technologies like natural gas in the Picken’s Plan. At the same time industry needs to stretch for meaningful results that go beyond minor transitions like the “clean coal” plan and expanded drilling. Collectively they have ensured is a gridlock that has achieved almost nothing over the past ten years. In reality we need a defined end-state that we are committed to, just like the extremes that NGOs are calling for, while at the same time we may need to accept profitable transitions that can fund these long term payoffs. One thing the Chinese and Americans both have in common with their greenhouse case challenge is that we all got in to it together. Yet while the Chinese are more likely to work together to get out of their challenges, we remain divided by greenwashing extremes in ours. We can be the leader, but time and opportunity may be running out.
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–GWW
A centralized government can make significant headway with a centralized plan. I wouldn’t want live under a semi-communist centralized government like China’s, but as a former China foreign area officer for the US military I realize the fact that they do have advantages with large scale initiatives. As America looks for ways to further advance energy reforms we are mired by our many divisions, be they conservative v. liberal; industry v. environmentalist; upper v. middle class; or regional energy interests v. others. In China these types of divides aren’t likely to significantly delay action. Although they will be outwardly visible in the beginning and likely to linger in hidden inner politics for years, the Chinese way is to accept more than resist in causes like this. From wide spread urban renewal to the Three Gorges Dam project China has shown that although there will be debate major change is manageable. There just won’t be major protests, revealing news exposes, or court cases blocking construction. In 2008 China was able to ban ultra-thin plastic bags and require fees for all others with no debate unlike the west where how to manage plastic bags has gone on for years. Yes large scale national energy reforms are likely to disenfranchise many in China, but the basic fact is that they are more likely to establish a system that will foster the growth of renewable energy technology applications before similar infrastructure will exist in the United States.