The launch
of the Sputnik I satellite in 1957 ushered in the “space race” between the US
and former USSR, a period of new political, military, technological, and
scientific developments, including the missile defense program that was to be known
as “star wars.” As the space race has
slowed, nearing a halt, the race in other technological fields has recovered
from the recent financial turmoil to regain their earlier momentum. The People’s Republic of China has
quickly emerged as the Soviet analogy in the race to develop commercially
viable green technologies.
In the
world of “green” – all things cleaner and/or more efficient – former titans of
green innovation, the US, Japan and EU, are quickly being eclipsed by China. The Chinese manufacturing capacity for green
products is no surprise, given their current dominance in nearly all other
manufacturing sectors. Recently, China overtook the US to become the world’s larger
manufacturer of solar panels. However,
the Chinese government’s investment in green technology R&D is beginning to
bear fruit in significant ways.
An article
in last month’s New Yorker chronicles China’s
rise to engineering prominence in high-growth markets like solar, wind and
“clean” coal. Most interesting is the
author’s comparison of the innovation policies of the Chinese and American
governments.
Given China’s recent rise from manufacturing epicenter
to burgeoning R&D hub, one might be perplexed by the Chinese position at last month’s
Climate Change talks in Copenhagen. It is still too early to speculate about what
results the “Copenhagen Agreement” will produce. The negotiations, however, showcased China’s
continuing reluctance to curb greenhouse gas (GHG) emissions, despite what is
now apparent as their capacity to finance, design, and manufacture their own
emissions reducing technologies.
Chinese green technologies have proven to be highly-competitive and are ripe
for global deals and licensing royalties.
China stands to gain the lion's share of manufacturing activity resulting from a new "green" economy, regardless of the origin of the design. So, why China’s hesitation to encourage other countries to adopt
policies that would further open markets for green technologies – before
relevant Chinese patents, trade secrets and other competitive advantages lapse? It has been reported that 95% of solar thermal water heating patents are held by Chinese entities.
One
possible explanation is a fear of “clean” coal technology, e.g. Carbon Capture
and Sequestration (CCS), not proving to be commercially viable or
environmentally sound. Over 65% of China’s electricity
demand comes from coal, and the majority China's coal is needed for for industrial, i.e. manufacturing, purposes. China is currently the world’s largest
consumer of coal, with consumption expected to rise at an unbridled 3.5% per
year through 2030 to meet Chinese manufacturing and global consumer demand. Alternative energy is far from being a viable
alternative to China’s
coal-based energy needs. Moreover, current
levels of funding for green technology development and deployment are not
expected to be sufficient to reduce GHG emissions to non-catastrophic levels.
However, China is not
alone in their coal-based energy needs. The
US
alone accounts for 48% of the coal consumed by all OECD countries (which does not include China or India). The US department of energy (DOE) expects coal-based electricity production to decline from
49% in 2006 to 47% by 2030, while growing at 0.7% per year. The US and China each have two of the three the largest national coal reserves in the world. The World Bank expects that much of the world's GHG reduction by 2050 will be attributed to CCS technology coming on board.
Both the US and Chinese
governments are funding R&D in CCS technology, to varying degrees. In what might become the “Green Wars” - to design and develop
viable CCS and other green technology - it appears that, in a reversal of historical roles, China has taken
the lead designing and developing the needed technology. Government R&D funding has waned since the
days of the space race, allocating much of the responsibility to the private
sector. Indeed, General Electric, a
dominant force in US
wind-turbine technology, is also active in developing CCS, but results have
been limited. The Obama administration
has vowed to reignite R&D in the US, taking many first steps through
allocations of Stimulus Package funding, which will hopefully bear fruit.
The New Yorker
relates that, drawing on 20% increases in R&D funding for the past 20 years
and a research system modeled on the US’s NIH (health) and DOD (defense), China has developed a
far superior coal-gasification technology and plans to unveil the worlds first
coal-fired, near-zero emissions plant in 2011. The project, "GreenGen," was originally slated to begin operation in 2009. Plans in the US
for similar plant, “FutureGen,” were withdrawn near the end of the Bush era, in
what a Congressional investigation revealed to be a “public relations ploy for Bush
Administration officials to make it appear that the US was doing something to address
global warming.”
However, Chinese
scientists have come under great scrutiny for proven allegations of falsified
data. In fact, a recent joint venture was announced between China and Peabody Energy, a US corporation, for the "GreenGen" project, perhaps indicating more difficulty than anticipated was encountered by Chinese officials in developing the necessary technology for CCS.
Could the development of a viable CCS platform by only China or the US tilt the balance of power such that consensus on a Climate Change agreement with legally binding commitments or meaningful emissions reductions obligations would be near impossible? Or rather, is certainty regarding the feasibility of CCS required for any binding or meaningful commitments?
Even if it does not,
this scenario is still yet another strong argument for the fruits of publicly funded R&D being
exempt from patent protection, given the underlying rationale of patents to stimulate investment. Or even yet,
perhaps CCS is an excellent area for a collaborative joint-venture between the US and Chinese governments,
similar to the symbolic Apollo-Soyus Test Project, which culminated in the docking of a US and Soviet
spacecraft in orbit in 1975. Placing our eggs in one basket, like Peabody Energy, is a risky move for the US government, considering the global public good nature of our environment.
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