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Business Voice for the Environment

U.S. Clean Energy Trade Mission to China

From left: E2 member Thomas Van Dyck, RBC Dain Rauscher; David Bohigian, U.S. Assistant Secretary of Commerce; Wu Guihui, Deputy Director General, National Development & Reform Commission; and E2 member David Readerman, Marsico Capital Management.
In January 2008, E2 members David Readerman (Colorado (a co-leader of E2’s Rocky Mountains advocacy region)) and Thomas Van Dyck (California) participated in the U.S. Commerce Department’s second U.S. Clean Energy Trade Mission to China. The group of 19 business leaders met with Chinese politicians and businesses in Beijing, Guangzhou province and Hong Kong. The trade mission had two key purposes: first, to introduce U.S. clean technology management to China, and, second, to foster a dialogue on key trade topics such as intellectual property protection, tariff reductions, grid connectivity to the broader electricity market and open-market pricing for U.S. firms. The following is a report on the trade mission from David and Tom.

“The trade mission reinforced two fundamental growth challenges for China: (1) the urgent need to slow greenhouse gas (GHG) emissions through pollution prevention and, (2) China’s need to reduce the energy consumed per dollar-unit of GDP growth through improved energy efficiency. These challenges represent large growth opportunities for U.S. cleantech. We left China knowing that the climate and economic growth stakes are high, but that Chinese leaders from NDRC (National Development & Reform Commission - China’s central planners), SEPA (China’s EPA), Guangdong Vice Governor and the Development & Reform Commission  (amongst largest province for China’s export manufacturing), U.S. government officials (Hong Kong Special Consul sponsored P2E2 program), U.S. firms manufacturing in China and Chinese firms (ranging from state-owned enterprises to publicly listed private firms) "get it" - that now is the time to sharpen Chinese environmental policy and put it into action. 

Beijing’s "blue sky days" initiative, for example, is aimed at cleaning up the city’s air prior to the summer Olympics. Though trial tests have produced mixed results, officials acknowledge that the threat of delayed or canceled competitions could be disastrous. The focus goes beyond air quality at the Olympics. At the national level, there is talk of China launching a Department of Energy as soon as March, in time for the People’s Congress. Beijing is also looking to change the nation’s economic growth priorities by passing sweeping mandates that would require a 20 percent GHG reduction for every additional one percent of GDP growth. The system would also reward local politicians for reducing emissions - a dramatic shift from a model that only rewarded economic growth. In addition to these broader policies, there are targets and incentives aimed at everything from fuel efficiency to building construction and design.

Intellectual property rights and technology transfer remain important issues in China. While China has the need for and the ability to produce cleantech solutions, their intellectual property is minimal. Thus, they turn to innovation from Europe and the U.S. It was clear to us that there are legitimate concerns about international patent violations. Yet, it’s also clear that this country is in drastic need of solutions. While China’s national laboratories are just starting to research cleantech, they will depend on international technologies for the near-term. This will be a challenging point of contention between the U.S. and China, but there is certainly room to develop a "creative commons" if both countries can collaborate on an issue as important as this. Joint ventures that combine intellectual property from the U.S. with manufacturing techniques in China could potentially manufacture clean technologies on a scale that would be affordable to everybody. Not only can E2 members help forge these ventures, they have an opportunity to bring their own companies into the equation. 

The stakes are high and it’s clear that failure in China will produce catastrophic results. While the government is engaging other governments and international organizations, it’s clear that the voice of international business can play a potentially powerful role in China’s cultural and economic shift to sustainability. E2 members are particularly well-versed in bridging the divide between business and public policy. Thus, we have a unique opportunity to be catalysts to China’s government and business communities. Like we have done in California, Massachusetts, Colorado and other states, there is a real opportunity for E2 members to help guide the dialogue and assert the economic value of sound public policy.

Lastly, we would like to call out the excellence of the efforts by the U.S. Department of Commerce (DOC) in advancing U.S. cleantech companies and their business interests in China and other emerging markets. David Bohigian, U.S. Assistant Secretary of Commerce, provided outstanding leadership for this trip, as did his team (and the staffs from the three U.S. Embassies we visited). These are “can do – will do” professionals working to promote U.S. cleantech firms – impressive best-examples of taxpayer dollars at work. For example, Hong-Kong-based U.S. Chief Commercial Consul Stewart Ballard is spearheading an ingenious financing program called “P2E2” (Pollution Prevention Energy Efficiency). This program was first introduced in 2005 and has won backing of $1 billion in financing from the Asia-Development Bank and U.S. Export-Import Bank. The structure allows Chinese companies to finance purchase of clean tech equipment and services at no upfront cost. The loan is repaid from energy efficiency savings under the terms of a performance contract. Importantly (and observed from a January 12 working sessions in Hong Kong) both leading U.S. companies who are sourcing manufacturing in China and Chinese state-owned enterprises (SOE’s) are accelerating capital investment in U.S. cleantech as a result. This is a “win-win” for everyone. 

Further, the DOC did an excellent job scheduling meetings with Chinese businesses and government officials, and got extensive press coverage where ever we traveled (see extensive interview with Tom Van Dyck in the China Daily). Assistant Secretary Bohigian clearly believes that clean tech is a huge growth opportunity for the U.S. and China to develop further business and economic ties.”

For future cleantech business opportunities with the DOC, please contact Justin Rathke at Justin.Rathke@mail.doc.gov.

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