Energy Secretary Steven Chu would like China to invest in America’s green future, not own it. But to challenge China’s growing lead in solar power, wind power, advanced batteries and grid technologies, the U.S. may have to boost its support of homegrown technologies.
These were some of the issues Chu raised Friday during a brief stop-over at Google (s GOOG) headquarters in Mountain View, Calif.. Chu planned to meet with Google execs — including Green Energy Czar Bill Weihl and Director of Climate Change and Energy Initiatives Dan Reicher — to discuss various Google green initiatives after his talk, but Google and DOE spokespeople wouldn’t say just what they planned to talk about.
Chu’s public comments, however, were quite pointed in regard to the challenge the U.S. faces in regaining its onetime dominance in green technology. U.S.-based Bell Labs invented the photovoltaic solar cell, and the U.S. once had about half the global market share in solar PV equipment, he noted. Now it has about 6 percent, and Chinese solar manufacturers rule the market.
American companies shouldn’t blame lower labor costs in China, he noted. He related a story that Mark Pinto, CTO of Applied Materials (s AMAT), told him about the company’s robotic factories in China outperforming those in other countries. This improved performance “ain’t labor,” Chu said. “It’s just paying serious attention to detail.”
Perhaps U.S. greentech companies can blame the Chinese government’s anti-competitive practices? Chu declined to comment on the federal investigation into a complaint from the United Steelworkers union, which alleges China is illegally supporting its domestic clean energy industries. The Obama Administration is considering bringing that case to the World Trade Organization.
Some aspects of China’s approach to cultivating a greentech market may be worth mimicking stateside. Chu noted in particular the contrast between China’s long-term incentives and the on-again, off-again nature of clean energy support in the U.S. While the Department of Energy has directed tens of billions of dollars of green tech stimulus support, China’s support can be measured in the hundreds of billions of dollars. To ensure confidence for investors, U.S. policy should guarantee support not for one-to-two year increments, said Chu, but “at least 10 years, and possibly 20 years.”
China is also sitting on about $2.5 trillion in foreign exchange reserves of dollars and euros, and “it’s not making them any money” at present, Chu said, meaning that China is looking for overseas green projects to invest some of that idle wealth. In fact, Chu said he met recently with a nameless Chinese official looking to invest, “say, a billion dollars” from China’s sovereign wealth fund in U.S. projects.
While the Chinese official said he worried America’s renewable energy sector may have “too much froth,” he did see opportunities to invest in transmission and distribution grid projects, Chu said. But the official wanted to know what limits federal policy would place on that involvement. Chu told him not to expect any access to state-of-the-art cybersecurity technology, and to prepare for political opposition to Chinese companies taking a majority, or “significant” share of any projects’ revenues.
Urs Hoelzle, Google’s senior VP of operations and Chu’s conversation partner, did ask what the search giant could do to support green energy investment. Chu praised Google’s recent investment in a massive offshore transmission cable meant to jump-start wind power development off the Mid-Atlantic coast, and said similar investments are needed across the country to incorporate the amount of solar and wind power it will need to meet some of the renewable energy goals set forth in bills before Congress. The Federal Energy Regulatory Commission is seeking to secure more control over trans-state transmission line planning.
In a final nod toward his hosts, Chu noted that advances in computing technology could help engineers and scientists advance green technology’s boundaries faster. “Quasi-incremental improvement in computers — getting petaflops on a desktop and doing simulations with it — you can expect breakthroughs in other things,” he said.
Image courtesy of futureatlas.com.
For more research on China and cleantech check out GigaOM Pro (subscription required):
- Carving a Path to Greentech in China
- Cleantech Overview, Q2 2010
- Finding a Niche in the Electric Vehicle Market