By Maura O’Connor
PRACTICAL COUNSEL/GLOBEST.COM
October 8, 2010
China knows that it has an air pollution problem. There’s heavy dependence on coal and fossil fuels, less experience with environmental remediation, and a fast-growing industrial sector. Air quality problems were brought sharply to global attention by the 2008 Olympics in Beijing; their national and local governments have been grappling vigorously with carbon cost and air pollution issues ever since.
They’re still struggling. Recently I led a trade mission for the Los Angeles County Economic Development Corporation (“LAEDC”), and spent two weeks in-country. Air quality was often tough; I was particularly struck by the persistence of smog in some parts of the countryside.
We rode through the rural but relatively industrialized North, 85 miles (136 km) from Beijing to Tianjin: about 2 hours by car or 30 minutes by the new bullet train). This is Hebei province, site of a major Chinese victory in the “Boxer Rebellion” a hundred years ago.
Now, it has modern roads winding through many green fields, most lined with trees in an enormous reforestation effort. But visibility is sharply reduced by intermittently thick smog, even out away from the urban settlements. Breathing can be difficult, here, as in muggier southern cities, and on back roads in the country. Beijing itself was a city of bicycles even 20 years ago; its incredibly fast transformation, with widespread car ownership and developed metropolitan freeways, brought with it the flip side of pervasive automobile exhaust.
The Chinese government and businesses are acutely aware of the problem. Sustainability, remediation and alternative energy development were the central topics both at Tianjin (where Los Angeles presented at the World Economic Forum’s “Summer Davos” meetings), and at the Second China Renewable Energy Conference (“CREC”) in the lakeside resort city of Wuxi.
Wuxi is a national center for photovoltaic (“PV” solar cell) development. China has a strong program of incentivizing the development of the alternative energy industry and of electric vehicles. You can see it as you drive through the cities: a remarkably high number of roofs have visible solar water heater tanks or PV panels. And we saw it on display in the presentations and trade show floor demos from various founders of the Chinese solar energy industry and burgeoning electric vehicle manufacturers.
The optimism and entrepreneurial energy of these CEOs, managers and local governmental leaders really stood out. They are confident that they’ll be able to radically improve the pollution at home by moving to alternative energy; and they fully expect to compete in global markets as well — having successful become a favorite PV supplier in Germany, and now looking intently to US markets. China is the largest user of (relatively dirty) coal for energy worldwide … but the US is the second-largest.
The senior executives of these companies had similar stories of a good technological idea, followed by a small start, then more tinkering with the idea and product, then huge growth (typically to tens or hundreds of thousands of employees) over a few years. They also made it clear that this sector is being strongly supported by the government, by training, financing and export assistance, both to encourage job growth and needs to clean up the air. That governmental support creates a big Chinese advantage in the alternative energy equipment marketplace.
Here at home, our governments are professing some support for carbon reduction and alternative energy sources, but it’s taking a different form. In California, the biggest producer of solar energy among the United States, the state government has pushed the local utilities to buy and distribute more alternative energy (solar and wind) by regulation. California has mandated that all retail sellers of electricity must demonstrate by 2010 that 20% of their power comes from renewable resources, and has expressed an interest in raising this proportion to 33% by 2020 – a very aggressive goal that would require significant improvements to the existing infrastructure, notably to transmission lines.
The state also is bringing on line a new California Green Building Standards Code (“CalGreen”) in 2011; and we are still wrestling with the contentious “Global Warming Solutions Act of 2006” (California AB 32), which mandated significant reductions in greenhouse gases in AB32, but also is being challenged at the polls (by Proposition 23) as a job-killer, while being lauded by some of the press as a catalyst for innovation. The details of each of these programs are being painfully and slowly hashed out: among other things, as to how enforcement and funding will be apportioned among state and local governments, down to individual air quality management district boards. While little is finalized, many complex regulations are underway at some stage.
Unfortunately, while California and some other states seem to be very good with the regulation “stick”, there’s not much going on at either the state or federal levels with the “carrots.” Where we’re gravely falling behind, compared to the Chinese effort so far, is in job creation.
Although our government has stated that it wants to be a leader in creating alternative energy jobs, it has focused more on becoming the largest buyer of such power in the U.S. This certainly helps create a market for solar companies to sell into. And this indirectly helps create jobs here, but more could be done.
We need to help our state and federal elected officials and governments develop a sustained focus on creating jobs (and/or enabling the creation of jobs), particularly manufacturing jobs, here. If we are spending the public’s money, we should not merely be incentivizing the consumption of goods, such as solar devices, created in other countries: we should also be incentivizing job creation and retention here.
There’s some hope: according to a report published October 7 by Next10, a nonpartisan public policy group, California is leading in green technology, and attracted about one-quarter of all global investment in the sector, netting about $11.6 billion in clean-tech venture capital, since 2006 . The San Francisco Chronicle points out that:
“California also had a disproportionate share of U.S. solar energy patents (39 percent of those issued from 2007 to 2009), battery technology patents (20 percent in the same time period) and wind energy patents (16 percent in that period). In 2007, the state generated 90 percent of the country’s total solar electricity output. . .According to the Next 10 report, green manufacturing jobs rose 19 percent from 1995 to 2008, at the same time that all manufacturing jobs slumped by 9 percent. ”
We’re seeing an increased interest in all aspects of green tech and renewable energy developing in California. Notably here in Los Angeles, the Solar Power International 10 conference convenes next week); and in January the annual VerdeExchange Conference will again convene business and public sector decision makers who buy, manufacture, sell, finance, endorse and legislate green technologies, products, innovations and sustainable services to discuss the latest technologies and share best practices.
There’s a significant world-wide need for more and cleaner energy – as well as energy we can produce at home in the U.S. Solar is not the only option, nor a perfect option: there are efficiency, variable supply, and storage problems with solar energy that need to be solved. No doubt it will take many years – perhaps generations – to fully convert the complex world economy from non-renewable to renewable energy sources. But alternative energy sources are obviously essential to energy needs and independence. It’s equally obvious that effective government policies should make this easier for commerce, industry and residential consumers.
Now that regulators are requiring that renewables be generated and purchased, we should be clamoring to make sure that this new industry also employs our fellow citizens here. Chinese leaders aren’t shy about their expectation that alternative energy demands create local jobs and growth; here in the U.S., we shouldn’t be either.
