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The United States and China: Clean Energy Friends or Foes?
July 7, 2010 By Joshua Nickell
As the world moves toward clean energy alternatives, companies in the United States and China are working to develop new, more cost-efficient manufacturing processes and increase their shares of the domestic and export markets for new renewable energy technologies. Controlling production lines and growing market share will certainly have important economic implications for both countries. But over the long term, a broader perspective suggests that cooperative initiatives to increase the capacity and reduce the cost of renewable energy technologies may produce benefits on both sides of the Pacific.
At an event co-hosted by the Wilson Center on the Hill and the China Environment Forum last month, John Romankiewicz, a senior analyst for China Clean Energy and Carbon Markets at Bloomberg New Energy Finance, and Ethan Zindler, head of North American Research at Bloomberg New Energy Finance, considered the big picture implications for U.S.-China clean energy cooperation and development.
Coming from an investment background, Zindler said that he looks at clean energy development “not as a social project, but as an industry.” The end goal, he asserted, is to produce clean energy more cheaply than fossil fuels. Zindler argued that if clean energy remains prohibitively expensive and uncompetitive without subsidies, it will be more difficult to implement and less likely to produce the desired environmental benefits.
Romankiewicz discussed China’s current supply of and growing demand for energy, pointing out that China’s power grid has grown by more than 70 gigawatts per year during each of the past 5 years, and that “at some point next year, the total installed capacity of China’s grid will surpass that of the United States.”
While coal and hydropower continue to play a significant role in meeting this growing demand, Romankiewicz noted that China also has set ambitious investment targets for wind farms, solar farms, biomass power plants, and other renewable energy sources.
China Looks to Go Global With Renewables
China is investing in clean energy not only to serve growing domestic energy demands, but also to become a major force in the international market, Romankiewicz asserted. Already, China has made impressive advances in clean energy industries: Of the top 15 wind turbine producers, four are Chinese and only two are American. Of the top 10 crystalline-silicon solar cell producers, six are Chinese.
But how will the United States impact China’s drive to become a major player in exporting clean energy technologies? Romankiewicz argued that breaking into the American market could prove exceedingly difficult for Chinese companies given the stiff competition from U.S. companies and other foreign firms.
The speakers also emphasized the importance of understanding the complex global economic implications of clean energy development. “If the Chinese are helping to drive down the cost… then they make solar less expensive,” said Zindler, “which means you can create more jobs in California or New Jersey.” Romankiewicz cautioned against reading too much into the “Made in China” label on clean energy technologies, as the supply chain could include parts from all over the world.
Though he maintained that focusing on the long-term benefits of clean energy investment in the United States would prove beneficial, Zindler advocated for a modicum of urgency. “I think a lot of opportunity would be missed potentially because there is innovation that doesn’t just come from a lab but comes from building newer and newer assembly lines,” Zindler remarked. But in the end, he characterized the U.S.-China battle for influence in the world’s renewable energy market as “a marathon, not a sprint,” asserting that “we’ve got a long way to go to determine who the winner will be in the clean energy race here.”
Joshua Nickell is a staff intern with the Program on America & the Global Economy at the Woodrow Wilson Center.
Photo Credit: <Wind Turbine Manufacture (in China),” courtesy of flickr user ANR2008.
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