AIMEE BARNES

HomeAbout This Blog

Switcher

Home > Interviews > China’s Energy, China’s Power: An Interview with China Energy Specialists, Elizabeth Balkan and Chris Brown

China’s Energy, China’s Power: An Interview with China Energy Specialists, Elizabeth Balkan and ChrisBrown

October 19th, 2009Goto comments Leave a comment

Elizabeth Balkan Chris Brown

The US-China relationship has entered into a new energy era, one where hope clashes with history and future collaboration is threatenedby unnecessary competition. While the two nations are taking considerable steps toward the development and implementation ofrenewable energy technologies, their entangled dependence on coal remains; the US and China now account for nearly half of the world’scarbon emissions. Is a US-China coal “cartel” inevitable? Will bilateral cooperation lead to future opportunities in low-carbon innovations?Or, will self-serving interests steer the US and China down divergent paths? I had the chance to talk with Elizabeth Balkan and ChrisBrown, China energy and climate change specialists who posses exceptional knowledge on the future of clean energy, greeninfrastructure, and the policies that shape this US-China equation. Together, their unique insights are unparalleled. To learn more, readon:

In addition to your energy sector expertise, you both possess a deep knowledge of China as well as fluency in Mandarin.What brought you to China in the first place and how did your experiences abroad shape your professional lives today?Elizabeth: I studied Mandarin throughout college and wanted to deepen my cultural understanding. For that reason, ever since collegeI’ve been working in a capacity that involves China. For the first part of my career, I focused on social and environmental compliance inthe field, and through that work I became aware firsthand of the environmental situation in China. I was quite alarmed to the point ofwanting to address it in my career and combine the US’s strength in innovation with China’s strength in manufacturing capacity.I had been spending a lot of time in factories and manufacturing facilities, and was mired by the absence of incentives for complianceand scale of China production capacity which, aside from serving Western consumption, wasn’t really doing anything to get Chinatowards a sustainable course of development. That experience prompted me to go back to school to get my Master’s degree, where Ifocused on environmental economics and sustainable development with an eye towards China and towards finding a way to makeenvironmental technology commercially viable with the use of China’s manufacturing capacity. For me, while I recognize that the on-the-ground issues related to the environment and the situation are extremely important, I find it critical to first work on bigger, moresweeping solutions in order to help people understand what China is capable of doing – installing the hardware before the software, youcould say. In the last year, my work has become increasingly shaped by indications from the Central Government as to what they arewilling to do in terms of funding, policymaking and national commitments.Chris: I also studied Chinese in undergrad, as well as studying abroad in Beijing. I then lived in Jilin City for a year and it was there thatthe Uighur students got me interested in Xinjiang. For the Spring of ‘89, near the end of the semester, most of the Han students wereprotesting so I ended up bonding with the Uighur ones because they were the ones who showed up for class. Following Jilin I moved toTaiwan, where I worked in Taiwan radio for a few years, mostly in Chinese and on the air. I then came back to the US, where I got myMaster’s in Chinese Studies at the University of Washington and had the chance to study Xinjiang policy. I’d wanted to study Uighur, butthe closest language they offered was Kyrgyz. That led me to work in naval intelligence for three years, [followed by a position as aDefense Analyst] with the Defense Intelligence Agency (DIA) in D.C. Since I’d been studying Kyrgyz all along, they had me groomed asthe Xinjiang expert. That was actually my start into energy- I’d been looking at energy issues for the government and particularly for theDepartment of Defense from a “threat security” perspective. Basically, it boiled down to “what’s China up to in Central Asia and what are

Aimee Barnes » China’s Energy, China’s Power: An Interview ... http://www.aimeebarnes.com/?p=1010

1 of 5 2/4/10 1:37 PM

they doing to secure resources?” I was also involved in stability studies with a focus on two questions: 1) what is China doing tointernationally secure resources in Africa, Venezuela and Central Asia, and 2) how does that tie into long-term stability in terms ofkeeping the economy going? But, I wasn’t really interested in looking at energy issues from a security perspective, so I left thegovernment in 2005 to pursue opportunities with China energy projects and look at it in terms of how the US and China cooperate, asopposed to working from the standpoint of seeing China as a threat. I no longer viewed it from a government perspective; it was moreabout what I could do to facilitate cooperation and bring the two sides together. For me, I’ve been looking more at clean energy overenvironmental issues, but obviously there’s an overlap.

China is reportedly spending $230 billion in stimulus money on “green infrastructure.” What is this investment targeting,specifically? Could you tell me about some of the projects currently underway?Chris: 40 percent of China’s stimulus package is going to the green economy. There’s a big push to get a domestic solar market. Theystarted off in March with the Solar Roofs Program and then in late July they announced the Golden Sun project, which is more utility-level. The difference between the two programs is that the “Golden Sun” targets larger utility-scale projects, probably mounted on theground instead of buildings, and more than 300 kw, and complements the Solar Roofs Program, which as the name implies, is meant forroof top projects not less than 50 kw. The Golden Sun policy explicitly excludes projects which fall under the Solar Roofs Program frombenefiting under the Golden Sun program.China’s government will subsidize 50 percent of projects that focus on- for instance- grid connections. It’s very impressive andaggressive.Elizabeth: There’s been some very good analysis done about how the stimulus money is being used and classified. My sense is thatthere’s a lot being done and generally speaking, green and non-green funding are creating positive feedback to help leapfrog China’sinfrastructure, which is a reflection of the central policy on the circular economy. For instance, you have projects like railways- whichcould be considered “green” or “not green,” depending on your perspective. It’s not really a renewable energy and doesn’t addresstransportation-related emissions issues, but at the same time it’s better than building roadways. These kinds of things point to a difficultyin arriving at a [RMB amount] allocated to green projects. The way that some analysts have sliced and diced the numbers gives a falseimpression. From my perspective, there seems to be promotion in some circles that China is racing ahead of the US, which is spawning acompetitive drive in Washington. This is not the message that should be conveyed because the numbers may be bigger than what maybe specifically allocated towards “green.” Even if China does exceed these numbers, [these initiatives] shouldn’t be turned into a tradewar.

In some ways, the US and China seem to remain divided on the issue of climate change, although both countries are takingsignificant steps to combat their own environmental problems. China has recently become the top polluter of greenhousegases, surpassing the United States; the two nations now account for more than 40 percent of the world’s carbonemissions. What are some of the steps that China is taking, and where do you see opportunities for US-China cooperationon the issue? What are some of the challenges?Chris: Jim Rogers from Duke Energy recently talked about how much they’ve done with carbon capture and sequestration, which holdshuge potential for China. I think it gets more difficult with some of the renewables. Having said that, First Solar in Inner Mongolia isinvolved in this massive utility-level solar project and has brought in its own engineers while incorporating knowledge from the Chineseside.I’ve been very impressed with how smooth the technological exchange process has been on this First Solar project- so far. But, they’re atthe very beginning stages so of course, policy vs. implementation problems could still occur.Elizabeth: I would characterize the US-China position on climate change not as being at odds, but as perhaps differing in terms of theirperception of responsibility. While I think China and the US are equally committed to being responsible and active players in combatingclimate change, there’s a difference between the United States position on how China should address climate change, and China’sposition on what it should do. It’s been repeated many times, but the controversy surrounding historical vs. current emissions and grossvs. per capita emissions remains. Depending on how you read the numbers, China can either look really good or really bad. Also, there’sthe debate about whether China is a developed or a developing country. So, I think the challenges and the opportunities stem from thatdifference in stance. The US seems to believe that China should be doing as much as the US. China has indicated that- at least in thisround of negotiations- no cap on emissions will be committed to. Responsibility for some of the funding is another issue that has seensome disagreement. China’s feeling is that the US, as a historically bigger emitter, should fund a lot of the abatement initiatives in China.Chris: Have you seen differences in policy from administration to administration on the US side?Elizabeth: Have I seen [those differences]? Yes. I think there’s been a huge change from the administration, but then again you comedown to issues like funding and technology transfer and even the current administration doesn’t really seem as yet fully equipped toaddress those things. US-China alignment, to be activated in a way that’s going to meaningfully bring climate change solutions is goingto require a lot of money, cooperation and technology transfer.Chris: Orville Schell had conveyed that at a [recent Carnegie Panel]. He’d said that, at this level, let’s put aside questions regardingwhose responsibility it is historically…. Really, where this is going to hit a wall is in Congress- trying to sell things like technology transferand financing.Elizabeth: Right. I think a lot of people in Washington have a hard time understanding why China needs funding when they’re the oneswho bailed the US out of the economic crisis. It’s a more complex issue than that, but I can understand why people have a hard timeunderstanding why China’s looking for handouts.

A recent Pacific Northwest National Laboratory study summarized by The New York Times predicts that “China’s vastunderground repositories could store more than a century’s worth of carbon emissions from coal-fired power plants andindustrial facilities, permitting use of cheap, industrial coal.” Given what we know about China’s coal dependency and thenegative effects coal has on the environment, what could this discovery mean in terms of policy dialogue?Chris: I’m glad you bring up coal. Coal is just an inescapable fact of life in China’s energy future. I think that the green movement ingeneral tends to be too purist, especially when it comes to China. Coal is just not going to go away. Do we focus on cooperation like theDuke Energy deal or do we cooperate on clean ways of burning it or do we make it a pariah?Elizabeth: There seems to be a dangerous trajectory toward US-China cooperation becoming a coal cartel, which is to say that althoughthe US and China have very different positions and circumstances, one thing that brings them together- while setting them apart from

Aimee Barnes » China’s Energy, China’s Power: An Interview ... http://www.aimeebarnes.com/?p=1010

2 of 5 2/4/10 1:37 PM

the EU- is their large-scale dependence on coal. The EU has drastically reduced its coal dependence. I worry that this common positionwill somehow trump the importance of a multilateral agreement aimed at diversifying fuel sources away from coal. The US and China astwo main powers do have the ability to derail that process by conveying “we need coal and that’s not going to go away, so the rest of theworld better get used to it.”If all of China’s dirty coal-fired plants were shut down and cleaner coal-fired power plants were brought online, I do think the negativeeffects of coal would be mitigated. I will say that many inefficient power plants have been shut down, but being familiar with this on-the-ground situation in China, it’s still not enough. China’s energy demand and the anticipated rate of energy growth over the next twenty tothirty years leads me to suspect that it will be impossible to shut down enough of those small power plants and bring online cleaner oneswhich will make enough impact. There’s a reluctance to shut them down, given the growing energy demand in the cities.Chris: I guess I’m coming from a late 80s, early 90s perspective. I agree that there needs to be pressure on the coal issue. That excuseof “well, it’s not going to go away” is sloppy and lazy. However, I am looking at China’s cleaning up its coal industry as a glass half fullrather than half empty. They are doing a better job than I would have expected, shutting down smaller inefficient plants and replacingthem with larger, cleaner and more efficient ones. It is not a one-to-one replacement and there is a net gain in coal capacity but theresult is that China’s coal plants have increased their thermal efficiency by 5.6% over the past three years.Elizabeth: I’d like to add something on the findings of an MIT study, which was really interesting. They went to 85 power plants with atotal of 299 generating units, almost 80% of which were outfitted with “clean coal” SO2 scrubbers, and they found that, in many of thesefacilities, a lot of the environmental technologies that had been added were not being used because they are expensive to use, andsub-grade coal was being used in a lot of these advanced facilities. You can have the most advanced equipment, but if you don’t have theproper operations and if you don’t have proper enforcement and monitoring to ensure that, then you won’t have clean power plants. It’smore than just shutting down the dirty coal plants and building clean ones. In the US, we have these automatic reports sent to the EPAbut in China, there’s nothing like that.

What are some of the opportunities in clean energy and green building for entrepreneurs standing on the US-China bridge?Chris: Solar is fresh in my mind; there’s so much opportunity for China to develop that market. I’m amazed at the access they’re givingfor solar and I’ll use that as just one example. Investing in First Solar and being involved with First Solar and Suntech, being involvedwith solar expansion and utility-level projects in China. At the same time, China’s solar companies are being very aggressive about goingoverseas- [expanding] into Pakistan and setting up PV cell plants here in the US.Elizabeth: I think a lot of the opportunities will depend on emerging legislation from Washington as well as outcomes from Copenhagen.Chris and I attended a conference on China-US clean energy economy. They made it sound like, in two weeks time, there would be arobust carbon trading market within China, which is something that holds a lot of opportunities for entrepreneurs, both in financial andnon-financial areas. But, the prospect for the development of those markets and the speed at which those markets will develop is stilluncertain. Apart from policy and legislation, there needs to be some key transformation in China’s market behaviors to really makeChina’s climate-related business opportunities blossom. I think, within a year’s time, we’ll know with greater certainty what types ofopportunities will come online. You can see just by China’s market transformation over the past twenty years that it will happen, and itwill happen quickly.Chris: I’d watch state and provincial level activities. Qinghai has been very aggressive in putting money into [clean energy]. Jiangsulikes to think of itself as the “California of China”. Not only has the provincial government been aggressive in promoting solar withinJiangsu but they have been very active creating relationships with US state governments, California in particular. There have beenseveral Jiangsu-California conference and workshops over the last year including a Jiangsu-California Clean Tech Exchange workshop inMay. I also find it interesting how the Jiangsu government has been working with the American Council on Renewable Energy (ACORE) astheir liaison between them and the US DOE and California state government. The military is also funding new energy projects.Elizabeth: The bottom line in China is often different than the US. Return on investment and cost benefit analysis dictates how moneygets spent in the US, whether private or public sector. In China, the calculation is often different. One instance that I’ve seen: a Chinesemunicipality wanted to adopt an emerging technology for treatment of waste. Within the financial world, that was considered unproven,unviable and not a sound investment. But, the municipality said “we’re not looking at this from purely economic terms. We’re looking atit from a social perspective.” That’s something that is unique in China and will lead to significant opportunities.

What’s next for you?Elizabeth: I’d like to continue on the same trajectory, consulting independently on issues related to China’s environmental actions andopportunities for alignment between the US and China to develop and deploy cleaner energy.Chris: Much the same- continuing with renewables, specifically. I’ve really enjoyed working with companies trying to bridge the two sidesand forge cooperation.

Elizabeth Balkan is an independent consultant currently based in New York City who specializes in energy efficiency and climate issues.To learn more about Elizabeth, be sure to check out her website, New Energy and Environment Digest (新能源与环保参考) atwww.needigest.com and her Linkedin profile. You can also follow her on Twitter @needigest. Chris Brown is a China energy consultantalso based in New York City and currently serves as a liaison, translator and research manager for Chinese and Japanese companies whoare expanding into the North American solar energy market. Visit his Linkedin profile and blog, solarsite, to learn more. You can alsofollow Chris on Twitter @chrisrbrown.

Interviews china, China manufacturing, Chris Brown, clean energy, coal, Elizabeth Balkan, Golden Sun, solar, Solar Roofs Program,Xinjiang

Comments (2) Trackbacks (0) Leave a comment Trackback

ChinamessageOctober 19th, 2009 at 23:08 | #1

1.

Aimee Barnes » China’s Energy, China’s Power: An Interview ... http://www.aimeebarnes.com/?p=1010

3 of 5 2/4/10 1:37 PM

Reply | Quote

Great discussion. I follow Chris on twitter and his excellent blog and I’ll follow Elizabeth now too.Currently, coal-fired power plants supply 75% of China’s energy; in the next eight years, China will add more than 560 coal plants.This is 1/week! Good information on the emission levels of these new plants will be valuable and important. (Not rated levels butactual).

China’s efforts and perspective on the importance of nuclear power in their future energy portfolio would be interesting to hearabout too.

Greener ChinaNovember 1st, 2009 at 10:03 | #2Reply | Quote

Excellent dialogue.

Some interesting view points in this post!

R

2.

No trackbacks yet.1.

Name (required)

E-Mail (will not be published) (required)

Website

Subscribe to comments feedSubmit Comment

Head West, China: An Interview with Private Equity Consultant, Song Jin Interview with Casey Wilson, Co-Founder of WokaiRSS feed

Follow me on Twitter

Categories

CommentaryGuest PostsInterviews

Archives

January 2010November 2009October 2009September 2009August 2009July 2009June 2009May 2009April 2009March 2009February 2009January 2009

Recent Posts

Mandarin For “Dummies” – A ProposalThe Unplugged Month: Notes From An ExperimentUntil Next Time… On Blogging, Connection and ContemplationA Life Transformed By China: A Conversation With Saul Gitlin (Part 2)A Life Transformed by China: A Conversation With Saul Gitlin (Part 1)

Aimee Barnes » China’s Energy, China’s Power: An Interview ... http://www.aimeebarnes.com/?p=1010

4 of 5 2/4/10 1:37 PM

Recent Comments

@Transition on Mandarin For “Dummies” – A ProposalHao Mama 好妈妈 » Blog Archive » Mandarin for “Dummies” on Mandarin For “Dummies” – A ProposalJocelyn on Mandarin For “Dummies” – A ProposalAimee on Mandarin For “Dummies” – A ProposalAimee on Mandarin For “Dummies” – A Proposal

China Business Blogs

China Law BlogChina SolvedChinaBizGovCNReviewsDanweiShanghaiistSilicon Hutong

Damn Good Reading

Asia Health Care BlogChina Financial MarketsChina TranslatedGlobal IssuesInside-Out ChinaLetter from ChinaNEEDigestSpeaking of ChinaThe FCPA BlogThe Useless TreeWangjianshuo’s BlogWebb-site

Search for: Search

Categories

CommentaryGuest PostsInterviews

Archives

January 2010November 2009October 2009September 2009August 2009July 2009June 2009May 2009April 2009March 2009February 2009January 2009

Meta

RegisterLog in

Top

www.aimeebarnes.com/blog by Aimee Barnes is licensed under a Creative Commons Attribution-Noncommercial-Share Alike 3.0 UnitedStates License.Based on a work at www.aimeebarnes.com.Permissions beyond the scope of this license may be available at http://www.aimeebarnes.com/blog

Aimee Barnes » China’s Energy, China’s Power: An Interview ... http://www.aimeebarnes.com/?p=1010

5 of 5 2/4/10 1:37 PM