The Leapfrog Strategy: Fuel-cell advocates say China is
uniquely positioned to jump past petroleum and straight into an
alternative-fuel future
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by JANE LANHEE LEE, Staff Reporter of THE WALL STREET JOURNAL
Relevance: Dan Sperling, professor of engineering and
environmental policy at UC Davis, said, "There's probably only one
developing country in the world that could even conceive of
[leapfrogging ahead]. And that's China." He will be head of the China
Center on Energy and Transportation, a cooperative effort between U.C.
Davis, Tongji University and Tsinghua University that will be launched
this fall.
In a lab on the outskirts of Shanghai, professor Wan Gang and his
students are leading an effort to secure China's energy independence.
Last year, the team from Tongji University created the Start II, a
prototype fuel-cell car that runs on hydrogen and spurts nothing but
water from its tailpipe.
Now they are trying to make it cheaper and more efficient -- but,
as Mr. Wan sees it, they are running out of time.
An explosion in car sales in the past three years has choked major
Chinese cities with smog and sent the country's oil consumption
soaring. Last year, China became the world's second-biggest oil
consumer, after the U.S., and it now imports 40% of its oil.
That's potentially unhealthy, especially with prices hitting record
highs and the oil-rich Middle East in turmoil. China's aggressive
efforts to secure oil and gas are also starting to cause friction with
its neighbors Russia and Japan, and U.S. politicians are on high alert
as China's Cnooc Ltd. tries to acquire U.S. oil company Unocal Corp.
"If China imports more and more crude oil, then other countries
will have problems, and prices will be higher," Mr. Wan says. "It
isn't just a China problem, but a problem for the whole industrial
world."
Looking to Hydrogen
Fuel cells, advocates argue, are China's best bet for limiting its
dependence on petroleum and cleaning up its air. Moreover, they say,
China is uniquely positioned to take advantage of fuel cells, thanks
to a seeming disadvantage: the nation's underdeveloped automotive and
energy industries.
In developed countries, gasoline and diesel distribution networks
are so extensive that converting them to supply hydrogen will be
costly for energy companies. But China's car culture is new, so it
doesn't have a big fueling infrastructure in place. Fuel-cell
advocates argue that this gives the country a golden opportunity to
leapfrog ahead of petroleum and create a network of fuel-cell stations
instead. If fuel cells are the future, they say, why build a
full-blown support system for gasoline?
In developed countries, "the infrastructure investment is so huge,
and inertia so great, that it's very difficult to do things
differently," says Dan Sperling, professor of engineering and
environmental policy at U.C. Davis. "There's probably only one
developing country in the world that could even conceive of
[leapfrogging ahead]. And that's China."
He adds, "The real question is, in the long term, would a leapfrog
strategy cost more than a gasoline-diesel strategy? And that's
unclear." Mr. Sperling will soon be studying the issue as head of
the China Center on Energy and Transportation, a cooperative effort
between U.C. Davis, Tongji University and Tsinghua University that
will be launched this fall.
Even though the Chinese government has made few official overtures
toward fuel cells, it has recently shown a general interest in
alternative fuels. Last year, the government updated its auto policy
for the first time in a decade, calling for companies to use more
environmentally friendly technology and encouraging foreign companies
to transfer such technology to their Chinese operations.
This year the government has also launched a top-level energy task
force headed by Premier Wen Jiabao to deal with all energy-related
issues, including shortages, conservation and China's deteriorating
energy trade balance.
In addition, Mr. Wan says the government plans to introduce tax
incentives for fuel-saving cars, as well as fuel taxes to dissuade
consumers from buying gas guzzlers.
Outside Influence
China's fuel-cell efforts could get a boost if international auto
giants undertook fuel-cell research there. So far most foreign
manufacturers are treading carefully, for fear that bringing such
research and technology to China could mean giving it away free. China
doesn't have a great record of protecting intellectual-property
rights, and companies fear that their products will be stolen and
refined by local firms -- and possibly end up gobbling market share.
Mr. Wan says that to further encourage foreign car makers, the
government could allow them to set up wholly owned companies. Today,
global auto makers are forced to take on a local partner, which
increases the odds of technology being drained.
Already, some foreign companies are considering taking the plunge.
Ballard Power Systems Inc., the world's leading fuel-cell research
firm, with investors including Ford Motor Co. and DaimlerChrysler AG,
is eyeing China for its future. Ballard, of Burnaby, British Columbia,
claims that it will begin making commercially viable automotive fuel
cells by 2010.
But the company has been fighting increasing pessimism that the
fuel-cell future may be at least another generation away. Now its
leaders believe China could help Ballard accelerate the
commercialization of fuel-cell cars.
"China has the strongest argument in the world to...leapfrog from
the old 19th-century oil and gas technology to the 21st-century
fuel-cell technology, and skip all that hydrocarbon infrastructure
investment that would be required to support the tremendous demand for
automobiles," says Denis Campbell, chief executive. "By teaming up
with a company like Ballard, the Chinese government or the Chinese
companies can shoot to the head of the pack."
Stephen Kukucha, Ballard's director of external affairs and
government business, notes that China has a strong base of automotive
suppliers that could also help cut costs in building fuel cells. As
for intellectual-property concerns, he says, "China's a market that
you avoid at your peril."
Global energy companies also are taking a strong interest in
China's fuel-cell future. "Shell Hydrogen sees China as a wild card,"
says Gabriel de Scheemaker, vice president, Asia Pacific of Shell
Hydrogen, a unit of Royal Dutch/Shell Group. The country's expected
boom in vehicle sales and potential demand for hydrogen could make it
a world leader in the new market. "Even as a follower[], it will very
quickly overtake whoever is in the lead."
Shell says it wants to set up experimental fuel-cell cars and
stations in China with the government and car makers, to match similar
projects in the U.S. and Japan. Shell says it expects a network of
hydrogen refilling stations to be built by energy companies in close
cooperation with the local government in Shanghai within two to four
years, and that it is discussing internally how to eventually
integrate the manufacturing, supply and distribution of hydrogen with
its existing operations and offerings.
But even without outside help, Mr. Wan says, China will bring the
technology to fruition. "I think it's better for [the global auto
makers] to push this technology in China rather than in developed
countries," he says. "But anyway, if global auto makers wait for China
to develop [fuel-cell technology] before investing, we will already be
exporting."
--Ms. Lee is deputy bureau chief for Dow Jones Newswires in China.
Original Article is found at:
http://www.news.ucdavis.edu/in_the_news/full_text/view_clip.lasso?id=12003