It's been fashionable to debate whether China will some day surpass the
U.S. in clean technology. Yet, after reviewing some of the
metrics that really matter, one could conclude that it
already has.
At least this was my thesis in moderating
a recent Haas School of Business event at U.C. Berkeley
in California that explored whether China would become a
green economy leader.
China has already surpassed the U.S., I argued (as
reported elsewhere), and pointed to the following:
- IPOs: According to data we
collected at the Cleantech Group, in 2009 (the last full
year for which data was available as of this writing),
China accounted for
almost three quarters of all cleantech IPO proceeds
worldwide, well ahead of the U.S., which had only
26%; and to date in 2010, the top three cleantech IPOs
of the year have all been Chinese companies
- M&As: The top region for cleantech
M&A activity in 2009 was Asia (35% of total), followed
by Europe (31%) and North America (26%), according to
our same research above
- Solar: 7 of the 10 largest solar
manufacturers in the world by production volume are now
Asian, #2 being China’s Suntech Power, which in 2009
surpassed even Japan’s Sharp, the longtime leader. This
according to a roundup by respected photovoltaic trade
pub Photon International (subscribers only; order the
back issue
here.)
- REEs: China holds a monopoly on
rare earth elements (REEs), critical raw materials for
wind turbines and electric motors such as those used in
electric vehicles like the Tesla and hybrids like the
Prius. It controls 97 percent of commercially available
rare earth element supplies, and has recently begun to
reduce the amount it exports (at Cleantech Group, we
produced the authoritative report on the subject, précis
here.)
- Stimulus: The amount of stimulus
funding China has allocated to clean technologies,
including water, waste and other non-energy cleantech
infrastructure, is 4 times that of the U.S. (221 billion
vs. ~60 billion)
- R&D: There’s been a
doubling of private R&D in China in recent years;
China could soon surpass the U.S. in R&D spending,
according to Lund University in Sweden
- Speed: China is making decisions
quickly, and isn’t encumbered by democratic process.
This January, China announced intentions to build a 2 GW
$5B concentrating solar thermal plant. In the words of
Bill Gross of eSolar (by
way of Tom Friedman), the company whose technology
was selected, “in less time than it took the U.S. DOE to
do stage 1 of an application review for a 92 MW project
in New Mexico, China approved, signed and is ready to
begin construction this year on a 20 times bigger
project.”
- Nukes: If you don't already
consider nuclear a clean energy technology,
you should. China is expecting to build some 50 new
nuclear reactors by 2020, and is already
hard at work on half of them; the rest of the world
combined might build 15
- Investment: A recent report by
Breakthrough Institute called
Rising Tigers, Sleeping Giant claims China,
South Korea and Japan have already collectively passed
the United States in the production of virtually all
clean energy technologies, and over the next few years,
these countries will be expected to out-invest the
United States.
If this trajectory holds, the majority of cleantech-related
jobs, tax revenues and cleantech commercialization bragging
rights will go to Asian, mostly Chinese, companies. The
interesting question for us at Kachan & Co. is what
commercial opportunities will this eventuality ultimately
create for others elsewhere? How can the U.S. and other
jurisdictions leverage the Chinese cleantech juggernaut?
Obviously, some companies will benefit from the
establishment of joint ventures with Asian companies. And
there WILL be local manufacturing jobs, especially when the
rising cost of oil makes overseas shipping from Asia less
cost-effective—one of the reasons China's Suntech is setting
up
local U.S. manufacturing in Arizona, for example. But
where are the less obvious opportunities?
We have thoughts. Contact us to discuss.
A former managing director of the Cleantech Group,
Dallas Kachan is now managing partner of
Kachan &
Co., a cleantech research and advisory firm that does
business worldwide from offices in San Francisco, Toronto
and Vancouver. Its staff have been covering, publishing
about and helping propel clean technology since 2006. Kachan
& Co. offers research reports, consulting and other services
that help accelerate its clients’ success in clean
technology. Details at
www.kachan.com.