Engaging China in New Energy Cooperation

With an average GDP rate of 10 percent for the past thirty years, China's economic boom has brought millions out of poverty and fueled a rate of urbanization that is faster than any country in human history. Between 1980 and 2008, China's urbanization rate rose from 20 to 44.9 percent, with the current urban population reaching slightly over 600 million. China builds the equivalent of two New York Cities a year. Maintaining a stable, safe, efficient, and clean national power grid for China's rapid economic and urbanization growth and pushing energy efficiency is truly a Herculean task for the Chinese government and power utility companies. At this October 2 CEF meeting, three speakers discussed their work to promote energy policy innovation and projects in China. David Mohler from Duke Energy spoke about his company's work to partner with major power utilities and energy companies in China to share information and explore potential initiatives to produce cleaner power from coal, promote smart grid, and adoption of renewable resources. Peggy Liu and Steve Papermaster from the nongovernmental organization Joint U.S.-China Collaboration on Clean Energy. (JUCCCE) discussed their recent mayoral training programs and other activities to encourage clean energy adoption at the local government level in China.

Dynamic Tensions
Steve Papermaster opened with the observation that globally there is a dynamic tension between the immediate needs to increase energy production to fuel economic growth and the longer-term endeavor to shift the global economy onto a more low carbon development path. He argued that as the two largest energy consumers and CO2 emitters in the world, the United States and China need to lead a low-carbon development revolution. While there are many U.S.-China government agreements on energy cooperation and even more nongovernmental organizations (NGOs) carrying out a broad range of capacity building projects in the energy sector in both countries, Papermaster felt that few of them effectively involved the private sector or brought sufficient models of clean energy development to empower on-the-ground city managers in China.

In the spring of 2007, Steve's involvement in U.S.-China Strategic Economic Dialogue talks and various energy industry initiatives focused on China led him to convene a group of government and private sector leaders to discuss the urgent need to find short-term low carbon energy solutions to fuel China's unrivaled rapid growth. He believed that such work also could help rapidly develop and commercialize new green technologies that benefit the United States. These discussions with experts led to the formation of JUCCCE, an NGO that aims to pull together a dynamic network of U.S. and Chinese entrepreneurs, investors, policymakers, civil society leaders, and other energy experts to catalyze both capacity building projects on-the-ground for Chinese policymakers and innovative consumer education programs.

Catalyzing New Networks and Projects
Next to speak was Peggy Liu who provided some examples of JUCCCE's projects in China. She noted that JUCCCE's projects have been guided by the goal to achieve concrete results every three years. One key area of work has focused on educating policymakers in China to encourage more adoption of sustainable infrastructure in cities. Although the central government has issued highly ambitious goals for greening the economy, particularly in the energy sector, city-level implementers are often poorly equipped to achieve these goals. JUCCCE thus began a mayoral training program over the past year to fill this gap in "green" vocational training in China's exploding cities. JUCCCE's mayoral training program has developed into a series of courses that were incorporated into mandatory sessions at the National Mayoral Training Center. JUCCCE provided top local decision-makers with city-level energy efficiency case studies and introductions to clean technology vendors and experts in order to transfer knowledge and best practices, which could help equip the mayors with the information and contacts they need to build a more environmentally friendly infrastructure in their cities. As of fall 2009, over 150 mayors have participated in the program.

Peggy Liu also discussed how JUCCCE may utilize its convening power in the area of smart grid. Because China has a highly centralized political system, particularly in the power sector, a handful of officials can potentially make change happen. China is in a unique position to undertake major reform of its power sector, for the infrastructure still needs to be built up. Moreover, China only has two state-run grid corporations (State Grid and South Grid), which could simplify some of the governance issues generally seen as an impediment to smart grid implementation in the United States, which has a highly fragmented power grid infrastructure made up of hundreds of public utility agencies and corporations. By bringing U.S. smart grid experts to China, JUCCCE is aiming to help promote a deeper understanding of the smart grid concept, particularly the demand-side management innovations in the United States. JUCCCE aims to help to contribute information and networks to inform four major smart grid demonstration projects taking place in China.

The final issue Peggy spoke on was consumer energy efficiency education. While per capita energy consumption in China is only 11 percent of that in the United States, the rate of energy use by Chinese consumers is accelerating rapidly. Expanding consumer understanding of energy efficiency is an important key for reducing China's carbon footprint. JUCCCE has a program called Green Lights for All, which is designed to get 10 million low energy CFL light bulbs into the hands of students. JUCCCE has already given away 10,000 and even has partnered with the supermodel Du Juan to give light bulbs to help promote this energy efficiency campaign to students.

In closing, Peggy showed a film on JUCCCE's mayoral training program, which can be viewed here.

The Duke of China
David Mohler of Duke Energy began his talk with the facts that his company the largest electricity generator and the third largest emitter of CO2 in the US. David emphasized that not only is Duke Energy doing significant work on carbon reduction efforts in the United States—all of their older generation plants will be replaced by modern ones by 2050—but they are also starting to expand their cleaner coal plant work into China.

As the world's number one emitter of CO2, China will set the curve for carbon emissions in the coming years. This is why Duke is interested in further expanding the company's work in China. David noted that since the United States and China are the leading carbon emitters, the two countries should work together on developing clean energy technologies. Both countries have a lot to offer each other. Because China is developing so quickly and has a centralized government the country's industries and regulatory agencies have an ability to move fast in experimenting with new technologies and operating systems for power generation. Such experimentation does not generally move as fast in the United States. However, in David's opinion, the United States is still number one in terms of researching and developing new low-carbon technologies.

Duke sees an opportunity in China to bring technologies—such as IGCC—to commercial scale and to market them much quicker than in the United States. In essence, China can be a proving ground for U.S. technologies. Thus Duke Energy can provide his U.S. customers with technologies quicker and cheaper by collaborating with China

However, David stated that to date there has been "a whole lot of talk, but not a whole lot of doing" in terms of U.S. collaboration with Chinese power sector industries and agencies. Duke Energy is moving forward with such work in China and has signed a number of MOUs with Chinese counterparts such as Huaneng (China's largest energy producer) and ENN (China's most successful privately owned clean energy company). These MOUs are to do work and investment together in projects like IGCC and smart grid. Overall, David stated, Duke's goal is not just to provide electricity, but to do so efficiently and with low carbon emissions.

By Peter Marsters
Dr. Jennifer Turner, Director, China Environment Forum