Events

A Roadmap for Economic Growth: U.S.-China Private Sector Cooperation in Power Sector

October 06, 2010 // 2:00pm3:30pm
Event Co-sponsors: 
Environmental Change and Security Program

…some suggest the race for those jobs is a zero sum game, saying clean energy technology development in China would be detrimental to the U.S. market…. The report we see today from Garten Rothkopf indicates the opposite: Accelerated development of energy technologies, such as those discussed in the report, could create hundreds of thousands of new jobs in the United States and China.

– U.S. Secretary of Commerce Gary Locke speaking at CEF's October 6th event

U.S.-China cooperation in the power sector could be an important driver of economic growth in both countries, according to a new report discussed at the Woodrow Wilson Center on October 6th. The discussion, part of the China Environment Forum's Cooperative Competitors meeting series, began with Commerce Secretary Gary Locke who provided remarks on the Obama Administration's strategy with China, emphasizing that cooperation with China has the potential to benefit both sides if set within fair trade rules. Secretary Locke emphatically stated that "in no area is that win-win situation clearer than in the energy sector." To support this claim of green energy sector jobs, Jim Rogers, CEO of Duke Energy, David Mohler, Senior Vice President of Duke, and Sun Yunquan, President of ENN Group North America discussed the power infrastructure collaboration between their two companies, which has enabled them to create cleaner and more reliable energy and jobs where the projects are based. Their belief in the mutual benefits of such a U.S.-China power sector partnership is backed by a new report by Garten Rothkopf's Anatomy of a Partnership: Benefits of US-China Private Sector Cooperation in the Power Sector. This report examines the potential benefits of collaboration in the areas of IGCC and carbon capture, solar PV manufacturing and installation, supercritical coal and smart grid development.

Huge Potential of Clean Energy Markets

Secretary Locke started his remarks by stating that while there have been some challenges in U.S.-China economic cooperation—notably intellectual property protection, Chinese indigenous innovation policies, and currency valuation—the growth of economic relations that began 35 years ago has benefited both sides and "continued economic growth and robust trade between our two nations will continue to deliver benefits to the people of both China and the United States."

Secretary Locke emphasized that clean energy has huge economic potential as China is expected to spend $3.1 trillion to meet its electricity demand in the next 20 years. This economic potential, coupled with the threat of global climate change, will require massive infrastructure developments and is an opportunity for U.S. companies, like Duke Energy, to grow their operations, create jobs and expand economically. The Secretary concluded by saying "I'm confident that this partnership, especially in clean energy, will only continue to strengthen over time. And we will all be better for it."

The Duke Energy-ENN Partnership

In his initial remarks, Jim Rogers, CEO of Duke Energy, emphasized the parallel needs in U.S. and Chinese power sectors—both countries face the massive challenge of building sufficient power plants to keep up with energy growth and fill the gaps left as old or dirty coal-fired power plants are retired. Most strikingly, in the United States nearly one-third of all coal plants will be shut down by 2020, and by 2050 virtually every power plant will need to be retired and replaced. The challenge ahead will be of infrastructure development, not necessarily of technology development.

The partnership between Duke Energy and the Chinese utility ENN is a prime example of a strong and mutually beneficial clean energy relationship. Mr. Rogers explained why his company was cooperating with a Chinese utility company, stating that they were not focused on the broad U.S.-China political relationship, rather were approaching this unique partnership from an explicit cost-benefit point of view because he believed that was his responsibility to the shareholders. To figure out the cost-benefit of potential cooperation with China, Duke Energy commissioned Garten Rothkopf to do a study of the impact U.S.-China cooperation in integrated gasification combined cycle, solar and photovoltaic, clean coal, and smart grid technologies could have on domestic job creation. Garten Ropthkopf mapped the supply chain of four model clean energy projects, using employment projections based on actual budgeted estimates and supply chain dynamics based on current perspectives and purchasing decisions.

The findings were that both countries can reap significant economic benefits from cooperation in all four areas. Labor unions and many politicians in the United States have begun to complain that China's green revolution is leading to a loss in U.S. jobs in the clean tech sphere, however this report indicates there is little evidence to support the belief that a "green" job created in China means the loss of a U.S. job. For example, ENN and Duke Energy are planning a solar powered energy plant in New Jersey. While the panels will be made in China and do create manufacturing jobs in China, almost 70 percent of the jobs created will be concentrated in the project location, not the source market.

According to Mr. Rogers, the toughest part of the energy business is the actual scaling. While developing technology is important, it is only half the picture; the physical development, maintenance, and operation of a power plant at scale constitute largely understated portions of energy business. With the Chinese power sector growing at 30 percent a year, they are currently tackling the issues that come with development, maintenance, and operation. This knowledge is extremely valuable and can be taken back to the United States.

Bringing it back to the idea of the U.S. and China as Cooperative Competitors, Jim Rogers concluded by stating "I believe we're smart enough and have a clear enough vision to cooperate and compete at the same time."

To wrap up the talk and to demonstrate the actual cooperation of the two companies, David Mohler, Senior Vice President of Duke, and Sun Yunquan, President of ENN Group North America tag-teamed the final portion of the presentation. ENN is the largest private energy company in China and has been a leader in investing in alternate energy. ENN has been partnering with Duke Energy since 2009 to share experience, technology, and capital. Examples of actual collaboration have included technical exchanges on IGCC technology, joint investment in solar technologies, and collaboration to create an eco-city in Langfang—ENN's headquarters outside of Beijing—which will serve as a pilot for various clean energy technologies. These projects, according to Mr. Mohler and Dr. Sun, have been extremely successful for both companies and will serve as the basis for continued cooperation—an area of collaboration that Dr. Sun hoped would allow Chinese and Americans to power a better world together.

 
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