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Can China's government out-innovate the American energy sector?


Evan Osnos's essay on China's green energy revolution is one of the best things I've read on the tricky intersection between government and innovation. For instance:

In 2001, the 863 Program launched a “clean coal” project, and Yao Qiang, a professor of thermal engineering at Beijing’s Tsinghua University, was appointed to the committee in charge. He said that its purpose is simple: to spur innovation of ideas so risky and expensive that no private company will attempt them alone. The government is not trying to ordain which technologies will prevail; the notion of attempting to pick “winners and losers” is as unpopular among Chinese technologists as it is in Silicon Valley. Rather, Yao sees his role as trying to insure that promising ideas have a chance to contend at all. “If the government does nothing, the technology is doomed to fail,” he said.


R. & D. expenditures have grown faster in China than in any other big country -- climbing about twenty per cent each year for two decades, to seventy billion dollars last year. Investment in energy research under the 863 Program has grown far faster: between 1991 and 2005, the most recent year on record, the amount increased nearly fifty-fold.

In America, things have gone differently. In April of 1977, President Jimmy Carter warned that the hunt for new energy sources, triggered by the second Arab oil embargo, would be the “moral equivalent of war.” He nearly quadrupled public investment in energy research, and by the mid-nineteen-eighties the U.S. was the unchallenged leader in clean technology, manufacturing more than fifty per cent of the world’s solar cells and installing ninety per cent of the wind power.

Ronald Reagan, however, campaigned on a pledge to abolish the Department of Energy, and, once in office, he reduced investment in research. ... By 2006, according to the American Association for the Advancement of Science, the U.S. government was investing $1.4 billion a year -- less than one-sixth the level at its peak, in 1979, with adjustments for inflation.


A China born again green can be hard to imagine, especially for people who live here. After four years in Beijing, I’ve learned how to gauge the pollution before I open the curtains; by dawn on the smoggiest days, the lungs ache. The city government does not dwell on the details; its daily air-quality measurement does not even tally the tiniest particles of pollution, which are the most damaging to the respiratory system. Last year, the U.S. Embassy installed an air monitor on the roof of one of its buildings, and every hour it posts the results to a Twitter feed, with a score ranging from 1, which is the cleanest air, to 500, the dirtiest. American cities consider anything above 100 to be unhealthy. The rare times in which an American city has scored above 300 have been in the midst of forest fires. In these cases, the government puts out public-health notices warning that the air is “hazardous” and that “everyone should avoid all physical activity outdoors.” As I type this in Beijing, the Embassy’s air monitor says that today’s score is 500.

By Ezra Klein  |  December 28, 2009; 3:00 PM ET
Categories:  China , Climate Change  
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Free market fundamentalists who are opposed to any government support or incentives for new technology should note that most of the important 20th century American technological innovations received lots of government support at some point. That includes the Internet (a government project originally), computers, computer chips, aircraft, you name it.

Posted by: alex50 | December 28, 2009 3:17 PM | Report abuse

The problem is not so much that China is out-innovating us, but that America is failing its children.

Posted by: bmull | December 28, 2009 4:06 PM | Report abuse

What has Beijing Air to do with Innovation? Of course, China is quite possibly going to 'eat Americans' in Green Technology. Why only Chinese? Did you get the biggest news over the weekend - UAE awarding $20B award for 4 Nuclear Plants to S. Korean companies. French did not win (though they may win few Saudi Arabia) nor GE. Americans are coming cropper in nuke tech as well. Just look for Indian market - despite doing the Bush - Singh accord it is unlikely that any American companies will get Nuke reactor contracts.

Even in non-Green Tech, Americans are loosing badly - not single oil contract went to Americans (not that it should have, but I am just pointing it). So the larger theme is very clear - there is absolutely no alignment of this countries Strategic imperatives and what it's political system delivers. Days of mighty Big Bad American Corporations winning in global markets on their own are gone and American Politicians don't even know that they are loosing the carpet under them while Corporate chieftains have lost all the credibility to ask for any government help.

Americans are simply engaged in fight to survive the onslaught of ever expanding list of enemies on borrowed money and do not have any capacity to look for their own Strategic Interests. Doing some machinations in installing Iraqi or Afghani governments is all that America's foreign policy is interested in. And when it is less busy; the internal wars about terrorism preparedness get erupted.

I know Ezra we are all vested in Health Care. But if Politicians of this country had any longer term interests (like Green Technology, looming Trade War and competitiveness of this country); they would have seeded more into 'infrastructure and strategic' investments so that business demand stands to pick up first. Green Technology encouragement is one of the best ways to ignite Business Demand (BD) because though BD is at 30% of our GDP; in days to come Consumers would not have money to increase demand unless employment increases. Employment increase would take place via higher infrastructure and investment spending and greater Business Demand.

Short answer - yes, China will take over Americans unless Americans change their ways here chances of which look dim.

Posted by: umesh409 | December 28, 2009 5:28 PM | Report abuse

"not single oil contract went to Americans (not that it should have, but I am just pointing it)"

I meant to say oil contracts in Iraq.

Posted by: umesh409 | December 28, 2009 5:29 PM | Report abuse

"Can China's government out-innovate the American energy sector?"

they have, they are...

"Chinese Solar Panel Manufacturer to Open Plant in Arizona[ 11/17/2009 ] Posted By: EM Staff

Suntech Power Holdings Co. Ltd., a China-based maker of solar modules, recently announced plans to open its first U.S. manufacturing plant, near Phoenix.

The plant will have an initial production capacity of 30 megawatts and is expected to begin production in the third quarter of 2010.

The Suntech plant will employ more than 75 full-time workers at launch and may double its staff within the year if the North American market grows as expected, according to the company.

Suntech said it selected the Phoenix area “because of Arizona’s leadership in research through Arizona State University, and statewide renewable energy policies, particularly its Renewable Energy Standard and distributed generation set-aside, as well as a supportive local business climate represented by the Greater Phoenix Economic Council.”

‘Long-Term, Strategic Investment in the North American Market’

Locating the plant close to Suntech’s U.S. customers will reduce the time, costs and emissions associated with long-distance shipping of Suntech panels, the company said.

“This is the first step in what I see as a long-term, strategic investment in the North American market,” said Suntech Chairman and CEO Zhengrong Shi. “Over the last two years we have grown our U.S. team to more than 60 employees. As a result of that effort, we have developed a network of more than 200 solar dealers and integrators installing Suntech products and are actively involved with a number of large-scale solar project developers serving the utility market.

“We also have developed strong partnerships with U.S. companies such as MEMC of Pasadena, Texas, our largest supplier of silicon wafers used in our modules. The leadership shown by the U.S. government in advancing renewable energy will only improve the environment for further investments in the coming years.”

meanwhile US solar firms are...

Solar Panel Firm's Factory Space Up for Grabs in McClellenPark
Tuesday, July 21, 2009 5:50 AM
(Source: The Sacramento Bee)By Jim Downing, The Sacramento Bee, Calif.

Jul. 21--Sixteen months after OptiSolar Inc. roared into Sacramento, the cavernous building it was converting into a factory at McClellan Park is seeking a new tenant.
As recently as last fall, the nearly 700,000-square-foot space was on track to be the largest solar panel manufacturing plant in North America.

"OptiSolar had torn out walls to connect several former Air Force storage bays, each larger than a football field, and was spending millions on heavy-duty plumbing and air conditioning systems. In November, Gov. Arnold Schwarzenegger stood in front of the factory as he ordered the state's big utilities to get more of their power from
renewable sources.

But the bad economy and a manufacturing glut in the solar power sector combined to choke
off the financing OptiSolar needed to fuel its rapid growth. Mass layoffs started in January, and in early March the company merged with much larger First Solar Inc., based in Tempe, Ariz., in a deal worth more than $400 million in stock.

OptiSolar, now a subsidiary of First Solar, listed the McClellan site with global commercial realestate firm Jones Lang LaSalle earlier this month. Derek Johnson, a vice president with the brokerage, said OptiSolar is looking for one or more tenants to sublet or take over the lease onthe entire site.

Posted by: hughmaine | December 28, 2009 6:45 PM | Report abuse

This corresponds pretty well to my experiences in Beijing. I was so happy when it snowed, I could take off my mask.

Ultimately though it shows why the focus on global warming is so misguided and ultimately stupid. The people can see and feel air quality improvements, and are willing to pay for them.

Posted by: staticvars | December 29, 2009 12:51 AM | Report abuse

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