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On October 11th, Mark Muro, Policy Director of The Brookings Institution’s Metropolitan Policy Program, presented the national-level chapter of the story of ‘Greater Philadelphia’s 21st century Clean Energy Opportunity’ at an event I organized in Philadelphia for the Academy of Natural Sciences of Drexel University and the T.C. Chan Center for Building Simulation & Energy Studies of the University of Pennsylvania.
According to Muro, Philadelphia enjoys key advantages due to: (1) its position as #5 top-performing cluster nationally, (2) its participation in a national trajectory of fast-growing, high-quality jobs, (3) its profile of balance with middle-skill, middle-wage ‘green collar’ jobs; (4) its breadth of clean economy segments (air & water purification, lighting, nuclear, mass transit, professional energy services, solar PV, solar thermal, and wind); and (5) its location in the middle of the most vibrant clean economy corridor in the country (from Albany NY and Boston MA down to Washington DC and northern Virginia).
Future posts will help tell the other chapters of this story, including the City of Philadelphia perspective (Alan Greenberger, Deputy Mayor for Economic Development), the regional perspective (Mark Hughes, Task Leader for Policy, Markets & Behavior at the Greater Philadelphia Innovation Cluster for Building Energy Efficiency (GPIC), the global perspective (Amy Fraenkel, UN Environmental Programme Regional Director for North America) and the U.S./China strategic opportunity (Terry Cooke, Founding Director of the China Partnership of Greater Philadelphia.
Stay tuned for more!
Note 1: If you want to be sure you see each of these upcoming posts reliably and promptly, please click the “Follow” button on the WordPress toolbar immediately above this blog’s heading and an email will automatically be sent to you as soon as each post appears.
Note 2: See Brookings Backgrounder for additional information on: (1) the Brookings Institution’s Metropolitan Policy Program initaitive for clean energy clusters; (2) the intellectual antecedents of this policy work in the work of Michael Porter at Harvard University; and (3) how David Sandalow and Brookings helped translated this thinking into U.S. Government policy through the closely-connected Energy Innovation Hub (EIH) program and the U.S.-China Clean Energy Research Center (CERC) program (via the John L. Thornton China Center at Brookings).
Note 3: If you want to help push for Philadelphia’s emergence as a 21st century clean energy leader, please tweet or Like on Facebook or +1 this on G+, using the sharing tool below. Thanks.
I was asked today what accounts for China’s outsized role in solar PV , amounting currently to roughly 50% of global share of production despite having a Lilliputian share of global consumption. It comes down to three inconvenient truths. That said, the degree of inconvenience of each truth varies with the point of view (e.g., ‘panda hugger’ vs ‘dragon slayer’ in the U.S. vs ‘patriotic netizen’ in China) of who you happen to be talking with :
(1) Post-WWII, Asia (and notably China since 1982) has had clear advantages of cheaper land, cheaper labor and cheaper facilities relative to manufacturers in higher per capita income markets in the West. Since solar panel production has some basic similarities to the manufacturing process for computer memory chips (which in the 1990s were the basic ‘rice’ commodity of the IT boom in Asia), solar manufacturing has benefited from the natural ‘cluster effect’ of decades of chip manufacturing know-how of Chinese, Taiwanese and other investors on the mainland.
(2) The barriers to entry for solar manufacturers are lower than the earlier tech waves of integrated circuits and bio-technologies so national and local
government in China has seized on it to bootstrap their economies to a higher rung of the global value chain. This has meant various government subsidies (on the producer side) to the point of a casino mentality — more than 100 solar manufacturers in the single town of Dezhou in Shandong Province. (The Chinese government also rounded up and ramped up polysilicon supply when that key input for solar PV production tightened in 2010/11);
(3) There’s not yet an established market for solar products in China so almost everything is exported to Western markets — especially to those national
markets like Germany and Spain and state markets in the U.S. such as New Jersey that have been subsidizing the industry (on the consumer side). [Note: World Trade Organization rules tend to allow/encourage consumer-side subsidies and to sanction producer-side subsidies, hence the recent trade action by the 7 Western solar firms against China. However, these actions take time to work their way through the ‘python’ of WTO process).
As a wrote almost a year ago ( click here for link ), there’s a global boom/bust going on in PV solar and China is in the thick of it.
Premise
Participation in China’s fast-growing nuclear market offers promise and peril for global market-leaders. A model coupling U.S. innovation with Chinese scale and speed of deployment offers the best path forward.
Discussion
The development of China’s nuclear market has been driven by a governmental elite, many of whom were trained as engineers. Their strategic thinking appears to be motivated in part by the challenges of climate change – to adopt lower carbon sources of electricity generation. As the vice president of the China Nuclear Energy Association has pointed out, nuclear power – rather than solar, wind or biomass – is “the only energy source that can be used on a mass scale” to achieve clean, low-carbon energy.
Just as significantly, though, China’s rapid expansion of nuclear power appears motivated by a desire to upgrade the Chinese nuclear industry by enticing foreign suppliers who want to participate in China’s market growth to share their technology with Chinese partners. The profit potential is vast in China, but other big emerging economies, such as India and Brazil, will be exploring nuclear installations in coming decades. To wrest some of that business away from established incumbents –such as France’s Areva and Japan’s Westinghouse – China is leveraging its low-cost labor and deep experience with major infrastructure projects. A Western-designed reactor can be built in China for 40% less cost and 36% faster than that same installation in Europe.
For China to become globally competitive its two major nuclear power companies — China National Nuclear Corporation and China Guangdong Nuclear Power Group — will need to improve in the knowledge-intensive end of the business. Of the 13 nuclear power plants currently operating in China, only three — all at the Qinshan site — rely on an indigenously developed design. Likewise, China has only limited experience selling its reactors in export markets; Pakistan is the only known foreign buyer to date. Finally, to compete globally, China will need to manufacture specialized components, for which it is currently dependent on foreign suppliers.
As for U.S.-China strategic cooperation in the nuclear field, there have been important undertakings but, to date the governments have not attempted anything on a broad strategic basis. There are interesting opportunities on the horizon. Former U.S. Ambassador to China, Jon M. Huntsman Jr., has reported discussing with Bill Gates a new kind of reactor “that runs for decades on a single fuel load, making and destroying plutonium as it runs,” thereby reducing the hazards of reprocessing and the dangers of proliferation. According to Huntsman, strategic cooperation between the U.S. and China to develop this American-pioneered technology could bring shared benefits. The technology could, for example, be certified and brought to commercial scale faster in China. A partnership effort could be envisioned where a joint American-Chinese company leads the construction, with co-development and commercialization rights apportioned between the partners. The end-result could be a cleaner and (marginally) safer form of energy brought to consumers quickly and at scale.
(This piece has been reprinted from G+ Insights, a publication series of the Gerson Lehrman Group at www.gplus.com. The G+ piece, in turn, has been adapted from Sustaining U.S.-China Cooperation in Clean Energy, a book publication authored by Terry Cooke forthcoming from the Kissinger Institute of the Woodrow Wilson Institute in November 2011).
Premise
The Fukushima disaster in March has prompted all major nuclear powers to pause and reexamine their nuclear development programs. Germany and Italy reached decisions to phase out their nuclear programs. In the U.S., stirrings of interest in a nuclear revival were silenced. In China, however, all indications are that a national program to establish China as a global leader in nuclear power remains on track.
Discussion
The first commercial nuclear power plant in the U. S. was installed in 1958. Today, 104 commercial reactors produce almost 20% of the nation’s total electric generation. By comparison, China’s first nuclear plant, Qinshan, near Shanghai, became operational in 1991. Today, 13 plants are in operation supplying just over 1% of China’s total electricity. However, this freeze frame comparison misses the contrast in momentum for the nuclear industry in the two countries. Of the 52 nuclear power plants that were either under construction or in advanced planning in America and China in late 2010, months before the Fukushima disaster, 50 of those plants were being planned and built for the Chinese market.
source: U.S. Energy Information Administration
As the above chart from the U.S. Energy Information Administration shows, nuclear generation has plateaued in the U.S. and Europe but is rapidly growing in China, India and the rest of the developing world. While active plants in the U.S. are approaching the end of their licensed lifetime without planned replacement, new nuclear installations in China are set to increase roughly ten-fold over the next ten years.
Following 1979’s Three Mile Island incident, the experience for the U.S. nuclear industry has been new order cancellation, new construction abandonment, premature shutdown of plants or extension without plans for replacement. Although improved design and technology advances have brought about significantly improved safety performance, public opposition to nuclear power — periodically galvanized by highly publicized international incidents such as Chernobyl and Fukushima and persistently bedeviled by the nuclear waste disposal problem– has kept the U.S. market virtually off-limits to new nuclear installations for three decades. China, by contrast, is the world’s most active site for new plant installations. National planning calls for nuclear power to provide 6% of China’s total electrical generation by 2020. This will require a net increase in installed capacity of 60-70 GW, comparable to the entire 63GW of currently installed nuclear capacity in France, one of the world’s most active users. By 2030, China plans to match the nuclear output currently provided by all 104 U.S. installations.
The bottom line: Chinese authorities clearly know how to throttle back a prestige industrial development project, as shown after July’s high-speed train collision in Zhejiang Province. After the Fukushima nuclear disaster, however, no such bureaucratic braking of China’s nuclear program has been apparent. Additional safety reviews have been instituted, but the scale and speed of China’s nuclear program remains essentially unchanged.
(This piece has been reprinted from G+ Insights, a publication series of the Gerson Lehrman Group at www.gplus.com. The G+ piece, in turn, has been adapted from Sustaining U.S.-China Cooperation in Clean Energy, a book publication authored by Terry Cooke forthcoming from the Kissinger Institute of the Woodrow Wilson Institute in November 2011).
I was asked during the UNEP Symposium in Philadelphia yesterday how I thought shale gas and ‘tight gas’ projects — which are at an early stage of operation in various parts of the world such as the United States, China and Argentina — may affect the development of existing renewable energy sources, such as geothermal, biomass, wind, solar, tidal.
There are different dynamics in advanced economies versus emerging economies as each responds to the shale gas opportunity.
In the advanced economies, the values framework for evaluating shale gas tends to emphasize the environment at the expense of economics. This is the so-called “3 C’s” orientation of carbon and climate change. Under this framework, shale and tight gas are only somewhat less carbon-intensive in comparison with traditional fossil fuel sources and their extraction entails media-ampliflied but not yet proven environmental risks associated with ‘fracking’ et cetera.
In the developing world, the tendency is instead to focus on economic and energy security benefits — the “3 E’s” of economics and energy exploitation. From this viewpoint, the positives of shale gas — a relatively cheap and abundant and lower carbon energy source for a country like China — far outweigh negatives of as yet unproven environmental risk. In any case, under the Chinese framework of development, industrial growth and wealth creation come first, and clean-up from the environmental impacts of fast growth come later.
The hard truth is that these the viewpoints in North America and East Asia should not be so divergent. In a world of finite resources and global pollution, we can ill afford to be seeing different problems and talking past one another. The common denominator and linchpin is long-term energy efficiency . Efficient energy utilization is environmental stewardship at the same time that it is good business and the basis for good economic policy. Efficient and diversified energy utilization promotes jobs, investment and a sustainable environment. Neither the advanced world nor the developing world should be sequencing energy and environmental policy or prioritizing between them. Both the U.S. and China could be pursuing a common approach, based on energy efficiency and designed to yield both economic and environmental benefits simultaneously.
By splitting the difference between the “3 C’s” and the ‘3 E’s” both countries could reframe the challenge as the “3 D’s” of diversified energy sources, dollar-accountability, and developmental sustainability. And by re-framing objectives on a realistic and common basis, strategic efforts such as the U.S.-China Shale Gas Resource Initiative may be able to get better global traction.
In the real world, it’s not shale gas versus renewables. It’s shale gas and renewables balanced together for economic and environmental sustainability.
The China Partnership of Greater Philadelphia (CPGP) is a non-profit organization that promotes collaboration on public/private cleantech initiatives between Philadelphia and the People’s Republic of China. We operate on the principles of openness, inclusivity, and transparency in order to maximize engagement from all relevant stakeholders throughout the Philadelphia area. Our objective is to accelerate job creation, attract investment, and support cleantech business incubation in Greater Philadelphia through strategic linkages to leading Chinese corporate, governmental, and academic organizations. CPGP leverages both established and emerging programs and initiatives including:
- The new $129 million Greater Philadelphia Innovation Cluster (GPIC) for energy efficient buildings, funded primarily by the U.S. Department of Energy (DOE)
- The City of Philadelphia’s 30-year old official Sister City relationship with Tianjin, China. Tianjin, the fastest-growing Special Economic Zone (SEZ) in China, also has a national mandate for clean energy leadership under China’s 11th and 12th Fiver-Year Plans
- The $150 million U.S.-China Clean Energy Research Center (CERC) program, with a dedicated building energy efficiency initiative led by Lawrence Berkeley National Lab (LBNL) in the US and the Ministry of Housing and Urban-Rural Development (MOHURD) in China
CPGP harnesses the Greater Philadelphia region’s broad base of resources and expertise to create synergy between regional and national initiatives in both countries through a single innovative program focused on cleantech jobs, business development, and investment. To support these goals, we have developed plans for:
- Export & investment initiatives including an open-consortium incubator (involving government, academia, business, and related associations) planned for the Philadelphia Navy Yard and leading to a world-class public demonstration facility
- A CEO Summit entitled, “Greater Philadelphia & China: Toward a Sustainable Future,” planned for the spring 2012 focused on four areas: carbon finance, water, green building, and clean energy
- An official U.S. State Department city EcoPartnership with Tianjin, China
- The expansion of our already extensive network of universities and think tanks on the local, regional, national, and international levels.
The Partnership includes members from a wide range of Philadelphia area stakeholders. Business: Capitol Project Partners, The China Business Network, Cozen O’Connor, Delmarva Group LLC, Deloitte, Deutsche Bank, Ecolibrium Group, GreenWorld Capital LLC, HSBC, KSW Consulting, Philadelphia Industrial Development Corp, VerdeStrategy, White and Williams LLP. Government: City of Philadelphia, International Visitors Council. Academic: Academy of Natural Sciences, Drexel University, Penn International Sustainability Association, Temple University, University of Pennsylvania’s T.C. Chan Center. Associations: Global China Connection, Greater Philadelphia China Center for Culture and Commerce. (Note: All work conducted by these organizations is done by individuals on a pro-bono basis.)
For further information, please contact Deputy Executive Director Nora Sluzas at nsluzas@post.harvard.edu
The following post was co-authored by Shawn Lesser (Watershed Capital Group) and me and appeared initially on the Cleantechies blog: 
A number of the cleantech efforts between the United States and China reflect the need for cooperation on issues surrounding climate change and clean energy as it is a major factor in the relations of these two countries. Although there are still issues to resolve in many of the collaborations, it is believed that if the United States and China can continue in their cleantech collaborations, that it will show the world that two major players on the international platform are serious about combating the challenge of climate change, and it will also encourage other countries to create alliances. Through collaboration, the two largest greenhouse gas emitters will be able to create technologies required to combat climate change. Not only that, but tangible benefits will be developed, not just for the United States and China, but the world as a whole.
1) United States – China Ten Year Framework for Cooperation on Energy and Environment was established in 2008, and it “facilitates the exchange of information and best practices to foster innovation and develop solutions to the pressing environment and energy challenges both countries face.” It also led to the creation of “EcoPartnerships” – a way to encourage both United States and Chinese stakeholders to strengthen their commitment to sustainable economic development within the local level.
2) United States – China Clean Energy Research Center (CERC) has its main headquarters in both countries. It will facilitate research and development of technology by a team of leading scientists and engineers in the clean technology industry. The research center receives both private and public funding which is split evenly for each country. The initial research priorities of the United States – China Clean Energy Research Center includes building energy efficiency, clean vehicles, and clean coal, which includes carbon capture and storage. It was founded in 2009 by United States President Barak Obama and Chinese President Hu Jintao. The goal of the research center is to “build a foundation of knowledge, technologies, human capabilities, and relationships in mutually beneficial areas that will position the United States and China for a future with very low energy intensity and highly efficient multi-family residential and commercial buildings.”
3) United States – China Energy-Efficient Buildings (CERC-EEB) Action Plan enables the United States and China to work alongside the private sector in an effort to develop energy efficient rating systems and building codes, benchmark industry energy efficiency, provide training to building inspectors as well as energy efficiency auditors at industrial facilities, synchronize test procedures and performance metrics for consumer products that are energy efficient, exchange energy efficient labeling systems best practices, and assemble a new annual United States – China Energy Efficiency Forum. The action plan will be achieved through green building and communities, industrial energy efficiency, consumer products standards, advanced energy efficiency technology, and public and private engagement.
4) United States – China Electric Vehicles (CERC-EV) Initiative builds upon the previous United States – China Electric Vehicle Forum which was held in 2009. The initiative comes from the shared interest in increasing the utilization of electric vehicles to decrease oil dependence and greenhouse gas emissions, while promoting viable economic growth. This initiative includes a joint standard in development, demonstration projects in multiple cities in each country, technical road mapping, as well as projects to provide the public with more information.
5) 21st Century Coal Program (CERC-ACTV) promotes a cleaner use of coal resources, such as large-scale carbon capture and storage projects. The program calls for collaboration between a number of companies in the United States, including General Electric, AES, and Peabody Energy, which will be working with a number of Chinese companies to develop an integrated gasification combined cycle power plants, methane capture, as well as a number of other technologies.
6) China Greentech Initiative was founded in 2008 and has rapidly grown to become the only China-international collaboration platform of 100+ organizations, focused on identifying, developing and promoting green technology solutions in China. CGTI released its first free public deliverable, The China Greentech Report at the World Economic Forum in Dalian, China in 2009. With over 50,000 copies in use, the report is commonly referred to as the ‘primer’ by which to understand China’s greentech markets.
7) United States Alliances in Chinese Cleantech Industry includes the availability of a number of United States cleantech companies to invest into the Chinese cleantech industry. Currently, many companies from the United States are finding opportunities through alliances and cleantech and capital technology transfer investments. This leads to an increase in opportunities to assist cleantech into becoming one of the largest industries on a global platform. There has been much in the way of cross-border collaboration in many cleantech sectors, including solar and wind generation, water technologies, smart grid infrastructures, and electric transportation.
8 ) United States – China Renewable Energy Partnership develops roadmaps for widespread and continual renewable energy research, development and deployment in the United States and China, including renewable energy road mapping, regional deployment solutions, grid modernization, advanced renewable energy technology research and development collaboration in advanced biofuels, wind, and solar technologies, and public-private engagement to promote renewable energy and expand bilateral trade and investment via a new United States – China Renewable Energy Forum held annually. In connection with the U.S.-China Renewable Energy Partnership, another important area of U.S.-China cooperation is the Shale Gas Initiative.
9) United States – China Energy Cooperation Program describes itself as the only non-governmental organization that focuses on the United States – China business development within the clean energy sector. The partnership’s purpose is to “promote commercially viable project development work in clean energy and energy efficiency, and support the sustainable development of the energy sectors in both countries.” It was founded in Beijing in 2009, initiative by the United States commercial sector, and provides a vehicle allowing companies from both countries to work together and pursue clean sector market opportunities, address any trade impediments, and increase sustainable development.
10) Key U.S.-China Regional Cooperation Initiatives. An important layer of ‘connectivity’ in the U.S.-China clean energy business landscape is provided by long-standing, regionally-based cooperative initiatives. Top among these are the U.S.-China Green Energy Council (based in the Bay Area), the U.S.-China Clean Energy Forum (based in Greater Seattle with a Washington DC presence), and the Joint U.S.-China Cooperation on Clean Energy (based in Beijing, Shanghai and Washington DC).
Article by Shawn Lesser & Terry Cooke.
Shawn is president and founder of Atlanta-based Sustainable World Capital, which is focused on fund-raising for private equity cleantech/sustainable funds, as well as private cleantech companies and M&A. He is also a co- founder of the Global Cleantech Cluster Association (GCCA), and can be reached at shawn.lesser@sworldcap.com
Terry Cooke is Strategic Advisor for Global Partnerships for the Global Cleantech Cluster Association (GCCA). He is also a 2010 Public Policy Scholar on U.S.-China Clean Energy at the Woodrow Wilson Center and author of the forthcoming Sustaining U.S.-China Clean Energy Cooperation being published by the Kissinger Institute of the Wooldrow Wilson Center. His website is www.terrycooke.com .
A personal note:
The Greater Philadelphia region stands on twin thresholds — as the new national innovation center for research and commercialization of energy efficient buildings in the U.S. and, potentially, as an economic partner to China in this priority sector under that country’s new 12th Five Year Plan (2011-5). What’s the bottom line for the region if it manages to sync with the speed and scale of China’s transformation of its commercial and residential building infrastructure? Delivering for our region the extraordinary levels of foreign direct investment (FDI), high-value exports, and jobs which Chicago secured six weeks ago through Hu Jintao’s visit.
What’s needed?
• First, the context: The article below describes the state of play – involving both market opportunity and political risk – for the U.S./China clean energy sector at the time of Chinese President Hu Jintao’s visit to Washington DC in January 2011: Clean Energy: U.S.-China Cooperation and Competition (The full collection is available for download at FPRI )
• Second, the megaphone: The China Business Network is in the final count-down for launching its Green Development Channel. Check out here to see how the site is looking on the launch-pad and how it will help amplify the message about opportunities for clean energy engagement with China once it is launched.
• Third, the springboard: There are some exciting events upcoming in the region this year focusing on China, Tianjin and 21st c. energy opportunity. Events in the early summer (June) and fall (Sept-Oct) will be announced soon. Stay tuned.
• Finally, the moment: As I’ve described fully in my forthcoming book Sustaining U.S.-China Clean Energy Cooperation (Woodrow Wilson Center/Kissinger Institute), the action with China clean energy is now moving from politically-driven Washington D.C. to commercially-driven regional economies – principally, Greater Philadelphia & the Bay Area (for energy-efficient buildings) , Ann Arbor/Detroit (electric vehicles) and West Virginia (clean coal). It’s a good time for Greater Philadelphia — a prime beneficiary of this trend — to focus on this opportunity now that our economy is strengthening. My book provides, hopefully, a clear and straight-forward read — just 120 pages — of the current landscape of U.S./China clean energy cooperation and competition. It gives equal attention to technology developments, investment opportunity/risk, and policy dynamics.
These twin, intertwined strands of opportunity — regionally-based energy innovation connected to global market opportunity through China — are my full focus. My goal is to provide a clear and concise ‘wiring diagram’ of the regional, national and global ‘connection points’ associated with this opportunity. My partners in this effort are The China Business Network, The T.C. Chan Center for Building Simulation & Energy Studies (UPenn/Tsinghua), The Foreign Policy Research Institute, The Greater Philadelphia China Center for Culture & Commerce, Gerson Lehrman Group, Capitol Project Partners, and GC3 Strategy.
I welcome your involvement and support.
______Assessing China / The TEA Collaborative______ 
