By Michael Kanellos
Energy giant BP has formed a $73 million joint venture with the Chinese Academy of Sciences that will aim to bring technology from Chinese labs to the market.
Much of the research of the Clean Energy Commercialisation Centre will focus on the fuel that's driving China's economic boom and many of its environmental problems: coal. Projects will likely include coal gasification techniques, underground methane bed gasification and carbon capture and sequestration. China has 126 billion tons of proven coal reserves and it's still a cheaper fuel than natural gas or renewables. Coal accounted for 26 percent of energy consumed in 2004 worldwide, according to the U.S. Energy Information Agency, and will grow to 28 percent by 2030. India and China will account for 72 percent of the increase.
Like several other energy and high-tech companies, BP has increased the amount of research it conducts with universities. In the U.S., the company has a 10-year, $500 million dollar alliance with the University of California at Berkeley and the University of Illinois, Campaign-Urbana to develop biofuels and other technologies. Although some watchdog groups decry these deals, companies and schools say they are needed. Companies are providing grant money at a time when many governments are curtailing costs while the universities are providing talent and know-how that the company probably couldn't afford to hire.
Ultimately, these programs also serve as both a career pipeline and a business development tool.
In China, it would be tough to do better than the Chinese Academy of Sciences. The organization oversees the government's research agenda and works extensively with universities like Tsinghua. (Hewlett-Packard set up a lab at Tsinghua last year.) Some members of the CAS have worked in the west and are plugged into the highest levels of the ruling communist party. In 2001, BP entered into a $30 million, 30-year research program with the CAS.
Although $73 million will be in the program, BP did not specify how much money it would put up. The joint venture will be owned 49 percent by BP and 51 percent by the CAS. Nonetheless, it is not uncommon for private companies to shoulder more of the financing in government-business deals.