by Dallas Kachan
It's been fashionable to debate whether China will some day surpass the U.S. in clean technology. Yet, after reviewing some of the metrics that really matter, one could conclude that it already has. At least this was my thesis in moderating a recent Haas School of Business event at U.C. Berkeley in California that explored whether China would become a green economy leader.
China has already surpassed the U.S., I argued (as reported elsewhere), and pointed to the following:
- IPOs: According to data we collected at the Cleantech Group, in 2009 (the last full year for which data was available as of this writing), China accounted for almost three quarters of all cleantech IPO proceeds worldwide, well ahead of the U.S., which had only 26%; and to date in 2010, the top three cleantech IPOs of the year have all been Chinese companies.
- M&As: The top region for cleantech M&A activity in 2009 was Asia (35% of total), followed by Europe (31%) and North America (26%), according to our same research above.
- Solar: 7 of the 10 largest solar manufacturers in the world by production volume are now Asian, #2 being China’s Suntech Power (NYSE:STP), which in 2009 surpassed even Japan’s Sharp (OTCPK:SHCAY), the longtime leader. This according to a roundup by respected photovoltaic trade pub Photon International.
- REEs: China holds a monopoly on rare earth elements [REEs], critical raw materials for wind turbines and electric motors such as those used in electric vehicles like the Tesla (NASDAQ:TSLA) and hybrids like the Prius. It controls 97 percent of commercially available rare earth element supplies, and has recently begun to reduce the amount it exports.
- Stimulus: The amount of stimulus funding China has allocated to clean technologies, including water, waste and other non-energy cleantech infrastructure, is 4 times that of the U.S. (221 billion vs. ~60 billion).
- R&D: There’s been a doubling of private R&D in China in recent years; China could soon surpass the U.S. in R&D spending, according to Lund University in Sweden.
- Speed: China is making decisions quickly, and isn’t encumbered by democratic process. This January, China announced intentions to build a 2 GW $5B concentrating solar thermal plant. In the words of Bill Gross of eSolar (by way of Tom Friedman), the company whose technology was selected, “in less time than it took the U.S. DOE to do stage 1 of an application review for a 92 MW project in New Mexico, China approved, signed and is ready to begin construction this year on a 20 times bigger project.”
- Nukes: If you don't already consider nuclear a clean energy technology, you should. China is expecting to build some 50 new nuclear reactors by 2020, and is already hard at work on half of them; the rest of the world combined might build 15.
- Investment: A recent report by Breakthrough Institute called Rising Tigers, Sleeping Giant claims China, South Korea and Japan have already collectively passed the United States in the production of virtually all clean energy technologies, and over the next few years, these countries will be expected to out-invest the United States.
If this trajectory holds, the majority of cleantech-related jobs, tax revenues and cleantech commercialization bragging rights will go to Asian, mostly Chinese, companies. The interesting question is what commercial opportunities will this eventuality ultimately create for others elsewhere? How can the U.S. and other jurisdictions leverage the Chinese cleantech juggernaut?
Obviously, some companies will benefit from the establishment of joint ventures with Asian companies. And there WILL be local manufacturing jobs, especially when the rising cost of oil makes overseas shipping from Asia less cost-effective—one of the reasons China's Suntech is setting up local U.S. manufacturing in Arizona, for example. But where are the less obvious opportunities?