The Chinese view this as an economic competitiveness imperative. They get that their own growth is driving up the price of energy and that both for producers and customers, taking costs out of the supply chain is vital. Americans, at least those who are frequently quoted on the subject, primarily energy industry lobbyists and the politicians who answer to them, appear to view it as a moral or ideological matter. History shows that economics beats ideology every time.
When American entrepreneurs can get venture funding in China they can not get in the US, it suggests that the calculation of risk and return by those rejecting new investment needs to be rethought or the economy that supports those conclusions will disappear. JL
Brian Spegele reports in the Wall Street Journal:
Will Latta, the founder of clean-energy company LP Amina Inc., says he tried last year to interest U.S. power utilities in testing a new technology that reduces pollution from burning coal. Rebuffed, he took his invention to the coal-belt city of Fengtai in eastern China, where he found a partner eager to install the multimillion-dollar technology.
Mr. Latta's story underscores how U.S. companies can gain from China's commitment to clean energy and challenges the notion that technological advances by one of the countries comes at the other's expense. Start-ups aren't the only companies getting a boost from China, so have energy giants like Duke Energy Corp.
"In the U.S. there's a resistance to demonstrate new technology," says Mr. Latta, a 42-year-old Miami native who founded LP Amina in 2007. "They don't like to be the first."
U.S. politicians, with some encouragement from the White House, are gearing up to confront China over what they say are unfair government subsidies to its clean-energy industry that make it impossible for some U.S. companies to compete. The saga of U.S. solar-panel maker Solyndra LLC, which got a federal $535 million loan guarantee but filed for bankruptcy saying its prices were undercut by Chinese rivals, has crystallized the issue.
China leads the world in investment in clean-energy infrastructure, and few nations embrace potential breakthrough inventions with such zeal. That combination allows commercial development of innovations that otherwise might never make it out of labs in the West.
"A wide array of technologically complex technologies will be viable that wouldn't be viable otherwise," says David Victor, director of the University of California at San Diego's Laboratory on International Law and Regulation.
The Obama administration trumpets that calculation as it promotes growing U.S.-China clean-tech cooperation in the face of unease from Congress. LP Amina is among the companies set to benefit from the U.S.-China Clean Energy Research Center, which wascreated in 2009 to jointly fund clean-energy development.
Last year Mr. Latta tried to create a pilot demonstration for a new piece of technology that reduces the size of coal particles during power generation. The invention is meant to improve coal-processing efficiencies in power plants and has shown promise in cutting nitric-oxide and nitrogen-dioxide emissions, which contribute to ozone-layer depletion and can harm a person's lungs. But he says several U.S. utilities turned him away, unwilling to invest the about $10 million it costs to retrofit a typical power plant.
Early this year, Mr. Latta found a partner in Zhejiang Energy Group, which installed his invention at one of its power plants in Fengtai. Zhejiang Energy didn't respond to a request for comment.
Armed with results from Fengtai showing that his technology worked, Mr. Latta returned to one of the U.S. utilities that had turned him away. This time, the utility agreed to install the invention at a plant. Mr. Latta declined to name the customer, citing a nondisclosure agreement.
Mr. Latta now is attempting to replicate that success with a new process that simultaneously produces electricity and, as a byproduct, a valuable ingredient for industrial chemicals. LP Amina, which is based in Charlotte, N.C., says the technology reduces greenhouse-gas emissions by 25%, compared with traditional petroleum processes. The process was developed in collaboration with the Bayer Technology Services unit of Bayer AG
This time, he didn't even consider asking U.S. utilities to pilot the project. He instead forged a partnership with Gemeng International Energy Co., which is owned largely by Shanxi province, in central China.
Small clean-energy companies are attracted to China because they can get lucrative government subsidies and find fewer regulatory hurdles and safety standards than in the U.S. Chinese utilities, meanwhile, gain access to technology that otherwise might be unavailable. "Adopting the newest technology to achieve energy savings and emissions reductions is always our pursued goal" in forming joint ventures, Gemeng said.
There are obstacles to collaboration, however, not least of which is public perception in the U.S. that American companies are benefiting from Beijing's subsidies and creating jobs in China while the U.S. struggles with high unemployment. Mr. Latta's joint venture with Gemeng will create 500 to 1,000 construction jobs in Shanxi.
China last year invested $49.8 billion in development of renewable-energy sources, more than one-third of total global investment in the sector, according to the United Nations. Such subsidies are helping bolster the global ambitions of China's clean-energy-gear manufacturers.
Proponents of collaboration argue that commercializing nascent technology in China ultimately creates U.S. jobs by bringing burgeoning technologies to market more quickly.
Biofuel innovators also are developing new methods in China. LanzaTech NZ Ltd., which uses waste from making steel to create ethanol, has joint ventures with two of China's largest steelmakers, Baosteel Group and Shougang Group.
"China has got the largest steel market in the world, so it's a natural place to start," says Jennifer Holmgren, chief executive of LanzaTech, which is based in New Zealand but has operations in the U.S.
Some of the company's technology was developed in the U.S. with funding from the Department of Energy and the Defense Advanced Research Projects Agency, which sponsors technology research for the Defense Department. LanzaTech's Chinese partners are paying nearly all construction costs for the ethanol pilot project.
The research and development of clean-energy technologies in China also has prompted major U.S. utilities to search for new technology in China.
Duke Energy, which will have to replace nearly the entire power-generating infrastructure for its aging fleet by 2050, two years ago signed its first agreement in China to explore clean-energy technology with China Huaneng Group, the country's largest utility.
"Can we actually bring clean-energy technologies to our customers in the Americas quicker, cheaper and with less risk than if we did it ourselves?" asks Chief Technology Officer David Mohler. "What made China stand out was they were building so much clean energy infrastructure so quickly at such huge scales."
Duke, which is based in Charlotte, N.C, has learned firsthand the high cost of launching new technology in the U.S. It is in the final stage of building a clean-coal gasification plant in Indiana that has faced roughly $1 billion in cost overruns. The plant will cost $2.98 billion, excluding financing, when it begins operation next year.
Duke says the project created roughly 3,000 construction jobs in Indiana and will require more than 100 full-time positions when the plant opens. Proponents of working with China say the U.S. could see more such jobs if new clean-energy technologies are brought to market more quickly.
New power plants "are massive capital investments," says LP Amina's Mr. Latta. "To push the envelope on the R&D side, it's also a massive investment. Why should one nation shoulder that?"
"It should not be us versus them," he says
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