September 19, 2014
By David J. Lynch
The threat of climate change is driving China and the U.S. — frequent rivals and the world’s two largest greenhouse-gas emitters — to collaborate on dozens of potential clean-energy breakthroughs.
In research laboratories on opposite sides of the Pacific Ocean, more than 1,100 Chinese and American scientists are engaged in a joint program marrying public and private money and talent. Among the U.S. companies teamed with Chinese partners are Dow Chemical Co. (DOW), Duke Energy Corp. (DUK) and Ford Motor Co. (F)
The cooperation contrasts with the two nations’ longstanding differences over a range of issues, including intellectual property, human rights, cyberspying and, notably, the terms of a global treaty on climate change. While President Barack Obama plans to join other world leaders in New York on Sept. 23 for a United Nations climate summit, Chinese President Xi Jinping won’t be there. Nor will Prime Minister Narendra Modi of India, the third largest emitter.
The diplomatic inaction means that advances in technology may represent the planet’s best hope for avoiding runaway warming. Innovations from the U.S.-China brainstorming could spread to developing countries, allowing the world’s fastest-growing nations to avoid repeating the advanced economies’ fossil-fuel dependence.
“What can be more effective than the two largest emitters of CO2, or greenhouse gases, going at it together, arm-in-arm?” said James Wood, director of advanced coal technology research for the U.S.-China Clean Energy Research Center at West Virginia University. “It sends some signals to people in the world that it can be solved and these are the two giants that can do it.”
The low-budget cooperation on everything from energy-efficient buildings to new lithium-sulfur vehicle batteries is a rare bright spot in the Sino-U.S. relationship. Tensions have risen this year over the South China Sea and China’s treatment of foreign multinational corporations.
The energy and environmental effort, which dates to Obama’s first visit to China in 2009, got off to a slow start.
U.S. companies worried that their Chinese partners might pilfer trade secrets. And the Obama administration’s failure to win congressional approval of a cap-and-trade system to reduce greenhouse gases raised doubts in China about U.S. sincerity.
The intellectual property worries were resolved with a government-to-government agreement on the handling of disputes. The political hesitancy was overcome after last year’s “Airpocalypse,” several days of hazardous air that prompted Chinese citizens to don facemasks and agitate for change.
In July 2013, the U.S. and Chinese governments agreed to five specific climate-change initiatives.
The research center, now in its fourth year, has no physical headquarters. It’s a virtual facility with advanced coal, vehicle and building-efficiency programs running 88 separate projects. Each brings together teams of American and Chinese specialists to work on a specific problem or technology.
The center is one of several overlapping U.S.-China efforts to promote clean energy or environmental improvement.
Partnership between the U.S. and China “will set the tone for the world,” Bill Gates, co-founder and former chairman of Microsoft Corp. (MSFT), told a recent meeting in Seattle of the Boao Forum for Asia, a Chinese nonprofit group.
One joint program is bringing Oakland, California-based BrightSource Energy Inc.’s concentrating solar thermal power technology to a demonstration project in China’s Qinghai Province. A second helped China last year enact its first rural energy-efficiency building code, opening the door to halving energy usage in a residential footprint equal to the entire U.S. housing sector.
A third linked Boeing Co. (BA), Honeywell International Inc. (HON), PetroChina Co. (857) and Air China Ltd. in a demonstration flight of a Boeing 747 powered by a mix of biofuels and regular jet fuel.
Perhaps the costliest undertaking uniting the two countries is a commercial endeavor that evolved into U.S.-China collaboration.
Seattle-based Summit Power Group LLC plans to build a coal-gasification plant on a site just west of Odessa, Texas, which would strip carbon from coal through a chemical process, producing less pollution than traditional coal-burning plants. The resulting carbon dioxide would be used to coax trapped oil from aging reservoirs and to produce urea fertilizer.
Summit anticipates completing a roughly $2 billion loan with the Export-Import Bank of China in the spring of 2015 and beginning operations in 2018, several years behind schedule. The Chinese loan, conditioned on the involvement of a Chinese contractor, offers better terms than other potential financing, said Eric Redman, Summit’s CEO.
“In this case, you have a lot of Chinese money and Chinese engineering expertise going into helping the U.S. put a lot of the U.S. carbon emissions underground,” said Redman.
Though its total greenhouse-gas emissions continue to rise, China has reduced the amount of carbon it generates per unit of gross domestic product by almost 20 percent and is expected to seek additional reductions.
Despite its notoriously foul air, China by some measures already has done more to address climate change than has the U.S. Under Xi, China has introduced seven pilot cap-and-trade programs, covering roughly one-third of its $9.3 trillion economy, and plans to establish a national system in 2016. China’s $54.2 billion investment in renewable energy last year was 50 percent larger than that of the U.S., according to data compiled by Bloomberg New Energy Finance.
“They’re serious about climate,” former Treasury Secretary Henry Paulson, who secured an earlier environmental partnership during the Bush administration, said in an interview.
Though there have been hiccups — joint estimates of China’s potential shale gas reserves were stymied by the government’s treatment of geological data as a “state secret” — by July, Obama boasted, “We have significantly enhanced our cooperation on climate change in the past year.”
Still, this is no Manhattan Project. The research center’s five-year budget amounts to just $150 million, divided between American and Chinese money. The U.S. Energy Department is also kicking in $450 million for the Texas coal-gasification plant.
Yet program officials and their corporate partners say the value of the research dwarfs the modest spending. The program has taken on some of the toughest clean-energy questions, including the search for ways to capture carbon from power-plant emissions and store them underground.
“It’s smart leveraging of public money for larger purposes,” says David Sandalow, a former Energy Department official who was an architect of the U.S.-China effort. “This is the right size” to start the research center.
For Dow Chemical, joining the U.S.-China Clean Energy Research Center offered a chance to develop connections in China and collaborate with top scientific talent in U.S. national laboratories. The company is developing improvements to a latex-based “cool roof” material aimed at reducing the cooling needs of buildings.
Dow is closing in on ways to make the rooftop coatings reflect up to 75 percent of sunlight, which would double their effectiveness in cutting cooling bills, says Greg Bergtold, global research director for Dow’s building solutions unit.
“It’s not sexy, but it actually works,” Bergtold says. “In both countries, we’ve seen an ability to move the needle both in carbon emissions and the energy demands of buildings.”
As the research center nears its December 2015 expiration, officials are weighing a more ambitious second phase. Details are expected to be on the agenda in November when Obama travels to China for an Asian summit and private meetings with Xi.
Duke Energy is among those urging a continuation. The largest U.S. utility by market value joined the program to study the carbon-capture technology that China’s Huaneng Group employs on its Shidongkou power plant outside Shanghai.
David Mohler, Duke’s chief technology officer, says the study showed that Huaneng’s approach would be worth installing if the U.S. put a price on carbon via a tax or cap-and-trade system.
Though there’s no sign of that happening anytime soon, the need for action is only growing more evident, according to the UN official heading the world body’s climate work.
Unless supplies of “low carbon or no carbon energy” are tripled or quadrupled, heat waves that now occur once every 20 years will become every-other-year phenomenon, said Rajendra Pachauri, chairman of the UN’s Intergovernmental Panel on Climate Change.
Earth’s temperature has already risen 0.85 degrees Celsius (1.53 degrees Fahrenheit) from the pre-industrial era and will reach a total increase of 4.8 degrees Celsius by the end of this century, more than twice the UN’s goal, he told the Boao Forum.
“That will clearly lead to disaster,” Pachauri said.
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