China and Clean Tech: Competition or Collaboration

I recently attended two conferences where the keynote speakers presented viewpoints on China and clean tech that were dramatically different in perspective. At the Sustainable Capital Forum in San Francisco the keynote was delivered by Steve Westly of the Westly Group venture capital firm (Westly is a former Controller of the State of California and eBay executive). He started with a clip from President Obama’s State of the Union speech in which the President declared: “The United States is committed to strengthening our energy security and confronting global climate change. And the best way to meet these goals is for America to continue leading the way toward the development of cleaner and more energy efficient technology."

Westly then offered some now familiar facts:

• Energy and environment are several trillion dollar markets

• China is investing in all those market segments, including renewables (wind and solar), batteries, LEDs (light emitting diodes), and smart grid technologies

• At the same time, China’s cities are polluted and respiratory disease is already epidemic and growing

His punch line echoed the President’s speech, namely that the U.S. needs to lead in clean tech and U.S. companies need to move faster than ever if that goal is to be realized. Westly pointed out that when the Oracle of Omaha, Warren Buffet, invested in the clean tech sector he chose a Chinese firm, BYD (Build Your Dreams, a battery and electric car venture).

A contrasting view on China was presented by Peggy Liu at the Green Business Forum 2010 sponsored by GreenBiz.com. Liu, a former venture capital COO, Time Magazine Hero of the Planet (2008), currently serves as chairperson of JUCCCE (Joint U.S. China Collaboration on Clean Energy). As the organization’s name implies, JUCCCE aims to bring together international expertise and technologies to accelerate the use of clean energy in China within the next 10 years.

Liu pointed out how much progress China has already made in the past five years in terms of clean energy development, e.g. four citywide smart grid demonstrations, 27 citywide LED projects, extensive wind power, to name just a few of their projects (Read Liu’s thesis that China has done more than the U.S. in terms of combating climate change).China faces mind-boggling challenges, however, according to Liu, and only collaboration can meet those challenges.

In the next 10 years alone, China will settle another 350 million people in urban areas and there will be more than 200 cities with populations of 1 million or more in the country. While China excels in manufacturing products, Liu argues that the Chinese are not so good at innovation and often lack the expertise to integrate systems, such as the transportation and utilities that will be required in those cities. JUCCCE is actively working with U.S. and other foreign companies to bring that kind of expertise to Chinese projects and is offering its expertise in navigating the often tricky provincial and State government processes. Liu concluded with a plea for companies to get over any “fear” they may have about doing business in China (e.g. the fear of losing intellectual property) and to explore the opportunities there.

My own perspective is that Westly and Liu’s views are by no means mutually exclusive. The U.S. needs to be A leader in clean tech; we have the means to do so and we need to build our own low-carbon economy, just as China is doing. And, a U.S.- Chinese collaboration can yield benefits for both countries that, hopefully, dramatically accelerates the use of solar PV and other clean energy technologies. Silicon Valley is certainly accustomed to multicultural collaboration and we can take A leading role.