Tapping China’s Green Revolution

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“The Chinese government…has figured out that this is the way to stand on the stage with the United States on equal footing,” Rocky Lee, based in Beijing as head of international law firm DLA Piper’s Asia private equity and venture practice and the firm's Asia Cleantech Practice, told Portfolio.com. “Green and clean is the way to do it.”

During a speech earlier this year to the U.N. General Assembly, Chinese President Hu Jintao promised to plant 150,000 square miles of trees, slow the growth of emissions, and get 15 percent of China’s energy from renewable energy by 2020—a more ambitious goal than any yet stated by the Americans or Europeans.

As a practical matter, that means massive government and private-industry investments in renewable energy, and there are signs that China is making such investments.

In 2008, according to Frost & Sullivan analyst Linda Yan, investment in renewable energy in China climbed 18 percent to $15.8 billion, compared to global growth of 5 percent.

China has become the world’s biggest solar-panel manufacturer, and it’s done so almost overnight.

But that doesn’t mean the market is closed to U.S. firms. Duke Energy, one of the largest utility companies in the United States, has signed deals with two Chinese energy companies this summer to work on developing sources of low-carbon energy. Commercial solar projects, coal-based clean energy, biofuels, natural gas, smart grid, energy efficiency, and carbon-capturing algae are all on the table for Duke’s research and development deals with ENN Group and state-owned China Huaneng Group, the country’s biggest utility.

China is doubling its wind capacity every year, and that could be a boon to Western companies like General Electric, the leading wind-turbine manufacturer in the U.S. Another area where U.S. companies could benefit from China’s push into green is biofuels, especially as U.S. companies pioneer next-generation biofuels that can be made from materials such as algae, rather than food crops like corn.

"Chinese should rightly be lauded for taking actions that are commensurate with the energy challenges we face," Locke said at a working breakfast including representatives of 50 companies, including Boeing and Intel, that are involved in China-U.S. cleantech cooperation programs. "To speed up the development of energy-efficiency solutions, as well as the production of new fuels and other new energy technologies, it's critical that the U.S. and China firms leverage each others' talents."

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