Cleantech: Sino-American Cooperation Could Provide a Breakthrough
Jonathan Woetzel | McKinsey Quarterly | August 2009
The world's two largest CO2 emitters, the US and China, are working hard to find a solution to climate change. In addition to drastically reducing oil imports and improving environmental protection measures, the two countries are heavily focusing on the development of clean technologies. However, instead of accepting the challenge on their own, the two states should instead cooperate with each other in order to produce promising technologies that are ready for the market. Some of these technologies are:
Electric vehicles: 42% of traffic emissions could be reduced if by 2030 the majority of vehicles would be driven by battery powered or hybrid motor cars. In order to enable companies globally to develop the necessary drive, batteries and charging stations, the governments should establish uniform standards, secure the funding of the necessary infrastructure, advance dual research and development, reduce trade barriers and offer their customers incentives for purchasing these new vehicles. Both Washington and Beijing should jointly identify corresponding cities for pilot projects of the new technology and mutually exchange data on customer behaviour.
CO2 mission and storage (CCS): The CSS technology is still missing market maturity, as the capture of greenhouse gases from coal-fired plants is still very costly and energy-intensive. Furthermore, no final solution has been found for the storage of captured emissions. Jointly building demonstration plants in the US and China could provide a breakthrough dependent on whether the results are shared with other actors therefore enabling faster and more efficient solutions to the technical challenges of final disposal. 20% of all new coal-fired plants in China and 40% in the US could use this technology by 2020.
Concentrated solar power: This kind of energy production will struggle to develop without a partnership between the US and China. These powers are the only two that can feasibly establish the necessary investment patterns that can make solar power a reality. The CSP technology transforms sunlight into steam power that can be stored and in this respect its level of efficiency is higher that that of the photovoltaic technology. Through common standards, pilot projects and R&D in this area, half a million jobs could be created in the US and in China and more than a fifth of their energy needs could be covered by 2030.
In addition to decreasing oil imports, reducing air pollution and creating new jobs, a close US-China energy nexus could have further advantages. Firstly, it would strengthen the confidence in their governmental relations that have been so far characterized by political and economic differences. However, the obstacles to this are enormous as companies on both sides of the Pacific approach any collaboration with mistrust. In particular US companies are sceptical about initiating pilot projects in China, whose inadequate protection of intellectual property rights has so far been a cause for concern. Furthermore, both countries need to ensure an effective institutional framework for joint projects as well as establishing the financing mechanisms and set rules for corporate partnerships. Both need to recognize that an efficient collaboration would give a strong impetus to clean technologies. Other states would also profit form these advantages, the competition would then become increasingly intense. Europe would then have to be careful to not fall behind.
This summary was prepared by the Atlantic Community editorial team
from "China and the US: The potential of a clean-tech partnership" published here by McKinsey Quarterly.