To Go Green, Go Global
China and the United States are competing for dominance in the global clean-energy business, a market valued at billions of dollars. But if the U.S. wants to stay in the race, it needs to pay more attention to China’s business strategies, says the Fletcher School’s Kelly Sims Gallagher, an expert on energy policy.
In her new book, The Globalization of Clean Energy Technology: Lessons from China (MIT Press), Gallagher observes that U.S. businesses have been too inward looking and are handicapped by what lawmakers and regulators think are barriers to the global diffusion of green technologies, such as intellectual property concerns, trade barriers and lack of markets in developing countries.
“Unlike the U.S., China didn’t start out looking to sell clean-energy technologies like solar to their own domestic market. They were looking abroad,” says Gallagher, director of the Fletcher School’s Center for International Environment and Resource Policy, who is spending the next year in Washington, D.C., as a senior policy advisor to the White House Office of Science and Technology Policy. “China saw countries like Germany, the U.S., Italy and Spain creating energy policies that would open up new clean-energy markets, and they wanted to serve those markets.”
For the book, Gallagher spent two years researching China’s solar photovoltaic, gas turbine, advanced battery and coal gasification industries. She found that fear of perceived impediments to becoming a player in the global market has slowed America’s progress in developing clean technologies.
It is true, for example, that there is more potential for intellectual property infringement in business sectors such as computer software and chemical products because those technologies are very easy to copy, she says. But the clean-energy industry is based on very complex technologies that are hard to duplicate.
China has legally partnered with other countries on green technologies, to the mutual benefit of both. In fact, Gallagher initially wanted to title her book No Great Wall because of the lack of barriers to global competition.
“What I realized midstream was that clean technology was a truly global enterprise, and that the Chinese had an incredibly global perspective on where and how they could get the technology they needed,” she says. “They would buy manufacturing equipment from the Germans, and they would license Danish wind technology. They hired Korean consultants and Chinese who had been educated abroad. That was when I saw the potential of the forces of globalization that the U.S. should take advantage of.”
Building the Domestic Market
A starting point for developing a more robust clean-energy industry is having a strong domestic market for it. Gallagher points to the recent U.S. Environmental Protection Agency announcement that it will limit the percentage of U.S. electricity generated by coal-fired power plants to 14 percent by 2030—compared with 40 percent now—in an effort to cut carbon dioxide (C02) emissions. This the boldest step the U.S. has ever taken toward a national policy to generate clean-energy markets, she says.
While critics say the new policy will lead to job losses, Gallagher counters that it will be economically beneficial and expand the global market for clean energy.
“Any government policy that creates a market for clean energy will create demand for these technologies,” she says. As clean energy is perfected and proliferates, costs will come down, making these technologies more available to the United States and developing countries, and helping to avoid the costs of climate change, she notes.
“In the 10 years since the Chinese have gotten into the solar photovoltaic market, for example, the cost of solar on the global market has dropped by half,” she says. “And because costs fell, market demand rose. The market forces really do work. But you need the government to step in and create that market in the first place.”
Gallagher hopes her book will help fuel the debate about the potential of the global clean-energy market, both as an important cornerstone for the U.S. economy and as a way to lessen our reliance on imported fuels, reduce air and water pollution and avoid larger climatic disruption caused by the dramatic rise in CO2 in the atmosphere—one-third more than before the industrial revolution began.
To compete successfully, the U.S. needs to learn from China by focusing on world markets, devising and implementing a national energy policy and being less risk-averse, she says. “We just cannot seem to agree at the national level on clean-energy market formation policies that would spark our creation of new technologies.”
Gail Bambrick can be reached at email@example.com.