U.S. businesses not buying President Obama’s rhetoric on energy ‘race’ with China

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The U.S. has “raced” to control space exploration, nuclear arms and electronics. Since taking office, President Obama has introduced the idea that the U.S. is now battling China — the world’s largest polluter — in new race for world domination. A clean energy race.

“The nation that leads in the creation of a clean-energy economy will be the nation that leads the 21st-century global economy,” the president has said. Energy Secretary Steven Chu has repeated the message several times, creating a frenzy to “go green,” before China does.

If America really is in such a race, the Energy and Commerce Departments should talk.

According to Ernst & Young’s Renewable Energy Country Attractiveness Index, China ranks first among 30 countries on building renewable-energy infrastructure. In the fourth quarter of 2010, China invested more than $10 billion in its wind energy sector — half the total global investment of just over $20 billion. The U.S. fell from first in May to fifth in November, because of its relatively low investment.

Consulting firm Accenture said in a January report on transportation technologies, “Whoever wins the race to commercialize technology first may have unique advantages. These include intellectual property ownership and opportunities to provide jobs to their domestic population.”

Accenture is betting on a Chinese victory, if China’s government continues to prop up alternative energy investment. “Our expectation is that China will be able to achieve its targets faster, but in a narrower field of technologies. While the United States may be slower in its development, its openness to new and disruptive technologies is more likely to generate a breakthrough solution,” Accenture said in its report.

The U.S. Department of Energy is putting more than $16 billion from the economic stimulus into the green technology sector, but at the same time the Commerce Department is pushing to relax rules that would allow U.S. businesses to invest in China’s green technology sector.

At its most recent meeting in December, the U.S.-China Joint Commission on Commerce and Trade, composed of trade representatives from both countries, agreed to make it easier for American companies to provide equipment for large-scale wind power projects in China. And American companies will find it easier to submit information on technical requirements for large Chinese wind-power projects.

“This is the game of the century for a lot of companies,” said Richard Stavros, founder of Green-Edison, an investment-research company in Alexandria, Va.

The JCCT says China plans to spend $10 billion annually from 2011 to 2020 to build a national smart grid and an another $590 billion on an electric power grid. China’s renewable-energy market alone is expected to be $100 billion by 2020 with most of that money going to the wind industry.

“There’s a huge market, and a lot of these businesses see this as a huge earning opportunity, and some are willing to make the fox den deal,” Stavros said.

The China Greentech Initiative, a collaboration between 80 global technology companies, entrepreneurs, policy advisers and non-governmental organizations, predicts as much as $500 billion to $1 trillion annually is up for grabs for companies that get to China first. That’s 15 percent of its forecasted gross domestic product in 2013, the group said.

Charles Freeman, chair in China studies at the Center for Strategic and International Studies and former assistant U.S. Trade Representative for China Affairs, said the U.S. has framed the green technology race as if it’s the next industrial revolution which the Chinese feel is a way to “to keep China down.”

Also, China, is the world’s largest polluter, is “starting to choke on coal,” Freeman said. “So they make an effort to go green.”

China has installed high-tech scrubbers at some power plants, and it has an enormous carbon capture and sequestration project in Ordos City in the country’s Inner Mongolia, Freeman said.

“They don’t have problems getting permitting like we would,” Freeman said.

Ernst & Young’s report said, “Such heavy investment has ensured that approximately one in every two wind turbines to go live in 2010 will have been in China.”

Freeman said the numbers can be loaded.

When the Chinese government made the decision to increase wind turbines in the country, “overnight, the number of wind turbine producers went from three to 80. Anyone that put together something that looked like a fan or a gear post, suddenly said, ‘We’re a wind turbine [maker],’” Freeman said. “They looked at GE, Vestas, Mitsubishi, and said we can kind of make that.”

That opens the door for intellectual-property theft, which the White House is well aware of; it released a Joint Strategic Plan last summer to combat it, with a focus on China.

Victoria Espinel, the government’s IP enforcement coordinator said, “We will initiate a comprehensive review of current efforts in support of U.S. businesses that have difficulty enforcing their intellectual property rights in overseas markets, with a particular focus on China.”

GE has found a way to protect itself; it will only sell Chinese companies its 850 megawatt wind turbine while it makes its 1.5 gigawatt turbine available in the U.S. and Europe.

Stavros said American businesses are safe from the consequences of IP theft if the Chinese can’t innovate.

“If China can’t innovate, in the long run, the U.S. will win. But, if China can innovate, you are creating a potential global competitor,” Stavros said.

“Given the money they’re spending, they do have potential to overtake the U.S. permanently in the green-energy space and become the country that delivers everything for green energy infrastructure that that world needs,” he said.

Stavros said U.S. companies entering the Chinese green sector are definitely taking a risk.

First, an American business is required to combine efforts with a Chinese state-owned business to enter the market.

Stavros said the Chinese government will say, “That’s the quid pro quo to get into this market.”

“The race for businesses has been to be there first, get to know people, understand the market and make a big play for the future. Some of those plays have been working out, but there are a lot of companies that lost their shirts,” Stavros said.

In many cases, local Chinese companies develop and manufacture copycat products and eventually price the American goods and businesses out of the market.

“Our companies say we can’t compete because of intellectual property rights theft, and favoritism of Chinese companies,” Freeman said. “It’s big stakes, and the deck is a bit stacked to be candid.

Article printed from The Daily Caller – Breaking News, Opinion, Research, and Entertainment: http://dailycaller.com

URL to article: http://dailycaller.com/2011/03/15/u-s-businesses-not-buying-president-obama%e2%80%99s-rhetoric-on-energy-race-with-china/

Copyright © 2009 Daily Caller. All rights reserved.

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