U.S.-China Collaboration in Renewable Energy?

Where can the U.S. and China collaborate in renewable energy? With the state of competition between the two countries both in the Olympics and in other arenas, areas for collaboration may seem dim, but actually there are possible areas for doing so.

Definitely there is a need for collaboration to make renewables reach grid parity, meaning that renewable sources become just as cheap as fossil fuel based sources. Feed-in-Tariffs, or fixed prices per kilowatt-hour that have been preset in order to attract investors in solar and wind have been under attack in many countries. This despite the fact that external impacts for coal and fossil fuel power plants (such as public health respiratory impacts ) have not been captured in their energy pricing, and their subsidies remain untouchable at the moment.  For example, ask coal plant investors about the health impact of emissions and the handling of byproducts such as coal ash, and many will say it is not their concern. A carbon tax should capture these fossil fuel external impacts, but as public opposition in Australia shows, implementing a carbon tax is not a cake walk.

Publicly funded government research institutes, such as the Department of Energy Sandia and Lawrence Livermore laboratories are probably not high on the list for collaboration venues. Unwarranted collaboration is one ticket for scientists to be charged with improper handling of classified information, such as what happened in the case of Dr. Wen Ho Lee, who was eventually cleared by the courts. Anything is possible of course. Nixon did fly to China in the seventies for his pingpong diplomacy, but surprises like that are either fodder for films or novels. If it happens, it happens, but don’t count on secret American or Chinese government labs suddenly ushering in a new spirit of cooperation.

Nevertheless, research however in public and private universities like Tsinghua and Dartmouth should be strengthened. Jointly authored journal papers in technology areas like solar, wind, hydro, biomass, energy efficiency and other energy topics are probably the most basic way of encouraging some type of collaboration. The exchange of scientific ideas should be unfettered in order to march forward – a brilliant and breakthrough idea can now come from anywhere in the world. For example, the efficiency of polysilicon based solar photovoltaic panels are now hovering just above the 20% range. Breakthroughs in making solar photovoltaics more efficient, such as combining photovoltaic technology with the Seebeck effect on the same wafer, are possible areas that scientists can collaborate on.

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Standards are another area of collaboration. In the semiconductor industry for example, many chip companies realized early in the ballgame that it does not make sense for wafer sizes to be different, as the resulting lack of standardized deposition tools will simply redound to unwarranted expense for all. So standards result in equipment and materials that can be marketed to different companies, resulting in cost savings across the entire sector. At the moment, the situation in the solar photovoltaic sector is that some companies still resort to custom built manufacturing equipment, which is basically what made the early days of the chip industry uncompetitive.

Then there is of course private company research, both in core technologies owned by the company and technologies that reside in its key suppliers. Microsoft, Intel and other Fortune 500 companies have their own R&D labs in China, employing Chinese scientists who work closely with their American counterparts. Collaborative research in this framework is determined to a large extent by corporate strategy, including access to markets. Collaboration within companies in the same sector, such as solar, will probably happen to a larger scale in the future in the same manner that American chip companies banded through the SEMATECH alliance to improve their competitiveness. However, there is a very low likelihood that this sort of cooperation will happen between the U.S. and China, except perhaps for a couple of non-core business and technology areas.

Related to this is the global supply chain for renewables. Some materials, like polysilicon, are important for the manufacture of solar panels. While the cost of this commodity item is driven by supply and demand, and made efficient by the many decades it has been there and by the number of companies who use it, nevertheless any opportunity to lessen its cost should be examined, if at all this is still a concern. Having reliable strategic suppliers to the wind and solar sector, or a framework for developing these suppliers, can be a good area for collaboration.

Manufacturing research, both in the U.S. and China, need to be coordinated – if not shared. While asking for sharing may be difficult as there are intellectual property issues to contend with, a certain framework that allows different creative minds to dance to the same tune will always be helpful. For example, manufacturing cost savings developed by Chinese manufacturers will not help if new American technologies will not be manufacturable using those new technologies. Again, having industry standards that companies actually comply with is key.

Access to markets, in order for renewable energy companies to grow, is important. No one will pay a corporate research scientist any money to do research if there is no business. Therefore, one area of collaboration for both China and the U.S. is unfettered access to markets. This is easier said than done of course – the new U.S. tariffs on Chinese wind turbines, and earlier on solar panels, undermines access to markets.

Finally, there should be common support for the Green Fund by both the U.S. and China. Most of this Fund will be used to pay for capital expenditures in renewable technologies like wind, solar and others. By having this money available, it can jumpstart a market that will signal to renewable energy companies, be it in China or the U.S., that the slack from the slowdown in Carbon Development Mechanism (CDM or “carbon credit”) funds will be taken over by the Green Fund. Once economies of scale have taken over – with demand for renewables coming from many parts of the globe, the current opposition to renewables determined mostly by its current cost should go away, and ensure healthy growth for all renewable energy sectors such as solar and wind in the years to come.

Dennis Posadas is an international fellow (based in the Philippines) of the Climate Institute Center for Environment Leadership Training (CELT) and a former engineer/analyst for a leading U.S. semiconductor firm. He is also the author of Jump Start: A Technopreneurship Fable (Singapore: Pearson Prentice Hall, 2009) and Rice & Chips: Technopreneurship and Innovation in Asia (Singapore: Pearson Prentice Hall, 2007)