China's Greentech Programs and the USTR Investigation

Author:Joel B. Eisen
Position:Teaches courses in Environmental Law, Energy Law, and Law of Climate Change, and Environmental and Energy Law in China
Pages:3-8
 
CONTENT
SUSTAINABLE DEVELOPMENT LAW & POLICY3
INTRODUCTION
Since the Renewable Energy Law went into effect in 2006,
the Chinese government has implemented numerous laws
and programs designed to encourage renewables.1 While
China has made strong progress, many factors will influence the
nation’s future success in renewable energy deployment, includ-
ing the need for consistent pricing policies to stimulate private
sector development and the need to upgrade the country’s trans-
mission grid.2
The issue of China’s support for renewables has taken cen-
ter stage in a United States Trade Representative (“USTR”)
complaint alleging that China unfairly subsidizes its greentech
industries, in violation of its obligations as a member of the
World Trade Organization (“WTO”).3 Well before that inves-
tigation began, numerous Americans believed the United States
was less engaged in greentech promotion than China,4 and many
feel the United States is falling behind. New York Times col-
umnist Thomas L. Friedman has been perhaps the most active
proponent of this view,5 but he has plenty of company. If recent
reports are to be believed, China could be generating more elec-
tricity from renewables in 2020 than any other nation on Earth.
It has also advanced rapidly in private sector spending on renew-
able energy technology and research and development spending.
Many observers state that the two nations are engaged in
a new “green energy race.”6 This term deliberately invokes the
“space race” competition between the U.S.S.R. and the United
States to achieve milestones in space after the 1957 launch of the
Sputnik satellite. To simplify matters a bit, there are two related
but different arguments being made. The first is that China will
dominate the global market for greentech, diminishing Ameri-
can companies’ ability to compete with Chinese firms. This, of
course, is the bedrock principle of the USTR investigation, and
must be considered in the context of the complex relationship
between the two nations. The United States has departed from
its “courtship” of China, criticizing it for its currency stance and
other economic policies.7
To some, “losing” the race and falling behind the Chinese
would have serious consequences for national supremacy. Even
senior military leaders recognize that the United States is jeop-
ardizing its future by not taking appropriate steps to address the
dire situation presented by climate change. In this view, failing
to transition to a clean energy economy would leave the United
States vulnerable to ceding its position as a major world power.
Playing into fears about China provided a convenient means
of political theater in the 2010 election season,8 but portraying
China’s ascendancy in greentech as a national threat will have
unacceptable costs. Given our nations’ pressing needs to address
climate change, it would be much more productive to forego the
rhetoric of the greentech war and support both nations’ green-
tech initiatives. Moreover, the reasons given for why China is
“winning” the “race” are not yet completely convincing.
Invoking a race metaphor may be less productive than cap-
turing national attention in the United States with concrete, clear
domestic goals. I believe that the United States should articulate a
single, clear national goal, just as it did with space research in the
Cold War era. Elsewhere, I have argued for the creation of “solar
utilities”9 that would deliver greentech in the residential setting
by consolidating all of the functions of financing, installing, and
servicing in single entities that would ramp up to utility-size scale
in individual areas. This is the sort of idea that could capture the
popular imagination and lead to more greentech development in
the United States than casting China as a competitor.
GEOPOLITICAL COMPETITION IN GREENTECH?:
SUITABILITY OF THE “SPACE RACE” METAPHOR
The idea that the United States and China are in a compe-
tition for greentech supremacy has many adherents. A recent
Internet search for “China” and “green energy race” yielded
over 300,000 results, with most of the top one hundred having
titles such as “Who’s Winning the Clean Energy Race?,”10 “Is
China Beating the U.S. in Green Technology Development?,”11
and so forth. The “China as green competitor” narrative has
captivated journalists,12 bloggers,13 politicians,14 environmen-
talists,15 think tanks,16 executives of venture capital and energy
companies,17 financial market analysts and commentators,18 and
many others. The USTR investigation is yet another measure of
CHINAS GREENTECH PROGRAMS AND THE
USTR INVESTIGATION*
by Joel B. Eisen**
* Excerpted from “The New Energy Geopolitics?: China, Renewable Energy,
and the ‘Greentech Race,’” 74 Chicago-Kent L. Rev. ___ (2011).
** Professor Joel Eisen teaches courses in Environmental Law, Energy Law,
and Law of Climate Change, and Environmental and Energy Law in China.
He also teaches the Environmental Law and Policy course to undergraduate
students in the University of Richmond’s Environmental Studies program. In
recognition of his contributions to teaching, scholarship, and service, he has
been named the University’s Distinguished Educator for 2010-2011. In spring
2009, Professor Eisen was a Fulbright Professor of Law at the China University
of Political Science and Law in Beijing, China. He has become an authority
on renewable energy law and policy in the United States and China, and has
published extensively in law journals, periodicals for general consumption, and
books and treatises. He is a co-author of the leading law and business school
text on energy law, Energy, Economics and the Environment, with its third edi-
tion published in 2010. His most recent articles on renewable energy (includ-
ing two on China’s energy programs) were published in law journals at Notre
Dame, William and Mary, and Chicago-Kent. Professor Eisen is a graduate of
the Stanford Law School (J.D. 1985) and the Massachusetts Institute of Technol-
ogy (B.S. degree in Civil Engineering in 1981).
WINTER 2011 4
the strength of the race idea. Some say the race is already over.
One observer notes, “[t]he United States ceded its leadership
in the production of clean energy technologies during the past
decade of neglect.”19
WHAT IS THE “RACE,” AND IS CHINA “WINNING”?
In the space race, there were concrete goals in physical
space: put satellites and humans in orbit, and land a man on
the moon. Here, it is not so clear. What is the competition with
China? To have more solar panels and wind turbines in place?
More governmental and private investment in greentech? More
greentech-friendly governmental policies? All of the above?
Those writing about it often have different agendas. Companies
want more investment in greentech and more access to China’s
markets. Environmentalists want more active federal policies to
encourage deployment of renewables. Free traders want barriers
to trade removed.
Consider a threshold question: Why are we competing with
China? European nations20 have had greentech policies for many
years, have seen strong growth in greentech, and have generated
much electricity from renewables.21 Some observers note that
the race is not with one nation but many,22 yet the prevailing
comparison is to China. There is something more to the “race”
metaphor, then, than growth in greentech. As in the space race,
there is the pervasive sense that if China has more extensive
greentech investments and deployment than we do, there will be
drastic consequences for national power and wealth. Denmark
and Germany attract less attention than China because they pose
less of a threat to the United States’ superpower status.23
Evaluating the “race” claims on their merits, it is hardly
clear that the United States is “losing” to China. The differences
between the two nations are much more subtle than they appear
in the prevailing narrative.24
Growth of China’s Greentech Industry
One fear is that multinational companies will find it dif-
ficult to sell their greentech in China, and Chinese companies
will flood the United States with their products. This fear reflects
broader American unease about China’s potential for global eco-
nomic dominance. In 1979, China began to experiment with the
free market, and since then, has experienced robust growth.25 In
2010, China’s economy had become the world’s second largest,
surpassing Japan’s.26 China’s “pace of industrialization is signifi-
cantly faster than that experienced by other countries throughout
history.”27 So much of China’s manufacturing output is already
sold in the United States that observers believe we are “joined at
the hip economically.”28 Many believe domestic products can-
not compete against those manufactured in China due to China’s
advantages in less expensive labor, more lax protections of intel-
lectual property, fixed currency rates (until very recently), and
weaker environmental protections.29 In the depths of a recession
in the United States, descriptions of growing Chinese greentech
firms invoke images of a rising Asian industrial juggernaut.
Is greentech destined to be another area in which the Chi-
nese overpower American firms? China’s 2007 “Medium and
Long-Term Development Plan for Renewable Energy in China”
contained an explicit goal to develop a domestic renewables sec-
tor.30 China’s wind turbine industry rose from virtual nonexis-
tence to become a major player in the global market in less than
five years. In 2009, three of the largest wind turbine manufac-
turers in the world were Chinese.31 China leads the world mar-
ket for solar photovoltaics (“PV”) cells and modules, producing
more than forty percent.32 Chinese firms’ share of the domestic
market has increased rapidly,33 and Chinese companies have
become major players around the globe.34
The USTR petition details a growing imbalance in “envi-
ronmental goods” between the United States and China,35 but
in some categories, Chinese firms have been less successful in
the United States. Chinese firms sold only 28 megawatt (“MW”)
worth of wind turbines outside of China in 2009.36 Some predict
an upswing in Chinese greentech exports to the United States,37
and at least one high-profile proposed project involving Chinese
technology has attracted negative attention.38
Another factor cited in the USTR investigation is that the
Chinese government appears to be shutting foreign manufactur-
ers out of its domestic market.39 Official Chinese government
policy promotes “indigenous innovation,” calling for reliance
on foreign technology to decrease to thirty percent or less.40
Foreign observers report that it has become more difficult for
foreign companies to get their technology accepted in domes-
tic projects.41 A recent report states that thirty-six government
regulations promote domestic greentech and hamper foreign
firms’ ability to compete in China.42 The USTR investigation
petition claims, for example, that the indigenous innovation pol-
icy gives Chinese firms a five to ten percent advantage in wind
turbine procurement processes.43 Encouraging announcements
of joint ventures and other developments seem to contradict
this protectionist trend.44 China has dropped a requirement that
seventy percent of the components in wind turbines come from
domestic sources.45 Agreements between American companies
such as First Solar46 and Chinese local governments to develop
renewable energy projects point to a potentially large market for
American greentech in China.47 Perhaps ironically, however,
the USTR investigation complaint cites the First Solar memo-
randum of understanding to develop a 2 gigawatt (“GW”) solar
project as impermissible under the WTO because First Solar
agreed to work to support China’s domestic industries.48
The concern seems to be that Chinese firms will dominate
the global greentech market if current growth rates continue.
However, some signs in the past year point to overbuilding and
overcapacity in the wind industry, and a possible retrenchment
and consolidation. In mid-2010, concern about the failure to
agree on a climate change agreement and projections of slowing
demand in China for wind energy made for an uncertain busi-
ness climate for wind energy companies.49 The top three IPOs
in 2010 in global greentech were by Chinese companies.50 Other
firms moved forward with their offerings,51 but a planned initial
public offering for one firm had to be scrapped in mid-2010 due
to unfavorable market conditions.52
There is also evidence that Chinese firms are not yet com-
petitive in certain market segments. Some provincial utilities
5SUSTAINABLE DEVELOPMENT LAW & POLICY
have chosen Western wind turbines due to superior control sys-
tems and longer experience with manufacturing larger turbine
sizes.53 As recently as 2009, Chinese wind turbines were less
capable than their foreign counterparts,54 as measured by lower
capacity factors (the percentage of time that turbines operate to
generate electricity).55
Chinese firms often do not hold key technology patents that
would enable them to develop more sophisticated equipment.56
Firms have grown rapidly through acquiring manufacturing
equipment and capitalizing on advantages such as their lower
cost of labor.57 As a result, they have a leadership position in
“downstream” areas of the PV production chain, but lag behind
in “upstream” areas requiring more technological skill, such as
silicon purification, ingot, and wafer manufacturing.58 In 2009,
American companies held the top ten cited patents worldwide in
solar technology.59
Many familiar with China believe that it is only a matter
of time before Chinese greentech improves through importing
foreign technology and assimilating it. Even if Chinese solar
and wind technology improves, however, the greentech industry
in the United States is growing.60 The cost advantages of Chi-
nese firms may eventually fade,61 or the gap may close. Chinese
workers increasingly are demanding higher wages and better
working conditions.62 Some greentech, like larger components
of wind turbines, is heavy and expensive to transport.63 In the
American market, the costs of shipping large turbines from
China might outweigh higher domestic labor costs. And Ameri-
can greentech firms enjoy other cost advantages, such as prefer-
ential tax policies.64
On the whole, then, Chinese firms are not yet invincible jug-
gernauts displacing their foreign counterparts. There is obvious
concern, as the USTR investigation and high-level discussions
and trade missions suggest.65 Some retort that fear of Chinese
firms is as overblown as rhetoric in the 1980s claiming that mighty
Japan was about to dominate the world economic scene.66 Setting
up China as an economic bogeyman has a potential drawback: it
could imperil the bumpy economic relationship between the two
nations. Some have argued that for this reason alone, it would be
best to drop the rhetoric about a green energy race.67
Central Government Support
Observers believe China’s national government offers con-
sistent and committed support to the greentech sector. In this
view, a Communist nation with a central government planning
process can develop renewables far more quickly.68 However,
the reality is that China occasionally struggles to find consis-
tency in its greentech policies. Some have led to considerable
progress,69 such as the Renewable Energy Law and the 2009
stimulus package,70 but others, including reorganizations of the
governmental energy bureaucracy, have been less successful.71
The most frequently cited instance of government support
is direct financial aid, in the form of low-interest loans, export
promotion, and other aid such as subsidized land made avail-
able to developers.72 The USTR complaint cites “prohibited
subsidies to green technology”73 that include the Ministry of
Finance’s “Special Fund for Wind Manufacturing,” the Min-
istry of Finance and Ministry of Commerce’s “Export Product
Research and Development Fund,” and the provision of financ-
ing through export credits by China’s Export-Import Bank.74
The state-owned China Development Bank made $42 billion in
loans in 2010 to solar and wind energy companies,75 a sum that
exceeds comparable financing levels in the United States.76
Yet some other policies, such as pricing for electricity gener-
ated from renewables added to the national electricity grid, have
been anything but consistently encouraging. Over the past two
years, prices in China’s feed-in tariff for solar have been incon-
sistent.77 A project priced in late summer 2010 involved a feed-in
tariff of 0.73 renminbi (RMB, $0.108 at 6.8 RMB to the dollar)
per kilowatt-hour.78 This was more than one-third less than a
previous project’s winning bid, which suggests the winning bid-
der may have been a state-owned enterprise (“SOE”) that could
undercut a private company’s bid. This hybrid system of state-
owned and private companies competing for the same projects is
cited in the USTR complaint as disfavoring competition.79 It is an
ongoing challenge to China’s energy system,80 and as one report
observes, “lack of competition reduces efficiencies and innova-
tion that come from open and competitive markets.”81
Until 2009, a bidding tender system was also in place for
electricity generated from wind turbines above 50 MW. That
system was criticized for failing to promote wind power devel-
opment.82 For smaller wind installations, provincial govern-
ments set pricing policies on a project specific basis, which
provided little long-run guidance on pricing. A new system of
“zonal tariffs” largely replaced the previous pricing scheme, but
it is too early to tell whether it will encourage more wind power
development.
No fewer than nineteen governmental bodies have respon-
sibility for some aspect of greentech policy.83 There are inevi-
table delays in coordination. Ambitious announcements are
not always translated quickly into concrete policies.84 National
proclamations tend to be broad frameworks requiring imple-
mentation by administrative organs of the national government.
Unlike the American system, where public involvement can help
steer actions of administrative agencies, the Chinese govern-
ment has little accountability to accomplish its advertised objec-
tives.85 Key personnel changes in the inner circle of the Chinese
Communist Party can make for policy reversals or alterations.
The Chinese government’s top-down nature creates enor-
mous reliance on provincial and local governments to imple-
ment national policies. Robust policy announcements by Beijing
do not easily translate to the provinces,86 and coordination
between national and local officials is difficult.87 Local officials
often have incentives to prefer projects that can deliver short-
term profits,88 not renewable energy projects that might not pan
out for years.89 Some local governments have direct conflicts of
interest between responsibilities to promote SOEs and mandates
to implement national policies.90
The perception that China’s government is unwaveringly
committed to supporting greentech is often accepted uncriti-
cally, without these or any other caveats. Observers often jump
6WINTER 2011
to conclusions that might be erroneous or oversimplified. It is
difficult to obtain accurate information from China’s national
government, which is secretive and prone to releases of propa-
ganda (as any reader of Xinhua knows).91 Information routinely
available in the West is often protected in China as state secrets,
and recent efforts to promote a freedom of information regime92
show how difficult it is to understand governmental actions.93
According to the USTR petition, “there is a lack of official,
detailed information regarding the terms upon which financing
is provided by China ExIm Bank.”94 Thus, sweeping pronounce-
ments about the Chinese government’s intentions and policies
should be avoided when possible.
The Results Speak for Themselves . . . Or Do They?
By some metrics, Chinese greentech progress is impressive.
In 2009, China obtained a larger share of electricity from renew-
able sources than the United States (17% versus 8.8%),95 but
this figure is skewed by the predominance of hydroelectric gen-
eration in China,96 especially the mammoth Three Gorges Dam
project.97 China added 13.8 GW of new wind power capacity to
10.0 GW for the United States in 2009,98 but its installed total
capacity still trailed that of the United States (35.1 GW versus
25.8 GW). Those numbers cannot be compared directly, as Chi-
na’s wind projects have been less efficient.99 In 2009, China had
a mere 0.4 GW of grid-connected solar PV capacity,100 though
it pledged to meet a much higher target by 2020.101 The United
States had a larger 1.2 GW of installed PV capacity, still far less
than world leader Germany’s 9.8 GW.102
At present, then, China is not outstripping the United States
in total installed capacity, but it might if it achieves its ambi-
tious targets for 2020—30 GW for wind (or possibly 100 GW,
according to recent reports) and 1.8 GW for solar PV (or pos-
sibly as much as an astounding 20 GW).103 However, much of
the increase will be in hydropower.104 And apples should be
compared to apples: Europe and the United States also plan to
increase installed capacity substantially above current levels by
2020.105
Some point to a different metric. Asset financing levels
in China have recently outpaced those of American firms.106
According to a recent report,107 in 2009, Chinese spending
(excluding R&D) totaled $34.6 billion to $18.6 billion for the
United States.108 As the spending levels are within the same
order of magnitude, it does not seem that this is reason for panic.
The real fear seems to be that if the United States does not adopt
progressive climate measures (including a cap-and-trade law),
it will fall further behind China.109 The market data seems to
capture the spirit of American inaction on renewables, but does
it matter, except for international bragging rights, whether the
United States or China occupies the top spot in solar and wind
investment or installed capacity?
Total investment figures or gigawatts of renewable energy
capacity installed do not tell us how China is moving toward
reducing its usage of fossil fuels and achieving climate goals.
China is adding renewable energy capacity rapidly, but is much
more dependent on conventional fossil fuel generation than the
United States. Coal accounts for a staggering seventy percent
of the nation’s electricity generation capacity.110 Even large
deployment of renewables will not enable China to reduce that
number substantially over the next decade.111 And that only tells
part of the story. China’s growth and increasing appetite of its
citizens for modern conveniences has resulted in rapid increases
in energy demand.112 In 2010, China achieved the dubious mile-
stone of surpassing the United States as the world’s largest pri-
mary energy user.113 Its industries are far less energy-efficient
than those in the United States and Japan.114 The government’s
initiatives have helped,115 but China still has a long way to go.
To satisfy its increasing energy demand, China has added
more conventional generation capacity than greentech.116 An
article on China and greentech stated that, “China’s investment
in renewable energy and other green technologies is miniscule
compared to the resources devoted to its continued building of
coal-fired power plants and efforts to secure dirty oil shale sup-
plies in Canada and elsewhere.”117 In 2009, China began con-
struction of a mammoth 13.6 GW power base fueled by coal in
Gansu province, the same location planned for a much-praised
10 GW wind farm.118 New investments in conventional tech-
nology made up over one-third of the 134.4 billion RMB (just
under twenty billion dollars) in the first half of 2010.119 As of
2010, China “uses more coal than the United States, Europe, and
Japan combined.”120 That context should be a central part of any
discussion that touts China’s achievements in deploying solar
panels and wind turbines or in greentech financing levels.
INVOKING THE SPACE RACE METAPHOR IS COUNTER-
PRODUCTIVE FOR ADDRESSING CLIMATE CHANGE
While many believe the United States is losing the green
energy race, the reality does not yet match the rhetoric.121
However, there is more at stake. We need to confront a power-
ful reality: the United States and China are interdependent, not
independent competitors.122 We need China to take the very
actions some posit as competition. This makes the USTR inves-
tigation especially unwelcome.123 Without its greentech efforts
and other measures124 such as its announced goal to reduce the
“carbon intensity” of its economy (CO2 emissions per unit of
GDP),125 China’s increasing energy demand and spending on
conventional technology would add considerably to greenhouse
gas emissions.126
There will be no effective global reduction of emissions
that does not include the United States and China,127 because
they are by far the world’s two largest emitters of green-
house gases.128 Failure by either nation to reduce its emissions
would imperil the entire global effort.129 We should encourage
and support China’s efforts, not consider them a threat to our
national wellbeing.130 Rather than creating the scorched earth
of a “greentech war,”131 both nations can benefit from collabo-
ration.132 The urgency to do this is compelling. No nation has
ever had to address such daunting environmental challenges
at the same time as it has pursued such rapid growth.133 This
poses major hurdles to tackling climate change that must be sur-
mounted by nations working together. And there are not just two
7SUSTAINABLE DEVELOPMENT LAW & POLICY
nations involved, but the whole world.134 Rather than creating a
two-nation race, we should encourage China’s domestic policies
and the climate change collaborations of the “BRIC” developing
economies (Brazil, Russia, and India, in addition to China).135
Nationalistic rhetoric on climate change would be espe-
cially unfortunate for the U.S.-China relationship on climate
matters. The two nations have ongoing tensions on a whole
host of sensitive topics,136 but have worked productively with
each other to address climate change.137 In the two-year period
of international negotiations between the promulgation of the
Bali Action Plan and the December 2009 Copenhagen summit,
talks took place under the auspices of the U.S.-China Strategic
and Economic Dialogue.138 Discussions also took place during
2009 with world leaders at the Pittsburgh G-20 summit139 and
at the Major Economies Forum on Energy and Climate.140 The
two nations have pledged several times to take mutual action
to address climate change,141 and while the promises are often
hortatory, the ongoing discussion does have important value
in strengthening the bilateral relationship.142 Advocating com-
petition with the Chinese undercuts these activities. Continued
antagonistic rhetoric about a clean energy race will also make
it difficult to conduct cooperative efforts in energy and environ-
mental matters. Unlike the near-complete scientific secrecy that
marked the Cold War era,143 China and the United States are
working to develop technology together.
Some even argue that China’s programs to promote renew-
ables can be good for the United States’ economy.144 The Coun-
cil on Foreign Relations’ Michael Levi, argues that “it’s quite
possible for the United States and China both to win, with China
lowering the cost of relatively low-tech parts of the value chain,
in turn growing the market for the higher-tech parts that are still
handled by the United States.”145 Levi compares this to other
situations in which China manufactures products developed in
the United States.
Finally, greentech warring makes it more difficult to reach a
global climate agreement. According to some accounts, China’s
foot-dragging146 and refusal to adopt binding reduction targets
was in part responsible for the failure of the Copenhagen Accord
to incorporate global binding limits.147 As China’s economy
continues its rapid growth, there will be even greater demand for
it to agree to limit emissions.148 Castigating it for its greentech
policies could foster a climate of distrust and delay further prog-
ress on a post-Kyoto agreement.
For all of these reasons, the symbolism of the space race is
simply not helpful in a discussion of global climate change.
Lessons for Energy Policy From the “Space Race”
Blaming China deflects attention from our own inabili-
ties to develop progressive policies on renewables and climate
change. Numerous observers have noted that we lack a stable set
of policies to encourage greentech research, development, and
deployment.149 While we have done well to invent new tech-
nologies,150 our efforts to advance them to the commercial stage
and promote their deployment are “fragmented,” spread among
numerous agencies, and lacking coordination.151 As many have
noted, “[g]overnment policies can provide a strong impetus for
constructing renewable generation facilities,” and there is a wide
variety of potential incentives, including support for research and
development, tax incentives, government procurement policies,
renewable portfolio standards (“RPSs”), carbon cap-and-trade
programs, and feed-in tariffs.152 Federal spending on renew-
able energy is both anemic in its overall levels153 and, even after
the added billions of dollars in the 2009 stimulus package,154
well behind that devoted to fossil fuels.155 Federal tax policy for
renewables is inconsistently supportive,156 and in some years,
many new projects come to fruition, but the pipeline often dries
up.157 The cyclical pace of support “clearly illustrates the conse-
quences of on-again, off-again short-term federal incentives for
wind as a market signal.”158
Some Obama administration actions are similar to actions
taken in response to Sputnik, such as the creation of a Cabinet-
level position to address climate change, which echoes gov-
ernmental reorganizations taken in the late 1950s. One action
that is especially comparable and noteworthy is the funding of
the Advanced Research Projects Agency-Energy (“ARPA-E”)
with four hundred million dollars from the American Recovery
and Reinvestment Act (“ARRA”) stimulus package. ARPA-
E’s name and mission deliberately echo that of the Advanced
Research Projects Agency (“ARPA”)159 created after Sputnik in
the Department of Defense.
The moon landing was the product of an amalgamation of
many disparate efforts to develop different types of technologies.
So too is energy research and development. Like the Apollo pro-
gram, it is not clear at the outset which technology will prevail,
so we need to work on a variety of fronts over a long period of
time. Programs established in the stimulus package are tempo-
rary, not the comprehensive approach we need.160
Much of our effort to develop greentech is mired in a rut. No
climate bill, renewable electricity standard, or national feed-in
tariff is forthcoming.161 Progress toward a stand-alone national
renewable electricity standard is doubtful.162 Many have noted
the failure of federal leadership163 and the actions of progres-
sive states that have stepped into the void with their own pro-
grams.164 These policies are not uniform throughout the country.
A national program may achieve results that piecemeal state and
regional efforts underway cannot.165
How can we make more progress? Addressing climate
change requires the kind of committed and strong support from
the federal government that the space program received through-
out the 1960s.166 The race is really to meet a national goal that
we have articulated and that is in our national self-interest,
whether or not it has geopolitical significance. We put a man
on the moon in part because we were captivated by the idea of a
simple, clear goal. I have focused on one idea that could catalyze
a push toward rapidly increasing development of renewables: a
“solar utility” that would reduce the upfront cost of panels to
nearly zero by subsidizing and installing them at houses.167
8WINTER 2011
Conclusion
China has become a major player in greentech in a short
amount of time. If it could keep up its breakneck pace of
growth it might look like it has pulled far ahead of us in the new
“green energy race,” but at present the picture is more muddled.
The “space race” metaphor and the USTR investigation are
counterproductive in that they pit the two nations against each
other, when they should emphasize interdependence and coopera-
tion. In the end, competing with China in greentech is about as
useful as “energy independence.” It may be much more produc-
tive to convince Americans that their nation’s future depends on
investment in renewables through a specific national goal.
Endnotes: China’s Greentech Programs and the USTR Investigation
1 See generally Joel B. Eisen, China’s Renewable Energy Law: A Platform for
Green Leadership?, 35 WM. & MARY ENVTL. L. & POLY REV. 1 (2010).
2 Id.
3 United States Launches Section 301 Investigation into China’s Policies Affect-
ing Trade and Investment in Green Technologies, OFF. U.S. TRADE REPRESENTA-
TIVE (Oct. 15, 2010), http://www.ustr.gov/node/6223. A full discussion of this
investigation under prevailing trade law is beyond the scope of this article.
4 See, e.g., Thomas L. Friedman, Failure Is Not an Option, N.Y. TIMES,
Apr. 27, 2010, http://www.nytimes.com/2010/04/28/opinion/28friedman.
html?ref=thomaslfriedman (opening the column with “China is having a good
week in America. Yes it is. I’d even suggest that there is some high-fiving going
on in Beijing. I mean, wouldn’t you if you saw America’s Democratic and
Republican leaders conspiring to ensure that America cedes the next great global
industry—E.T., energy technology—to China?”).
5 Friedman has written often in his column about the need for American energy
policy to move forward expeditiously, frequently contrasting America’s lack
of progress unfavorably with China’s policies. See Christina Larson, America’s
Unfounded Fears of a Green-Tech Race with China, YALE ENVT 360 (Feb. 8,
2010), http://e360.yale.edu/content/feature.msp?id=2238 (stating that “Fried-
man has used the bully pulpit of his influential New York Times column to
warn that the United States is engaged in a global green-tech competition
with China, whose potential dominance represents a ‘new Sputnik’”). Fried-
man has written numerous columns in the first half of 2010 alone that mention
China’s energy ascendancy. See, e.g., Thomas L. Friedman, We’re Gonna
Be Sorry, N.Y. TIMES, Jul. 24, 2010, http://www.nytimes.com/2010/07/25/
opinion/25friedman.html?ref=thomaslfriedman; Thomas L. Friedman, What
7 Republicans Could Do, N.Y. TIMES, Jul. 20, 2010, http://www.nytimes.
com/2010/07/21/opinion/21friedman.html?ref=thomaslfriedman (noting that
“by 2012, China should pretty much own the clean-tech industry”); Thomas L.
Friedman, No Fooling Mother Nature, N.Y. TIMES, May 4, 2010, http://www.
nytimes.com/2010/05/05/opinion/05friedman.html?ref=thomaslfriedman;
Friedman, supra note 4; Thomas L. Friedman, Global Weirding Is Here, N.Y.
TIMES, Feb. 17, 2010, http://www.nytimes.com/2010/02/17/opinion/17friedman.
html?ref=thomaslfriedman (“China . . . is investing heavily in clean-tech,
efficiency and high-speed rail. It sees the future trends and is betting on them.
Indeed, I suspect China is quietly laughing at us right now.”).
6 See infra notes 10-24 and accompanying text.
7 Sewell Chan & Keith Bradsher, U.S. to Investigate China’s Clean Energy
Aid, N.Y. TIMES, Oct. 15, 2010, http://www.nytimes.com/2010/10/16/
business/16wind.html. Note this comment from Rep. Charles Schumer, however:
“An investigation into China’s illegal subsidies for its clean energy industry is
overdue, but it’s no substitute for dealing with China’s currency manipulation.”
Id.
8 See CAGWmedia, Chinese Professor, YOUTUBE (Oct. 20, 2010), http://www.
youtube.com/watch?v=OTSQozWP-rM.
9 Joel B. Eisen, Can Urban Solar Become a “Disruptive” Technology?: The
Case for Solar Utilities, 24 NOTRE DAME J.L., ETHICS & PUB. POLY 53 (2010).
10 THE PEW CHARITABLE TRUSTS, WHOS WINNING THE CLEAN ENERGY RACE?:
GROWTH, COMPETITION AND OPPORTUNITY IN THE WORLDS LARGEST ECONOMIES 7
(2010), http://www.pewtrusts.org/uploadedFiles/wwwpewtrustsorg/Reports/
Global_warming/G-20%20Report.pdf (containing a section titled “China Takes
the Lead, While the U.S. Slips”).
11 Is China Beating the U.S. in Green Technology Development?, BUILDAROO.
COM (Mar. 7, 2010), http://buildaroo.com/news/article/china-green-technology-
development.
12 See e.g., Keith Bradsher, On Clean Energy, China Skirts Rules, N.Y. TIMES,
Sept. 8, 2010, http://www.nytimes.com/2010/09/09/business/global/09trade.
html?pagewanted=1&_r=1&ref=keith_bradsher; Keith Bradsher, China Lead-
ing Global Race to Make Clean Energy, N.Y. TIMES, Jan. 30, 2010, http://www.
nytimes.com/2010/01/31/business/energy-environment/31renew.html; Kent Gar-
ber, U.S. Lacks a Coherent Clean Energy Strategy: China Is the Main Competi-
tor in the Global Energy Race, U.S. NEWS & WORLD REP., May 7, 2010, http://
politics.usnews.com/news/energy/articles/2010/05/07/us-lacks-a-coherent-clean-
energy-strategy.html; Evan Osnos, Letter from China: Green-Tech Space Race,
NEW YORKER, Apr. 21, 2009, http://www.newyorker.com/online/blogs/evanos-
nos/2009/04/greentech-space-race.html; Bruce Usher, Red China, Green China,
N.Y. TIMES, May 6, 2010, http://www.nytimes.com/2010/05/07/opinion/07Usher.
html (observing that “[b]y giving China more time to develop its capacity while
neglecting our own, America is not just losing the clean-tech race, it’s forfeiting
it”); Gerard Wynn, Is Clean Tech China’s Moon Shot?, REUTERS, Jan. 28, 2010,
http://www.reuters.com/article/idUSTRE60R02520100128; supra note 5 and
accompanying text (including Thomas Friedman’s New York Times columns).
13 Richard Brubaker, Will China Surpass the US as a Superpower?, ALL
ROADS LEAD TO CHINA (Jul. 16, 2010, 6:22), http://www.allroadsleadtochina.
com/2010/07/16/will-china-surpass-the-us-as-a-superpower; Derek Thompson, Is
China Winning the Energy Race?, THE ATLANTIC (Jun. 17, 2010, 2:25 PM), http://
www.theatlantic.com/business/archive/2010/06/is-china-winning-the-energy-
race/58321, republished by Julian L. Wong, Interview with The Atlantic on China
and the Clean Energy Race, GREEN LEAP FORWARD (Jul. 8, 2010), http://green-
leapforward.com/2010/07/08/interview-with-the-atlantic-on-china-and-the-clean-
energy-race.
14 Rep. Ed Markey, Landing a Clean Energy Victory, HUFFINGTON POST (Jul. 20,
2009, 9:57 AM), http://www.huffingtonpost.com/rep-ed-markey/landing-a-clean-
energy-vi_b_240938.html.
15 Frances Beinecke, In the Clean Energy Race, Jobs Can Stay in America,
SWITCHBOARD: NAT. RESOURCES DEF. COUNCIL STAFF BLOG (Feb. 23, 2010), http://
switchboard.nrdc.org/blogs/fbeinecke/in_the_clean_energy_race_with.html
(providing commentary by Frances Beinecke, President of the Natural Resources
Defense Council); Robert F. Kennedy, Jr., The New Arms Race, HUFFINGTON POST
(Nov. 19, 2009, 3:11 PM), http://www.huffingtonpost.com/robert-f-kennedy-jr/
the-new-arms-race_b_364211.html.
16 Daniel J. Weiss & Susan Lyon, Running for First in the Clean-Energy Race,
CTR. FOR AM. PROGRESS (Jan. 28, 2010), http://www.americanprogress.org/
issues/2010/01/sotu_energy.html. The Center’s “Out of the Running” report, as
discussed below, analyzes the race in detail. ROB ATKINSON ET AL.. BREAKTHROUGH
INST. & THE INFO. TECH. & INNOVATION FOUND., RISING TIGERS SLEEPING GIANT:
ASIAN NATIONS SET TO DOMINATE THE CLEAN ENERGY RACE BY OUT-INVESTING THE
UNITED STATES (2009), http://thebreakthrough.org/blog/Rising_Tigers.pdf; Van
Jones & Pan Jiahua, Inst. for Pub. Policy Research, Climate Change, Innovation
and the Clean Energy Race, GOV MONITOR (May 23, 2010), http://www.the-
govmonitor.com/world_news/britain/climate-change-innovation-and-the-clean-
energy-race-31528.html.
17 John Doerr & Jeff Immelt, Falling Behind On Green Tech, WASH. POST, Aug.
3, 2009, http://www.washingtonpost.com/wp-dyn/content/article/2009/08/02/
AR2009080201563.html (providing commentary by John Doerr, partner in the
venture capital firm Kleiner Perkins Caufield & Byers, and by Jeff Immelt, chair-
man and chief executive of General Electric, a major manufacturer of wind tur-
bine equipment).
18 Eric Pooley, Senate Inaction Cedes U.S. Energy Race to China, BLOOMBERG,
Jul. 29, 2010, http://www.bloomberg.com/news/2010-07-30/senate-inaction-
cedes-u-s-energy-race-to-china-commentary-by-eric-pooley.html; Kerri Shannon,
Endnotes: China’s Greentech Programs and the USTR Investigation
continued on page 70