Clean Tech: Wishing We Were China for a Day

In his book “Hot, Flat, and Crowded,” Tom Friedman wishes that America could be “China for a day…but only one day.”

Friedman writes:

If only…If only America could be China for a day — just one day.

As far as I’m concerned, China’s system of government is inferior to ours in every respect — except one. That is the ability of China’s current generation of leaders — if they want — to cut through all their legacy industries, all the pleading special interests, all the bureaucratic obstacles, all the worries of a voter backlash, and simply order top-down the sweeping changes in prices, regulations, standards, education, and infrastructure that China’s long-term strategic national interests — changes that would normally take Western democracies years or decades to debate and implement. That is such an asset when it comes to trying to engineer a sweeping change, like the green revolution, where you are competing against deeply embedded, well-funded, entrenched interests, and where you have to motivate the public to accept certain short-term sacrifices, including higher energy prices, for long-term gains. For Washington to be able to order all the right changes and set up the ideal market conditions for innovation, and then get out of the way and let the natural energy of the American capitalist system work — that would be a dream.
– Tom Friedman, “Hot, Flat, and Crowded

Friedman goes on to cite examples of mandating unleaded gasoline: America started the process in 1973 and didn’t finish until 1994. China accomplished the same between 1998 to 2000. America stalled 32 years before implementing new vehicle efficiency standards, but China took only two years.

Friedman’s “China for a day” thought was sparked by an interview with GE’s CEO, Jeff Immelt, who commented,

“What doesn’t exist today in the energy business is the hand of God. I think if you asked the utilities and big manufacturers in this business what they would most like, it would be for the president to stand up and say: ‘By 2025 we are going to produce this much coal, this much natural gas, this much wind, this much solar, this much nuclear, and nothing is going to stand in the way.’ You’d have about thirty days of complaining, and then people…would just stand up and say, ‘Thank you, Mr. President, now let’s go do it.'”

…and we would. I’d be one of them.

America’s CleanTech Vision, Adapted for the Stage

Image credit: unknown

In America, we instead have the political theater that unfolded this past week in Congress (for example).  I heard Peter Sagal describe it best during this past weekend’s broadcast of the “Wait, Wait, Don’t Tell Me” news quiz on NPR.

PETER SAGAL: The House this week tried, but failed, to keep the government from taking away America’s what?
(Soundbite of bell)

SAGAL: Incandescent light bulbs! This is what happened; I will explain. Back in 2007, a bipartisan majority in Congress, and President Bush, passed a law [the Energy Independence and Security Act of 2007, which was voted in at 314-100 that year,] calling for a major increase in light bulb efficiency. It’s only now that Republicans, including the guy who actually sponsored that bill [Rep. Mary Bono Mack], realized that the whole thing was a plot by President Obama to rob us of our freedom, using his Kenyan socialist time-traveling technology.

SAGAL: So they tried this week to repeal the law calling for light bulb standards. Presidential candidate Michele Bachmann weighed in. She said, quote, “The American people want less government intrusion into their lives, and that includes staying out of their personal light bulb choices,” unquote.

SAGAL: Ms. Bachmann believes Americans should have perfect freedom to screw whatever they want, but only if we’re talking about light bulbs.

The sad thing is that after the Republican’s repeal failed, they voted successfully to strip the Department of Energy of the funding necessary to enforce the lightbulb switch. Read more here.

Stimulus Funding — Thanks, but No Thanks

Take a look at this graph of the DOE’s solar energy technology research funding profile. Do you think this is the right way to fund an organization…let alone a nation-wide research effort?

Image credit: Department of Energy

It would have made infinitely more sense to spread that huge spike from the stimulus evenly over 4-5 years. Last year I saw the DOE struggle mightily to manage twice the amount of funding (and triple the money from 2006). Spreading out the funding was, of course, not politically feasible for Obama. He had to pass the stimulus and then move on to the next fight. Obama had to beat the clock before the Republicans took the House in 2010.

I recently spoke with a friend who works for a senior DOE official; he said that under the current political climate, staffers are expecting a 30% budget cut in the DOE’s EERE (Energy Efficiency and Renewable Energy) office funding. He also said he wouldn’t be surprised if the Republicans killed ARPA-E — a new Obama initiative to pursue high-risk/high-reward energy technologies — within a year or so.

This on-again, off-again nature of clean tech research funding in the U.S. prevents innovators and engineers from gaining momentum through sustained funding, and it makes investors skittish about the unpredictability of government support.

The CEO of one clean tech company that I’m involved with — a company that was one of the largest recipients of DOE research stimulus funding, landing nearly $10MM in contracts — quipped “The DOE is driving this company out of business!”

No, he was not just being an ungrateful S.O.B. The company had received notices from the DOE that they were selected for awards. The CEO took the risk…assuming the money would come in on the usual timeframe…to start hiring the additional engineers necessary to execute the projects. This is exactly what the stimulus was intended for! Instead, the DOE, which was overwhelmed with administering double the number of projects, took nearly six months to get the funding in place. In the meantime, the company couldn’t bill for its work and bled cash in paying all the additional heads.

Just Leave it to the Free Market!

In Europe, the grass roots support of clean tech is strong, so governments are much more likely to mandate utility renewable portfolio standards and higher vehicle efficiency standards. On the other hand, Europe has triple the electricity and gasoline costs than in the U.S.

On the other side of the world, in China, the government issues 5-year plans and can mandate sweeping reforms in a matter of months. On the other hand, China suffers from lack of enforcement and grass roots initiative.

In the U.S., free-market conservatives say that anything the government can do, the market will do better. Want to bet? I’d wager they’ve never sat on a standards development committee, which is one way the free market decides on technologies, performance, and safety standards…these committees move painfully slow!

Can you imagine building our national highway system based on free market incentives? A commercial company trying to do that would go bankrupt just from fighting all the lawsuits from affected neighborhoods.

Can you imagine building the space shuttle and space station programs using the free market? Several companies are currently trying to build tourist spacecraft (30 years after the first space shuttle was built), and they’ll only have a fraction of the altitude and payload of the shuttle.

We Can be China for a Day…and Better than China Thereafter

There definitely is a role for government in providing leadership for big, important projects. The space program, the national highway system, the military, safety enforcement for drugs and food are among them…and so is clean tech. The government doesn’t necessarily need to bankroll clean tech the way that it paid for the entire highway system, because financing that’s the role of the free market.

What the government does need to do is:

  1. Provide bold, clear targets to give the industry’s technologists direction, and
  2. Its support needs to be unwavering, to give investors the peace of mind that the rules won’t dramatically change after the next election cycle. 

Voters need to demand that of their representatives at the polls and through advocacy, because if the government provides the marching orders, my colleagues and I in the clean tech industry will do the rest!

— August 20, 2011 UPDATE —

RenewableBizDaily recently posted this interesting, short article describing how China is out-pacing the United States in most aspects of renewable energy development. Much of this is simply due to the country’s explosive economic growth, which driven by the move of millions of people into cities and at a higher standard of living. However, the country’s support of clean technologies — as opposed to more traditional coal, oil, and gas energy sources — is driven by the Chinese government’s ability to make decisions more quickly, decisively, and definitively than those in the West. It’s a short article, so take a look, here.