The Green Leap Forward 绿跃进

Newsy tidbits on green developments in China, sans analysis.

HK Introduces Green Tax Cuts. Hong Kong to provide attractive tax deductions (20% for construction and 100% for new purchases) for installations of environmental technologies. Closer to the mainland, China Environmental Law Blog ponders what the more macro tax reform proposals by the central government mean for environmental governance.

China’s Telecoms Industry Greens. “China Mobile has created a “Green Action Plan” focusing on energy conservation and reducing emissions…Nokia Siemens Networks, one of China Mobile’s four major suppliers, says its recent Flexi GSM base stations are the smallest and most energy-efficient GSM base stations in the market…Other suppliers including Ericsson, Huawei and Alcatel-Lucent have also introduced various leading cards for energy-efficient solutions.”

Huaneng to Boost Renewables… China Huaneng Group, the country’s largest power producer, said it will boost the development of renewable energy sources such as wind, solar and biomass across China. Late last year, it was reported that Huaneng would embark on a GreenGen project to build the world’s first near zero-emissions coal power plant (with carbon capture and storage) in Tianjin in collaboration with Peabody Energy of the U.S.

…So Will JIC Tech. Not to be outdone, Hong Kong’s J.I.C. Technology, a manufacturer of LCDs but recently acquired in March by HKC, a Hong Kong-based property developer and alternative energy company, will invest $207 million in three renewable energy projects across China, including two wind farms and a pilot cellulosic ethanol plant.

Methane Plants: China’s Clean Energy Alternative. NPR runs this powerful story on the potential of the harnessing of methane as a by-product of coal mining to decrease the demand for coal.

A Legal Leap Forward. And it is green, and evolving. This China Daily story charts the evolution of Chinese environmental law

Tags: clean coal, governance, green hops, green taxation, methane, Rule of Law

The Green Leap Forward is just over six months old.  First formerly introduced to the China blogosphere by ResponsibleChina, GLF was also recently featured as an editor’s pick by the China Economic Review. In addition, GLF has today made it to both the China and Green lists under Alltop, the brainchild of Guy Kawasaki.

I am also please to announce that GLF and has tied up with AsiaIsGreen to syndicate some China content to a broader audience.  The first piece that GLF has syndicated to AsiaIsGreen is last month’s story on biodiesel.

In the coming weeks, look forward to more stories on wind, the city of Xiamen, and next week’s Renewable Energy Finance Forum in Beijing.

Thanks to all for your continued readership and support!

Tags: Alltop, AsiaIsGreen, China Economic Review, ResponsibleChina

Gridlock in Chongqing: Is this what they call progress?

While one can take heart that what seem liked unabated proliferation of SUVs just a few years ago is giving way to a range of smaller, more fuel efficient passenger vehicles (see last post on my review of the Beijing auto show), the fact remains that China is adding some 20% or more vehicles to its roads per year. In fact, Jack Perkowski of Asimco Technologies points out that the growth rate of vehicle manufacture in China since 2001 has been somewhere between 20 to 50% per year. I had the chance to listen to Jack speak to a group of Tsinghua MBA students last Friday. Jack and his business exploits in China with his founding of Asimco in the early 1990s is featured in Tim Clissold’s bestselling book Mr. China. Jack himself is currently on a speaking tour to promote his book, Managing the Dragon (sharing same name as his blog), which talks about all the lessons he’s learnt in building a successful business in China and has already received glowing reviews.

Although Jack is very cognizant of China’s ecological challenges, he and I do not see eye-to-eye on the ecological challenges that the auto industry poses to China. During to the Q&A session, I expressed the profound pessimism that I felt as I walked away from the Beijing auto show just a few hours earlier. Even though there were small cars and hybrid cars and electric cars, etc., its clear that at the end of the day, all of this is GREENWASHING. The same companies that tout their hybrid or electric cars also sell gas-guzzling SUVs, which have higher profit margins. Even if every single vehicle sold from tomorrow onwards was a hybrid/electric car, the fact would remain that China would be putting at least another 20% new vehicles on the road each year, and not to mention the continued build out of highways all across the country. Oil consumption would not cease its upward trend, and neither would oil imports, creating a threat to both the environment and energy security. I then asked Jack what he thought of the apparent contradiction between China’s promotion of the auto industry and the the imperative to tackle its environmental and climate problems.

While Jack agreed that solving its environmental crisis was a matter of survival for China, he is convinced that China had no alternative but to continue to develop its auto industry and transportation links in order to grow its economy. “The Chinese want the freedom of owning their cars, just like Americans” he would say. Taking as a given that nothing was going to stop the development of the transportation industry in China, he acknowledged that the key question was whether China would do things differently, and started to rattle a few technological solutions such as clean diesel and some others that I frankly tune out. He ended by saying:

Both India and China will have to face the same problem; that’s 1 billion pus 1.3 billion people, a total of 2.3 billion people working on this problem, someone will figure it out. I’m a little more optimistic.

I just don’t see any solution in Jack’s response. First, let’s be clear that the promotion of China’s auto industry in the way that the US has works at direct cross purposes with any climate policies that China adopts. Not only do cars gobble up oil, but the manufacture of cars is a highly inefficient and energy intensive process that consumes loads of increasingly expensive mined metal commodities. Couple that with the mega-tons of asphalt and concrete needed to build and maintain city roads and intercity highways (and please remember that the cement industry is one of the most carbon intensive there is), you start to appreciate the enormity of the auto industry’s multiplier carbon effects.

I recently read Chapter 19 (”Sustainable Urban Transport”) of the landmark book, The Natural Advantage of Nations, which delved into statistics available on the Millennium Cities Database for Sustainable Transport. The database is not the most current (dated 2001), but it did provide some interesting insights into the relationship between wealth and car use. At this point, I will just lay out a few selected quotes that struck me:

Less prosperous Asian cities already have a rate of car ownership relative to wealth that is virtually equal to cities in Australia/New Zealand. Chinese cities, despite an average GDP of only US$2400, have almost the same rate of car ownership per dollar of GDP as Western European cities (11 compared to 13) which have an average GDP per capita of US$32,000.

[A]mongst high-income cities there are considerable differences in car use that are not explained by differences in wealth. For example, US, WEU [Western Europe] and HIA [High-income Asia] countries have average GDPs per capita that are almost identical, yet their car use varies by around a factor of six.

When lower- and higher-income cities are included together in cross-city comparisons,a moderate positive association between urban transport energy use, greenhouse gas emissions and GDP is observed. Amongst higher-income cities, however, there is no statistically significant relationship between energy use, greenhouse gases and wealth despite a wide range of GDP per capita…Explanations for such differences in transport energy use (and by implication CO2 emissions) are strongly linked to the modal share between private [i.e. privately owned passenger cars], public [subways, bus systems] and non-motorized modes [bicycling, walking].

While these observations are not a slam dunk, it does suggest a strong possibility of decoupling car ownership or use from per capital GDP. We should challenge the dogmatic assumption that cars = wealth. To be fair, this was not Jack’s assertion. He was making a more basic point that the development of China’s economy is dependent on the development of transportation infrastructure in general. This is hard to argue against, but what it easy to debunk is the notion that car ownership is a necessary indicator of national/municipal wealth and that technological solutions, by themselves, will help make transportation systems more sustainable.

Disruptive Systems over Disruptive Technologies

Bus-Rapid-Transit system in Beijing

The fact is that “disruptive technologies” such as plug-in electric vehicles or utlra-clean biodiesel engines are not going to make a difference. Time and time again, I have heard the rhetoric technologists and their unfettered faith that technology will save the day. Such an approach misses the forest for the trees. As my good friend Ivan Urlaub, Executive Director of the North Carolina Sustainable Energy Association likes to say, we need to employ whole systems thinking and create “disruptive systems” to really get at the heart of our climate challenges. Aside from improving vehicular design through battery, engine and emissions improvements, a more macro view on urban form must be taken. Rather than lay out a comprehensive prescription, I present my thoughts in a series of questions:

• How thoughtfully are road networks laid out?
  
• How compact and dense are buildings and people situated, so as to reduce the need and/or distance (and influence the form, i.e. from driving to cycling or walking) required for traveling and mitigate the propensity for urban sprawl?
• What is the best way of encouraging a shift of private to public and/or non-motorized modes of transportation?
  
• Can Chinese cities increase public and non-motorized options while discouraging car ownership and use through a Singapore-style real-time electronic road pricing and car quota systems (through the auctioning of certificates of entitlements ).
  
• How can mass rapid transit systems (i.e. subways and light rails) be effectively financed and implemented, as we’ve seen in Hong Kong, Singapore, Shanghai and now Beijing?
• What about bus-rapid-transit systems, which offer dedicated road lanes to public buses, that the cities all across China are considering?
  
• How can pedestrianization be encouraged, as has been done in the prominent retail districts of WangFuJin in Beijing, Beijing Road in Guangzhou, and Mong Kok in Kowloon, Hong Kong?
  
• Looking beyond single-cities, how can different cities and counties work together to create integrated and seamless inter-municipality/province public transit systems?

I am clearly just scrapping the surface here in terms of what forms disruptive systems would take in terms of sustainable transportation. But my point is, all the hybrid and electric vehicle technologies in the world will hardly make a dent if car ownership and use continue to increase, if oil (or coal, in the case of electric cars) continues to be burnt, and if roads and highways continue to be built out with reckless abandon. We need disruptive sustainable transportation systems implemented in China and the rest of the developing world if we are to avoid the mistakes made by my country, the US.

Tags: automotive, Beijing Auto Show, bus rapid transit, disruptive systems, disruptive technologies, electric vehicles, hybrids, Jack Perkowski, mass rapid transit, transportation

After writing my post on China car culture, I just had to check out the Beijing Auto Show show for myself. Green was the theme, and nearly every car maker had a “green car” to boast about, whether it was a hybrid car, plug-in electric, or simple more fuel efficient variety. In most cases however, these “green cars” were nothing more than concept cars, and I wonder what proportion of these will every hit the market. I was irked that none of the informational plaques accompanying each car disclosed information on fuel efficiency. I was greatly impressed by the number of Chinese auto makers, and I’ve been told that the floorspace of this year’s exhibition has doubled to 120,000 square meters over last year’s floorspace (unverified). Symptomatic of the explosion of the Chinese auto industry since China joined the WTO in 2001. This blog piece by Jack Perskowski, CEO of auto-components manufacturer Asimco Technologies, tracks all the recent numbers in the Chinese auto industry.

I would like to talk about some of the green car technologies that I had the pleasure of seeing, and then in my next post, I want to crush all your hopes by telling you that none of this really matters by sharing and critiquing a brief exchange I had with Jack Perkowski himself at a talk I attended that same evening I attended the auto show.

Rising oil and commodity prices are driving the shift towards smaller, more fuel efficient and economical cars, as this piece identifies. My observations at the auto show backed this up. Every Chinese automaker had at least a few makes of mini cars.

Great Wall Goes Mini

In my ignorance of the Chinese auto industry, I had not previously heard of Great Wall Motor Company before, but apparently, they are among the top 3 independent (i.e. no JVs with foreign makers) automakers in China together with Chery and Geely. According to Wikipedia (of course!), Great Wall is “the first privately owned auto company of China listed on the Hong Kong stock market and has obtained HK$1.7 billion of financial investment.” Great Wall has an annual production of 400,00 vehicles, primarily through large-sized sports utility vehicles (SUVs) and crossover SUVs (CUVs). In order to grow market share, however, the company is undertaking a strategy of making more smaller cars in order to conform to changing consumer tastes. I had the chance to see some of these smaller cars.

The Great Wall Mini SUV (right) is the smallest SUV in China, featuring a 1.3 litre engine, supposedly with all the four wheel drive and other features of an SUV. I was honestly surprised it was an SUV, thinking it to be a rugged-looking version of the GWKULLA. This Mini SUV meets Euro IV emission standards. To put this in perspective, China is only adopting Euro III standards this coming July.

Finally, the GWPERI EV (below), a four-sear all-electric car that uses a permanenet magnet brushless DC motoro and adanced lithium ion batteries was on exhibit. It has a top speed of 130 kmh and can travel up to 180 km on a fully charged battery.

Of course, I have no idea what the exact fuel efficiency of the GWKULLA and Mini SUV are as this information was not disclosed. Nor do I have any idea it any of the above three cars will eventually make it to market.

Build Your Dreams

I hadn’t heard of BYD Auto either. In this case, however, I would probably be forgiven, for BYD Auto did not exist 5 years ago. BYD also stands for “Build Your Dreams”, the company’s mantra. The BYD Company started in 1995 to become one of the world’s leading makers of lithium ion batteries that are commonly found in mobile phones, and went public on the Hong Kong exchange in 2002. It did not get into the auto game until it acquired Shaanxi Qinchuan Auto Company Limited in 2003. It has since sought to capitalize on its competencies in the battery market to focus on building cars with battery-based engine systems, i.e. hybrids and electric vehicles.

At the Beijing auto show, I caught a glimpse of the darling of the F6DM, that made waves at the Detroit auto show earlier this year, as well as the e6, that was making its debut. The superiority of BYD’s cars come from its lithium iron phosphate batteries (or simply known as Fe batteries), which are to be distinguished from the lithium ion batteries that are found in most other electric/hybrid vehicles. The Fe batteries allow for a must quicker recharge, and lasts longer (see this piece that suggests it can last for 2,000 charge cycles) and can be easily recycled.

DM stands for dual mode. The F6DM (above) is an plug-in electric vehicle that incorporates a pure electric driving system and a hybrid electric driving system. Its Fe battery allows for a 50% quick charge in a mere 10 minutes, and can reach a maximum speed of more than 150 kmh. The F6DM will begin production this year, targettng the China market. It may hit the U.S. market in 3 to 5 years according to BYD Chairman Wang Chuanfu.

Debuting at the Beijing auto show was the new pure electric e6 (above). It can reach maximum speeds of 160 kmh and its lithium iron phosphate battery can be quick charged to 80% in a mere 15 minutes. BYD claims that the e6 will have a range of 300km, making it the longest range among all pure electric vehicles in the world. According to a Wall Street Journal article:

BYD Auto’s e6 electric vehicle, in part because of its relatively high price and the need to be plugged in relatively frequently to charge the car’s sizable on-board batteries, will initially be more ideal for use as taxis and other feet vehicles. The “feasibility” of the e6 is “very high as a taxi,” Mr. Wang [Chuanfu, chairman of BYD] said.

The e6 will hit the Chinese market in 2009 or 2010, and will be priced at about RMB 200,000 (about US$28,500) while the F6DM at about RMB 150,000 (about US$21,500). Not bad considering the prices of foreign-made hybrids being sold in China, as discussed in my earlier post.

Exciting stuff, but I’m not sold. I’ll tell you why in my next post.

Tags: Autos, Beijing Auto Show, BYD Auto, China, electric cars, Great Wall Motors, hybrids, transportation

Ecopowered Solutions (EPS), a Beijing and Colorado based startup, aims to bring pocket-sized solar cell batteries, especially to the remote areas of the developing world. EPS’ product, dubbed the SunCell, is a portable solar chargeable battery device that can recharge a whole host of consumer electronics including mobile phones, mp3 players, digital cameras and bluetooth devices (but not laptops as laptops charge at a much higher voltage than SunCell’s maximum voltage setting of 9 volts).

Measuring 5.1 by 3.4 by 0.9 inches and weigh just half a pound (225 kg), SunCell consists of 1.5 watts of monocrystalline photovoltaic panels coupled with an internal lithium ion battery. The SunCell requires 8 to 12 hours of direct sunlight to be fully recharged and when fully charged can typically recharge mobile phone batteries of average capacities three complete times before the SunCell itself requires a recharge.

One of the drivers of growing electricity demand worldwide is the proliferation of portable consumer electronics. A report by In-Sat forecasts the market of portable consumer electronic devices to grow from 2.7 billion units in 2007 to 3.1 billion in 2011. Harnessing solar power to power these portable devices addresses two major issues–first, it relieves electricity demand from an already overstrained electricity grid. Second, it allows users in remote areas without access to grid-based electricity (read, people in much of the developing world) to recharge their mobile phones.

Indeed, besides being a clean tech company, EPS has a social mission to bring clean solar power to the developing world. Kip Stringfellow, the founder and CEO of EPS sat down with The Green Leap Forward to talk about his business, his product and his vision.

GLF: How did the idea for creating a portable solar powered battery charger come about?

KS: Basically, when I first started I felt that there is a lot of potential out there for products that can be really useful and also utilize renewable energy. People are starting to care more and more about renewable energy and everyone always seems to be running out of power for their various electronic devices like cell phones, cameras, and mp3 players. I though a solar powered battery charger would really be a unique product to fill this demand and solar products also allow me to focus on another area I’m really passionate about, international development. There are billions of people in the world without access to electricity and by providing a power source, a whole new range of opportunities become available. Lighting systems, cell phone use in off grid locations, and many other applications open up once you have a reusable power source. I’m trying to find as many ways as possible to get my products into the hands of people that could really use them to change their lives by donation programs I am setting up and also through partnerships I am trying to form to distribute the SunCell in developing countries.

GLF: There are other competing products now in the market. How does the SunCell distinguish itself from other solar powered batter chargers?

KS: There are two main differences between the SunCell and other solar chargers. The SunCell features an internal lithium-ion battery that has over twice the battery capacity of many of the other solar chargers on the market. This means that you don’t have to recharge it as frequently and you can have more power available for when you need it the most. Also, the SunCell has a built-in LED flashlight that comes in handy at night. It can run nonstop for about 6 days so you always have backup light source if you need one.

GLF: What is the biggest market for SunCell currently, and where else are you seeking to expand?

KS: Right now our largest market is in the US but we are actively trying to expand into Europe and other locations around the world. We have received a lot of interest so we are working hard to set up partnerships in different countries in order to distribute and sell as many SunCells as possible. It’s a win-win situation because by expanding sales we do better as a company but we also provide more and more people with a portable power source charged from renewable solar energy.

We are also really trying to expand our donation program by working with international education and health organizations that focus on communities with no access to an electricity grid. So far, donated SunCells have been sent to Haiti, Malawi, Rwanda, Lesotho, and Panama.

GLF: And what about China?

KS: China is an enormous market and like many countries in the world, it is obviously a place where renewable energy is definitely needed. We are working on trying to get a sales program going in China even though this currently presents more challenges than operating a business in the US.

GLF: How is the SunCell priced? How does this compare to competing products in the market?

KS: The SunCell currently retails for about $120 in the US. I believe the SunCell is well priced because of its advantages over other solar chargers. Some other solar chargers in the market are cheaper and others are more expensive. From all the competition I have seen though, I believe the SunCell is definitely the best value and it has better capabilities than some other products that are more expensive.

We also have special pricing for countries where we feel the full $120 retail value will prohibit people from being able to buy the SunCell. I am really focused on trying to get as many SunCells out there as possible so in developing countries, a lower retail price may be the only way for the SunCell to make a real impact. We also have special prices for NGOs and other international organizations that want to purchase the SunCell to distribute them in developing countries.

GLF: Tell us a little more of the donation program.

KS: EPS’ mission is to promote the use of alternative energy technologies and also to provide a vehicle for donating SunCells to people and organizations that can utilize the device to dramatically improve the quality of life in the communities where they are used. There is a link on our website that accepts donations that we pool together, and then we use the donated money to send SunCells and other products to programs in developing countries at cost. Currently, we are donating all SunCells to Partners in Health, one of the largest and most effective international health organizations. SunCells are currently being used by Partners in Health in many of the countries it has operations in such as Haiti and Malawi. They are used by the communities they work in to power cell phones in remote areas and they can be used as lighting systems for people that have no access to electricity.

GLF: It would seem that the needs of the customer in say a mature developed market like the US full of affluent eletronic gadget collectors would differ from that of low-income villagers in Kenya. The practical use of SunCells in developing countries with no grid electricity is pretty obvious. But how do you sell these to urbanites in well developed cities?

KS: You are right, we are really trying to address very different markets in very different countries. The SunCell clearly has a more vital use in places with no grid system but its versatility makes it a great product for those urbanites you mentioned in developed countries. The SunCell, at its core, is a portable battery that has the additional functionality of being able to recharge itself from the Sun. Its internal battery can be recharged with a power adapter that is included with the SunCell so it can be used as just a portable battery. So for urbanites it may be easier to recharge the SunCell from the wall, but with its solar panels the SunCell still provides a lot of value as an emergency power source and can also be extremely useful if those urbanites head out for a camping trip or spend some time off grid.

GLF: And I suppose there is also a symbolic value…

KS: Absolutely! EcoPowered Solutions is trying to combine two areas of focus into one. We are trying to promote clean, renewable solar energy and also improve the quality of life for people with no access to electricity. Solar power is currently one of the best and most effective ways for people in developing countries to have access to electricity and it’s just as easy for people to use in developed countries. All you have to do is put the SunCell in sunlight and everything else takes care of itself! We are really trying to provide simple, cost effective power solutions that anyone on the planet can use and enjoy. The idea is about everyone being able to have access to electricity no matter where they are or where they live.

Tags: Ecopowered Solutions, international development, solar, SunCell

Today is Earth Day. Happy Earth Day.

Today is also the opening ceremony of the Beijing International Automotive Exhibition 2008, which runs all week.

This ironic confluence of Earth Day and the Beijing Auto Show is perhaps iconic of the economy versus ecology juggling act that China has had to deal with. China is experiencing an explosion in private automobile ownership. The combination of a growing middle class, widening reach of consumer credit financing and liberalization of the auto sector stemming from China’s entry into the WTO earlier this decade is driving this trend. Foreign luxury car makers anticipate a boom market for years to come, and are investing heavily in China. While all this investment and production is boosting GDP, it is also exerting collateral damage by putting a strain on the country’s petroleum resources as well as air quality. Resulting traffic congestion also cuts into productivity; I’ve experienced this first hand living here in Beijing for a mere four weeks. Rush hour on the road is not a pleasant experience and not a short one either.

This 2006 Wall Street Journal piece provides an excellent and concise overview of the history of the automobile in China, and the evolution of the juggling act. From this piece, it is clear to see that once the government appreciated the massive contributions to GDP that the auto industry presented, it would be to lift the foot off this accelerating economic growth engine. The multiplier effects of the auto industry become quite apparent when one just thinks about the various parts that make up a car—the shell, rubber tires, hundreds of different auto parts including the battery, glass, lubricants, plastic, PVC. Each requires specialized skills, and hence a large work force, and lots of heavy duty machinery for the assembly line and manufacturing plant. And I haven’t even mentioned other indirect multiplier effects. The auto industry effectively serves as a subsidy for the oil industry and highway infrastructure build out.

My Way or the Highway

Well, China has chosen the highway. It’s a scary thought. China is repeating the US’ mistakes by building a transnational highway network of that is projected to reach a whopping 2.1-2.3 million km by 2010, up from “minuscule” 41,000 km at the end of 2005. What really takes the cake is the recent opening of the Kunming-to-Singapore transnational highway. But this is just the beginning; they intend to extend this highway to Beijing. To put this in context, it takes about 7 hours to fly from Beijing to Singapore. That’s a lot of friggin’ asphalt. INSANE.

The consequences of a (over) developed highway network are both positive and negative. Sure it increases connectivity between cities, reducing transportation costs and boosting economic productivity in the conventional sense. But it breeds urban sprawl and a sick, sick car culture that is already prevalent in the U.S.

The Long and Winding Road to Sustainability

Sustainable auto policy is tricky business in China. The government has had to backpedal on promoting biofuels that use due to the strain on food supply and prices exerted by grain-based biofuels. The government has been enacting fuel efficiency standards that surpass those of the US and follow just behind those of the EU in terms of stringency. Another encouraging move is the auto parts recycling scheme that I have previously highlighted (more details here).

But I want to talk more about the introduction of hybrid cars, as a number of new models were unveiled at the Beijing Auto Show.

The Price is Right—the Challenge of Pricing Hybrids

The introduction of hybrid cars (and other green car technologies in the future for that matter) into China face a unique cost hurdle. Gasoline prices at the pump is heavily subsidized in China; the Chinese government has had to compensate its state oil refiners for their losses resulting from the excess of their costs of purchasing crude oil over the state-mandated low prices of gasoline at the pump. The artificially low pump prices reduces the incentive to purchasing more fuel efficient makes of cars. Non hybrid cars are also very cheap. Says a WSJ article yesterday on the issue:

Wu Zhixin, director of research and development at the China Automotive Technology and Research Center, a think tank in Shanghai, says his survey research shows that the majority of Chinese drivers would be willing to buy a hybrid — if the price tag were no more than 20% higher than that of a conventional car. That is a tough challenge since compact and smaller cars, which made up 67% of all car sales in China last year, are selling for as little as $4,500.

And how much do hybrids cost?

The [Toyota] Prius, with a starting price of [US]$21,000, is popular in the U.S., where fuel prices are high. But in China, the same car costs nearly [US]$40,000 because of government duties on imported parts, higher production costs and, analysts say, no competition to drive down prices. For that money, many wealthy Chinese consumers are choosing high-end sport-utility vehicles and luxury cars.

GM recently announced that it will be introducing its hybrid cars in China in July. Price tag? US$43,000. However, when the Chinese auto companies start rolling out their own hybrids for the domestic market, we can expect prices to drop significantly. Not only will increased competition drive prices down, but as is characteristic of protectionist industrial and trade policies of China, domestic producers can expect to receive favorable tax treatment that can hopefully be passed down to consumers. Chinese companies SAIC, and Chery are already planning to manufacture their own hybrid models.

For More Info

For other great resources on sustainable auto issues in China, check out the work of the Innovation Centre for Energy Technology, a non-profit think tank in Beijing focused on low carbon fuels and green cars, and that of one of the world’s leading researchers of the topic, Kelly Simms-Gallagher of the Belfer Center at Harvard’s Kennedy School of Government, including her book—China Shifts Gears.

Tags: automobiles, Beijng auto show, fuel efficiency, highway infrastructure, hybrids

Over the past week or so, I’ve had the privilege to get some high level access to some of the leading academics and government officials in Chinese environmental policy and law here in Beijing. I was an observer at a private high-level roundtable discussion on Chinese environmental governance held at Tsinghua University this past Sunday.

One of the first insights I gained was the skepticism a few members of the room expressed about the recent ministerial elevation of the State Environmental Protection Agency to the new Ministry of Environmental Protection (MEP). While it is true that the MEP now gets a voting seat on the important and powerful State Council, decisions on the State Council, it was noted, are in practice made by consensus. Not only is it unlikely that manpower at the MEP will be increased as I had hoped in my earlier post, but the MEP is still grappling with fundamental questions about internal structure (for example, the relationship among the MEP in Beijing, regional environmental supervision centers and local environmental protection bureaus) and its relationship with respect to other ministries. One member charged that the current ministerial reforms were piecemeal should urgently be replaced with an overall farsighted blueprint.

The need for an integrated approach to government

Perhaps the most striking comment was one made by a US law professor, and seconded by a senior policy advocate from a clean energy think tank. The former suggested that the fourth generation of environmental regulation (the first three being “nuisance law” approaches, command-and-control regulation, market-based tools, in that order) is integrating environmental policy and planning functions with other governmental functions, such as finance, construction and transportation. The latter took the idea one step further, saying that China has every incentive to accelerate this so called “fourth generation” approach to “first generation”—the phenomenal growth of China’s economy necessitates it.

China is the fastest growing economy in the world, and coupled with its absolute size, its global impact is nothing short of profound; I have already previously observed that China accounts for around half of the world’s construction activities. In terms of law and policy reform, China is trying to accomplish in a decade or two what the US has taken more than a century to achieve—deregulating state companies, establishing rule of law, creating well functioning capital markets, introducing laws relating to intellectual property protection, anti-monopoly and bankruptcy, and even experimentations with democracy at local levels. It is shock-therapy of a different sort and scale, driven by a combination of desire and necessity to integrate with a globalized market moving at internet-speed.

But if China adopts merely a piece-meal approach to environmental considerations, as many critics charge, the time will soon come where a prioritization of environmental concerns would be too little too late. We are starting to see hints of integrated environmental governance in China, as evidenced by the Green Whirlwinds, which integrate environmental criteria into the regulation of the capital markets, credit, insurance and trade sectors. Most pressing is the integrated regulation of heavy industry (power production, cement, steel, etc.) and what better lever point is there than scrutinizing the construction industry? Buildings and their fixtures are made of or consume just about every industrial resource available (cement, brick, glass, steel, plastics, water, electricity).

But even the greening of construction alone is insufficient. Discrete buildings are part of an integrated whole. Integrated urban and transportation planning would take into account efficient and ecological planning of land use and transportation networks, which is why all levels of government, from the Ministry of Construction, Ministry of Transportation to municipal urban planning authorities, but to name a few, need to come to a shared vision of sustainability. While the recent surge in renewable energy technology investments across the world, and especially China, is encouraging, less thought is being put into managing energy demand, and even less is being put to how to implement and deploy renewable energy systems on city-wide or regional scales.

One group is taking an integrated approach, however, is Chora, a non-profit urban planning and architectural organization, which is undertaking a city-wide urban eco-planning initiative involving the deployment of a series of renewable energy projects. An inside source has informed me that Xiamen City, in the southeastern province of Fujian, is a candidate city for their initiative. I look forward to reporting more about Chora in the not too distant future.

Tags: Chora, governance, green whirlwinds, integrated planning, Ministry of Environmental Protection, policy, reform, SEPA, urban planning, Xiamen

In the wake of the looming food crisis, biofuels are becoming more and more suspect as a sustainable long term substitute for oil, and in fact, are viewed as one of the chief culprits in the soaring prices of corn, soybean and other agricultural commodities that are feedstock to biofuels production. The diverted demand of such agro commodities to biofuel production has so interfered with agro production for food that the Chinese government enacted a ban on the production of grain-based biofuels.

China Clean Energy or CCC (OTCBB: CCGY), a producer of biodiesel (which is the focus of this post) and specialty chemicals (green chemistry is a ripe topic for a future post!) based in the city of Fuqing in the southeastern province of Fujian, seeks to produce biofuels in a smarter way. Embracing the concepts of “waste-equals-food“, “cradle-to-cradle”, and the “circular economy”, CCC is collecting waste vegetable oil, specifically cottonseed and rapeseed oil and turning them into biodiesel. These feedstock are much more inexpensive than their non-waste versions (i.e. raw cottonseed and rapeseed) because they are not perceived as useful inputs.

Gary Zhao, the CFO of CCC, explained how waste rapeseed oil is used in an exclusive interview with The Green Leap Forward:

Rapeseed oil is typically produced by pressing the fibers of the rapeseed. After the rapeseed has been pressed, there is still some oil left in the residual fibers that are typically discarded In fact some 10% of the oil is still left and it is rich in fatty acid. Through a chemical process, we are able to extract this remaining oil and convert it to biodiesel. As for the leftover fibers, that can further process it to be used as boiler fuel or animal feed.

By using “waste” feedstock instead of raw grains, CCC is able to indirectly continue to use waste grain feedstock which is otherwise prohibited and at much reduced prices as the raw grains (see story on soaring grain prices here), but more importantly, harness a previously untapped source of energy that would otherwise be discarded as waste.

CCC currently has a biodiesel production capacity of 11,000 tons per year, but it has just received US$15 million in financing for a significant expansion that will bring production to 100,000 tons per year by the beginning of 2009. CCC’s biodiesel market is distinctively local in nature. Zhao explained: “Unlike the US or Europe, there is no mandate for biofuel production in China, so the costs of transporting the fuel over long distances do not make [economic] sense.”

Transportation doesn’t make ecological sense either. In fact, one of the biggest criticisms of biodiesel (and other biofuels) is whether the net energy balance of biodiesel is positive or not. In other words, critics have charged that the amount of energy produced by biodiesel is less than, or barely exceeds the amount of energy needed to make biodiesel (including an accounting of the energy needed to harvest the grain through mechanized farm tools and transportation of such grain at various stages of its production cycle).

Biofuel production has also been heavily criticised for diverting away valuable food resources. Such criticisms target the conventional raw grain-based mechanized harvesting biofuel production seen in the US or Europe. The CCC process is distinctive for relying on non-food fuel sources and by focusing on local markets, both in terms of it supply of feedstock and its biodiesel end-customers, thereby substantially reducing energy needs and improving the energy payoff of its products.

Using waste as inputs also contributes to a dramatic improvement in the economics of biofuels production. One of the key insights (see #3 in link) gained by an venture capitalist, Michael Butler of Cascadia Capital, is that:

Waste or waste byproducts are the most sensible alternative-fuel inputs: There’s far less pricing pressure associated with sludge or algae versus corn as long as proven technologies are harnessed. And we’ve also seen that efficiencies soar off the charts if the right waste products are used as feedstock.

Perhaps, then it should come as no surprise that CCC is already operating profitably after only a two years of being in the biodiesel game.

CCC’s medium to long term plans to build biodiesel processing plants in Xinjiang and Hebei are again driven by its business model of “localization”; those two provinces happen to be the top producers of cottonseed in China. Being close to the source of cottonseed leavings will limit transportation and energy needs and also create new markets for its products outside of Fujian.

Zhao thoughtfully addressed concerns of limited availability of feedstock. Taking waste vegetable oil as an example, he explained:

The average Chinese consumes 16 kg/year of vegetable oil. That is roughly 20 million tons/year for all of China. If only 10% of such “ditch” [waste] oil can be recycled, we are looking at an availability of 2 million tons/year. Right now, we only produce 11,000 tons/year of biodiesel.

Zhao pointed out further that CCC entertains the possibility of diversifying further to other waste feedstock, thereby increasing its potential supply base.

“China is already the world’s largest importer of grain based products,” Zhao accounted, “and as the standard of living of China increases, consumption of pork, beef and chicken will increase… all these animals require grain.”

“We will never use food-based feedstock. We don’t believe in it.”

Tags: biodiesel, biofuels, China, circular economy

Construction boom? Perhaps more like construction doom! By some metrics, buildings are the biggest culprits of greenhouse gas emissions in our environment. Just think of all the kinds of basic materials that goes into a building—glass, steel, cement, paint—the manufacture, processing and transportation of which are energy and water-intensive. And that’s just in the construction phase. Once the building is in use, think of heating, cooling, lighting and mobility (escalators and lifts) needs! All that energy use implies the burning of massive amounts of fossil fuels and emissions of carbon.

Who will save China now?

Enter the Dragon. The Green Dragon Media Project, that is. The Green Dragon Media Project web portal is an in-depth online multimedia project that provides an analytical framework to understanding the forces at play in the Chinese construction industry, and what can be done to introduce best practices in green building design to China. The portal, a compendium to a 35-minute film on greening the Chinese construction industry (below’s a teaser!), presents a remarkable collection of video interview clips, and explores in quite a bit of detail the incentives and disincentives facing the construction industry, government, legal system, and the public with respect to residential and commercial development.

One recurring observation throughout the portal is the disjunct between the edicts of the central government and the level of enforcement of such edicts at the provincial, municipal and local levels. This has spurred the GDMP team to create, for their next film project, and instructional film on green buildings specifically targeting provincial mayors. Because much of the local economic development agenda is determined at the provincial level, educating and informing local leadership must be seen as an effective lever to effecting a green shift.

Among the things that should be pitched to the mayors is the economic benefits that will stem from a range of green jobs and technologies related to energy efficiency (roofing, insulation, advanced heating and cooling systems), water efficiency (efficient plumbing, micro-irrigation) and sustainable building materials (recycled carpeting, eco-friendly paints, sustainable timber).

Here at The Green Leap Forward, we’ll track the companies and technologies that are making this green construction revolution happen. One Beijing-based startup seeking to make its mark in the green building industry is Qidi Daring Energy Technology Co. Qidi provides comprehensive consulting services, providing advisory services on all aspects of the green building life cycle, including green building design, energy efficiency, energy audits, indoor air quality, and on green building standards such as the U.S. LEED system and China’s green building evaluation standards.

I end this post with one thought—there is too much talk about green buildings that leave out the bigger picture of smart urban design. A building, after all exists within the context of a neighborhood, town or a city. What’s the point of a construction boom in green buildings if no thought is given to curbing sprawl, promoting the use of mass urban transit, or maintaining a certain amount of green space? It is said that the greenest building is the one never built. Obviously that is not practical, so the question is how can we deploy the greenest technologies and methods not only build our buildings, but also arrange and structure them amongst other buildings and urban structures to create a holistically sustainable built environment?

Tags: China, construction, ecocities, green buildings, Green Dragon Media Project, Qidi Daring Energy Technology Co

Newsy tidbits on green developments in China, sans analysis.

Super eco-cities? The unstoppable drive in China towards increased urbanization in the midst of the massive scale of rural-to-urban migration is well known. A report by McKinsey, the prestigious global consulting firm, advocates that China undertakes a more concentrated form of urbanization by building 15 “supercities” each with populations of 25 million each, in order to facilitate the massive scale of rural-urban migration. This is in contrast to the more dispersed approach of developing dozens of smaller cities, and the development of the rural western inland regions of the country.

As stated in the press release announcing the report:

MGI [McKinsey Global Institute] finds that concentrated urban growth scenarios could produce 20 percent higher per capita GDP than that yielded by China’s current urbanization path, would have higher energy consumption but also higher energy efficiency, and would contain the loss of arable land. Concentrated urbanization would also have the advantage of clustering the most skilled workers in urban centers that would be engines of economic growth, enabling China to move more rapidly to higher-value-added activities.

Rule of Law. Earlier, I lamented about the need to improve environmental governance at the provincial and local levels. The head of the newly-named Ministry of Environmental Protection is vowing to tighten up enforcement of environmental laws.

Increased Government Investment. The government plans to pump in 41.8 billion yuan (about US$5.9 billion) this year to help meet its 2010 environmental targets, which include reducing energy intensity by 20% compared to 2005 levels. According to Xinhua News, 7.5 billion yuan would be invested in ten energy-saving programs, 4 billion yuan in closing inefficient coal-fired power units and outmoded steel plants, and 5 billion yuan to tackle water pollution.

Government White Papers. Charlie McElwee of China Environmental Law blog breaks down the National 11^th Five-Year Environmental Protection Plan (2006-2011), the English version of which has only be been released earlier this month. While I’m at, I should mention the official white paper on China’s energy policy, available in English here.

Recyling Auto Parts. As part of China’s Circular Economy initiative, the National Development and Reform Commission has signed and agreement with three auto makers and 11 parts manufacturers letters of commitment to set up a pilot auto parts recovery program. As the New York Times reports, China is becoming a big player in the auto parts industry.

Tags: automotive, eco-cities, enforcement, government, recycling, Rule of Law