Does China need better access to green technologies?

By Ed King

China needs affordable access to the intellectual property (IP) of clean technologies if it is to make progress in cutting national greenhouse gas emissions, a leading official has warned.

Zou Ji, Deputy Director General of China’s National Centre for Climate Change, says the country’s transition to a low carbon economy could be set back five years if this is not forthcoming.

“We can go to the market and buy from owners, but the price is normally very expensive and might lead to only a few companies who are rich enough to buy these IPs – not a whole sector,” he told RTCC.

IP cores are a small but essential part of the modern manufacturing process. A mobile phone can contain 1000 patented parts, and even if you own 999, the one cell you do not have access to could be the key to making it work.

China is aiming to put more than a million electric vehicles onto the road each year by 2015 (Pic: Nissan LEAF)

Zou said the alternative to buying IP cores could be ‘five years’ intensive research, and has worked with the United Nations Development Programme (UNDP) to develop a technology wishlist for China’s six major emitting sectors – iron, steel, cement, chemicals, transport and building.

Together they identified 63 IP cores (electrical cells, chip layout designs or algorithms) that could substantially cut emissions at an acceptable cost.

The UN recently revealed plans for a Climate Technology Centre and Network, designed to help developing and developed countries work together to develop their renewable energy sectors, but this is not expected to be operational until 2014.

IP agreements traditionally take place at the World Trade Organisation, so the extent to which this new network can effect change is unclear.

One area Zou identifies as critical is China’s creaking electricity transmission system. Many of the country’s power plants are based in the north east, and transmit coal fired electricity thousands of miles to Beijing, Shanghai, Namjing and Tianjin, losing vast amounts of energy en-route.

The country is currently constructing over 340,000 kilometres of high-voltage lines and developing the foundations for a smart grid that can accommodate a mix of renewables and fossil fuels, but currently relies on technology imported from South Korea and Japan.

“I do not mean we should directly request entrepreneurs to lower their price. It’s a matter of market,” Zou said.

“It’s very complicated to develop an IP mechanism, and this is a debate here at the UN. I know it’s not easy to find a solution but this is a topic we should debate.”

Business as usual?

Containing China’s greenhouse gas emissions is viewed as one of the most challenging aspects of the international climate talks.

The UN Environment Programme’s 2012 Emissions Gap Report stipulates global output of greenhouse gases must be around 44 billion tonnes of CO2 equivalent or less by 2020.

The UNDP estimates that if China continues along a ‘business as usual’ trajectory, its CO2 output will increase to 11.4 billion tonnes per year by 2020, 13.9 billion in 2030 and will not peak before 2050.

“It is technologically possible for China’s emissions to peak in 2030,” the UN agency report on China says, “but this will be difficult without a large number of support measures and their effective implementation over the next few years.

“China will otherwise have to bear large social and economic costs”.

Trade winds

Intellectual Property theft remains a sore subject among some companies who have done business in China, complicating an already complex situation.

US wind and grid experts AMSC is stuck in a legal battle with Chinese wind turbine maker Sinovel for around US$400m in damages over alleged intellectual property theft.

And earlier this year the US Congress called on President Obama to raise concerns with China’s new President Xi Jingping over ‘cyber security’ IP theft.

“IP partnerships need to be managed carefully to make sure they remain transparent,” IHS China energy analyst Olivia Boyd told RTCC.

Another issue is that low manpower and resource costs in China mean their manufacturers can undercut European or American producers.

The EU is likely to follow Washington in placing protective tariffs on imported Chinese solar panels, which it claims are unfairly subsidised by Beijing – the case is the EU’s largest ever trade dispute, involving around 100 Chinese companies that export €21 billion worth of solar panels a year.

VIDEO: Head of China’s Climate Commission Li Junfeng calls for greater tech transfer cooperation

Some analysts believe it’s too simplistic to say technology transfer is the key to China’s low carbon transition.

Boyd argues Chinese companies are far more savvy than many give them credit for, with the priceless ability of being able to develop on a scale other countries cannot match.

She cites Chinese-owned wind turbine manufacturer Goldwind’s 70% purchase of German company Vensys in 2008 as an example of how east-west technology transfer can make a good return.

“I think that Goldwind is a classic example of the way in which Chinese companies can gain access to foreign technology under market conditions,” she said.

“Goldwind was ranked the third largest wind turbine manufacturer last year, and the second largest the year before that. It has been able to bring down the cost of this technology by utilising lower Chinese manufacturing and supply chain costs.”

The Climate Group’s Changhua Wu argues green innovation is no longer about China taking technology and selling it back to the west.

She says there is evidence that the country’s research and development expertise is fast improving, and while it’s not at parity with European or US companies yet, it’s only a matter of time.

“You are starting to see the ambition to cap coal in this country and develop alternative energies more aggressively,” she told RTCC.

“On one side there is no doubt at all we desperately need solutions and technology, and we know the size and scale of the challenge in China. If you do not address the China issue there’s no way you can address the global issue.

“China definitely needs better access to clean technologies to ensure we don’t deploy old technologies and continue with high emissions. But we’re starting to see a two-way flow from China to other parts of the world.

“It’s encouraging to see increasing attention on technology and R&D. But we’re not starting from scratch. Rather you are seeing all kinds of local or indigenous innovations, and greater collaboration, cooperation and transfer of technology. It’s a complicated landscape.”

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