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1/31/10

Climate change has become the theater of geopolitical competition and China has the upper hand (so far)

While new energy sources will initially be more expensive than fossil fuels, politicians in the West, mindful of a stagnant or shrinking manufacturing base, are hopeful that clean technology offers a way of rebuilding older industrial areas by creating a comprehensive green supply chain.

The quest for a new comparative advantage, economists say, is all the more urgent as the crisis has left the financial-services sector reeling — a sector that was long considered one of the last bastions of Western sophistication. From China’s perspective, experts say, climate change offers the opportunity to leapfrog Western competitors. “The low-carbon economy is the future,” said David Li Daokui, a professor at the Center for China in the World Economy in Beijing.
Moreover, the quest for sustainable energy and industrial processes is playing out against the backdrop of vastly different economic and political systems.

In China, the government poured an estimated euro 318 billion ($440 )into clean energy last year. It is investing heavily in renewable energy and nuclear power. It also is pursuing efforts to make extraction of its vast coal reserves cleaner. Already home to one-third of the globe’s solar-energy manufacturing capacity and 400 solar-energy companies, China is expected to surpass Spain this year as the No. 3 country in terms of wind power installations, behind Germany and the United States. William Rhodes, senior vice chairman of Citigroup and board vice chairman of the National Committee on U.S.-China relations, predicted that Beijing’s research into storing carbon emissions underground could soon lead to a major breakthrough.

Note EU-Digest: Most experts agree that the European Union and the West can not and do not want to match China's controlled and centralized economy in the area of environmental research. One of the ways to encourage the Chinese to move away from their self centered objectives on the environment is to produce a binding global agreement on carbon emissions (with or without the Chinese) as soon as possible. One does not have to be an Einstein to figure out that China's reluctance to accept such a deal at present is precisely to win time and a competitive advantage over the rest of the world. With a global deal on carbon emissions in place nothing will stop the power of  innovation and the market place to become fully engaged in the process, benefiting everyone.

The Race Is on to Develop Green, Clean Technology - DealBook Blog - NYTimes.com


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