The Hong Kong edition of The China Daily recently invited me to contribute an article about China’s renewable energy development trends and the country’s relationship with southeast Asia. So I wrote about all the dams China is building in the south, southwest and west of the country it’s neighbors are unhappy with.The editor didn’t like the story. It might be Hong Kong, I was told, but it’s orbit is very close to Beijing’s, after all.

So I wrote another story, about how the subsidies for solar power in China will lead to even more (over-)production that will drive down the costs of photovoltaic technologies even further – a natural for archipelago nations like Indonesia, which have islands of people unable to hook into a national grid.

The editor accepted the sun-shiny story. entitled, “China may light up southeast Asia’s energy portfolio”. It’s a fine story; it’s just that it’s so … well, constructive. You’ll find it here, on page 14 of the HK edition.

Technorati Tags: bill dodson, china, electricity, energy, hydropower, indonesia, solar power, southeast asia, trends

The China Daily reports the Ministry of Industry and Information Technology (MIIT) website said on July 11, 2011 that it will continue closing energy intensive manufacturing industries, with 2,255 slated for closure. MIIT has targeted 18 major industrial sectors for restructuring, including iron, steel, coke, cement, flat glasses, paper making as well as printing and dyeing. The factories are simply sucking too much power from more productive uses in the society, not to mention from foreign operations in the country.

A prime example of the amount of energy heavy industry is consuming and wasting are the glass making furnaces of Xuzhou, in northern Jiangsu Province, a four-hour drive northward over the Yangtze River from Nanjing. Western inspectors have told me of massive furnaces that operate round-the-clock. Trucks circulate through the factories to disgorge tons of materials for making glass, while others pick up delivery of vessels of every shape and size. When one of the Western inspectors asked a manager of one of the kilns about how plant staff maintain the furnaces, the manager explained they merely use the furnaces until the kilns can no longer operate, then replace them with new facilities. The furnaces are open to the air, with employees – typically in their fifties – plucking near-molten glass vessels with tongs from conveyor belts that never stop. Furnace stacks blow heat and soot into the air, unfiltered.

When asked about any problems with electricity, local managers simply pointed to power plants that dotted the sooty landscape. The furnace and other heavy industries in the area were guaranteed power from local authorities because of the importance of the industries to the local economy and the standing of local political bosses.

I’ve edited a research note on the ramifications of ongoing power outages on foreign operations in China, titled, “Lights Off for Western Manufacturers in China“, located at TrendsAsia.

Technorati Tags: natural resources, policy trends

It looks like food prices will skyrocket even further here in China, with Xinhua announcing the worst drought to strike Shandong province in 200 years. Shandong is a part of China’s wheat basket, in the northeast of China.

While south China has just over half the population of the country, it has nearly 85-percent of the nation’s water resources. The south supports 40-percent of China’s croplands. The north, by contrast, has only about 15% of the country’s water, 55-percent of its population and 60-percent of its cropland. For instance, the citizens of the sea port city of Tianjin, which faces the Korean peninsula, can only provide its population of 10 million with one-tenth the amount of water of the average citizen in the world.

Modernization has only exacerbated the historically drought-like conditions in the north: industrialization, certainly; but agricultural, overwhelmingly. The low price of water connected with the lack of education of farmers in sustainability and the government’s lack of regulation and enforcement of irrigation has made a bad situation even worse, very quickly (see photo).

Technorati Tags: china, environment, natural resources, water

He places the divergence in the late 18th and 19th centuries, following the thesis set out by Kenneth Pomeranz of the University of California, Irvine in his book The Great Divergence (which I have not read but now want to). Angus Madison, a statistical historian, Wolf cites, pinpoints economic divergence in 1820.

I place divergence much earlier than the two of them, around 1700, with the increased interest in burning coal to run steam engines and turbines. It’s no coincidence at the time that Britain mined nearly 80% of the world’s coal at the time, and that the seat of the Industrial Revolution was that little island with the terrible weather. Nevertheless, James Watt’s massive improvements on the use of coal in combustion chambers paved the way for Britain – and then the other European countries and eventually America – to mine the energy they would need to “artificially” push the world into economic divergence.

China, meanwhile, had closed it’s doors to the outside world two hundred years before with the destruction of Zheng He’s fleet of massive ships that plied the seas as far away as India and Africa in the early 1400s. Unable and unwilling to keep abreast of the innovations occuring in the West, China set about deforesting southern China and northern Vietnam to maintain a burgeoning population and increasingly complex society. Without the energy needed to keep the country together, the Manchus were able to sweep in from the north, and essentially fight a losing battle over the next three hundred years to consolidate the country. No energy, no money, no society – a lesson today’s Chinese leaders know very well.

Perhaps if the Manchus had opened up the empire to the energy-related innovations of the West in the 1700s – just as the CCP has the last ten years -  the society would have trumped all comers and seen off a divergence that became a near-death experience for a nation.

What do you think?

China has set fire to the coal market at home and abroad. The National Development and Reform Commission (NDRC) recently commanded provinces to stop restricting shipments of coal to other regions to ensure stable supplies for the country, according to the Associated Press. The Ministry of Commerce, seeing a bubble in the making, has been attempting to stem speculation and outright scalping by ordering local authorities to press hard on companies and organizations hoarding coal, gas and other fuels. Profiteers attempt to manipulate auctions on the spot market to drive prices even higher than they are now for buyers, including steel mills and power generation plants. Of course, local governments that themselves have interests in local mining concerns may even sometimes thwart central government’s intent to keep the playing field somewhat level…

Read more of my China Economic Review column for this week …

Further reading: After Burning for 50 Years, Chinese Coal Fires May Finally Be Extinguished

image credit: treehugger.com

I asked the Suzhou Bookworm manager, Alexis, “So, who over there is the author?” He pointed at the tallest fellow in the huddled group at the back of the bookshop. I commented, “One of the things I like about writers compared to businesspeople is that writers typically don’t want to be found out; businesspeople are dying to let others know how great they are.” And with that, the group of about twenty attendees at the first joint Bookworm/Green Drinks gathering set about listening to an engaging talk about Sam Chambers’ book, Oil on Water: Tankers, Pirates and the Rise of China. Green Drinks is a Hangzhou-based discussion group of expats interested in environmental issues.

Sam co-authored the book with the prolific Paul French. The two, according to Sam, conceived of the book project while bored on a five-day trip aboard an oil tanker that had launched from Singapore. Ultimately, the book is about the fragility of the ocean-bound supply chain for oil.

Sam is a tall, handsome, self-effacing Brit who gave a fact-filled account of the extraordinary importance of the shipping arteries and infrastructure skeleton that support the transport of the most precious energy source in the world: oil. Water, I learned from the talk, is the most efficient mode of transporting the huge loads from source to consumer:

• 40% of the growth in oil consumption the world over is because of China’s growing thirst for the slick stuff;
• 60,000 people die each year from shipping-related incidents;
• Pollution from oil tankers in any given year is worse than all the cars in America put together;
• By 2015, 40% of all the oil shipped around the world will be on tankers made in China;
• China now has 13 ports making oil tankers;
• 3% of the world’s carbon emissions come from shipping; more than from aircraft flights

Compared to other developing nations like India and Bangladesh, China has amongst the cleanest approach to breaking up obsolete ships: Chinese bring the old ships into docks and take them apart piece by piece, whereas along the shores of the subcontinent Indian and Bangladeshi captains ram the ships onto shore where oil and other toxins coat the beaches while scavengers peel away the ship’s skin and cart away its vital components.

Listen to my podcast with Sam to hear about China’s strategic interests in becoming oil independent (something, we both agreed, Congress still does not understand about China).

Major internationalization trends are developing in China’s wind power industry. This year’s big Wind Power trade show and conference in Beijing a couple weeks ago showed a greater level of integration of the global marketplace than what the mainstream media might let on to. I write in my weekly China alternative energy column in the China Economic Review:

Not only were international players in greater evidence, but Chinese companies have become far more international in their own offerings and outlook. Four years before the Chinese wind power industry had seven turbine manufacturers. Now, it has eighty, a handful of which are amongst the largest in the world. The Beijing show saw nearly two dozen of these with displays of their products. The boulevard of expertise and technology traversing China’s borders and the rapidity with which the two-way traffic has developed indicate China just might reach its ambitious goals to see nearly five percent of its energy in 2020 generated from wind power. Chinese manufacturers like Goldwind and Sinovel may sooner than later realize their global aspirations to become major producers of wind turbines and components that rival those of their European and American idols.

Read more of the column here …

And check out my other China Economic Review alternative energy columns here…

image credit: westcoastweathervanes.com

A recent taxi ride with friends in through a Suzhou neighborhood led to a revelation for me. At an intersection walled in by apartment high-rises was a brightly colored display of the Suzhou skyline. Suzhou is about 75 km west of Shanghai, one of the richer cities in China. The display sketched in vivid reds and yellows and greens high rises and landscapes in Suzhou, and stood about three meters high. The most striking feature of the stationary parade float was the equally tall model of a wind turbine posted at one of the ends of the float, as though blowing energy over the rest of the cityscape.

It occurred to me then that a society’s adoption of alternative energy processes and structures was as much about government policy, adequate funding and industrial mobilization as it was about inserting the alternatives into the consciousness of the citizens. The wind turbine – and other alternate energy sources – the display seemed to say – is as much about what it is to be a modern society as the high rises, bridges and fast trains.

Wind power is here in China to stay.

Image Credit: Made-in-China

My column in the China Economic Review analyzes just how China’s back room dealings with Japan and control of supplies of rare earth minerals may leave China trawling in empty waters one day…

The Turbot War of 1995 saw Canada take a Spanish fishing vessel the Canadians claim were over-fishing waters just outside Canada’s Exclusive Economic Zone. Over a span of several weeks battle lines were drawn along Anglo-American and European Continental lines as the British and Irish sided with Canada in the international conflict against, it seemed, every other country in the European Union. At that time, the natural resource under contention was fish. Now at issue between China and Japan are deposits of oil and other natural resources in an island chain the Chinese call the Diaoyutai Islands and the Japanese call the Senkaku.. At stake for the moment is Japan’s access to rare earth metals it uses in its celebrated electronics and motors. Also held hostage is world’s ability to develop clean and renewable energy technologies to ensure the survival of entire societies.

Read more of the column …

I tend to be skeptical when it comes to just how “green” the Chinese revolution is in the renewable energy sector. Hundreds of makers of solar photovoltaic (PV) cells and attendant equipment manufacturers crowded the hallowed halls of the Shangahi International Exhibition center. The SNEC 4th International Photovoltaic Power Generation Conference & Exhibition ran from May 5 -7, with conference proceedings from May 7 – 9.

One of the more revealing exhibits was that of CRS Reprocessing Services, based in Louisville Kentucky. Since 2003 CRS has been cleaning up after PV makers in America, Europe and Japan, and is just breaking into China. The company builds the equipment and implements the processes needed to recycle chemical slurry for re-use. The company claims a 98% re-capture rate. The slurry is a combination of liquid chemicals and a fine dust that result from cutting silicon into the thin wafers that serve as the base for photovoltaic cells. Prospects for growth for the company in the China market are huge, as Chinese PV makers have until a recent  change in government policy been pouring a poisonous slurry into plastic bags they pile up in the back of their factory compounds.

Deborah Reese, Director of Marketing, told us of one potential Chinese customer who had so much of the slurry built up “you could actually see the dump from satellite photos, if you knew where to look.”

Of course, national government promotion of a sector looking to grow into a trillion dollar marketplace would prefer we look elsewhere.