Why is the U.S. Losing the Cleantech Race with China?

The U.S. is losing the sustainable energy technology race to China. So says Chris Martenson, an economic researcher and futurist specializing in energy and resource depletion. Martinson publishes the PeakProsperity web site and is known for his video seminar, The Crash Course, and his book of the same title. Actually, Martenson claims we’re not even really trying to compete. Advances in solar, wind, and thorium are being ceded to our biggest competitor.

I spoke with Martenson to find out what he meant by that contrarian statement. Martenson has much more to say about the energy future of the U.S. and the world, but around the U.S.-China cleantech competition, his first comment was “I’m a big believer in action more than words,” and in his view, U.S. policymakers are showing by their actions that they are not behind cleantech innovation and development.

Wind farm in Xinjiang, China. Source: Wikimedia Commons, CC BY 2.0.

Wind farm in Xinjiang, China. Source: Wikimedia Commons, CC BY 2.0.

“I’m a numbers guy,” he told me, “and in the U.S. a startlingly small amount of money is being dedicated at national levels to renewable-energy research” — only about a billion dollars for research at national laboratories. Compare that to China’s investment: “China is going to spend $80 billion a year on renewable energy research, and $800 billion over the next decade.” China already has more installed wind power than the U.S., Martinson says.

The Sustainable Energy in America 2013 Factbook from the Business Council on Sustainable Energy (BCSE) seems to correlate largely with Martinson’s complaint:

The U.S. generally lacks an over-arching policy framework for furthering the deployment of sustainable energy technologies. It has set no formal national goals for expanding sustainable generating capacity or for cutting harmful greenhouse gas emissions from the energy sector, for instance.

According to a report from Bloomberg New Energy Finance, worldwide investment in clean energy declined by 11 percent to $268.7 billion in 2012. But don’t blame China — that country invested a record $67.7 billion, while the U.S.’s investment shrank by 32 percent to $44.2 billion for the year.

Martenson cites battery technology as an example in which government research and investment could reap large benefits. “Electrical storage is a big limiting factor on renewables. If we had a better way to store energy, we could reduce reliance on fossil fuels and nuclear. What we need is a Manhattan-Project approach to advancing battery technology. China is pushing ahead to solve that equation, as well they should. The whole world should be doing that right now.”

Martenson thinks cleantech in the U.S. has been hurt by low natural gas prices in recent years: Why invest in renewables, when cheaper energy is abundant at low cost? He believes the cost of natural gas will begin to rise as time goes on, which would provide greater market incentive for renewables. The U.S. probably has enough gas to last another 20 to 40 years, Martenson said. The smart strategy, he believes would be “using those BTUs to rebuild, retool and revitalize our domestic energy infrastructure. The questions we need to ask in 2013 should be what fuels do we want to be using when natural gas runs out and which systems need to be in place by that time?”

Strong Motivation to Fund New Energy Sources for China

The World Bank says that China’s GDP growth of about 10 percent per year in recent decades “has lifted more than 600 million people out of poverty since 1978.” China is now the world’s second largest economy and has a population of 1.3 billion. In spite of its progress, though, the country remains hungry for growth. In 2011, gross national income per capita stood at only $4,940 per year, ranking 114th in the world. 170 million people still live below the $1.25-a-day poverty line.

China_GDP_small

Martenson believes China is executing a long-term strategy to position itself next to vital resources for technological and economic development. “China, in my mind, is pursuing a very aggressive course of action, using their magic checkbook. They’re importing more copper than they actually need, for example. They’re importing all sorts of materials beyond what you would think they would need.” In other words, they’re stocking up and hedging against future shortages of resources. “They understand there is a real global race to establish toeholds in countries where resources can be had and are plugging them into their own country.”

Martenson points to China’s head start on development of thorium-based nuclear power as further evidence of the country’s determination to win in the cleantech arena. “This is a fairly exciting technology,” he tells me. “The U.S. has enough thorium mined and buried in Nevada to power the United States for a thousand years. There’s a lot we need to learn, but the waste stream is a fraction of uranium-cycle technology.”

Thorium is advocated by enthusiasts as a nuclear fuel preferable to uranium because of its greater abundance, its better performance, and its lower potential for waste production and weaponization. Writing in Environmental Science & Technology, Nicolas Cooper and colleagues of the Georgia Institute of Technology assert that a liquid fluoride thorium reactor (LFTR) program “could be achieved through a relatively modest investment of roughly 1 billion dollars over 5 to 10 years to fund research to fill minor technical gaps, then construction of a reactor prototype, and finally a full-scale reactor.” They write that “many of the engineering and technological problems … have already been solved” and that “LFTR can mean a 1000+ year solution or a quality low-carbon bridge to truly sustainable energy sources solving a huge portion of mankind’s negative environmental impact.”

(Not all observers are so convinced of thorium’s feasibility, as discussed by David Sims recently at Industry Market Trends.)

Early thorium reactor developed by the U.S. government in the 1960s. Credit: Oak Ridge National Laboratory.

Early thorium reactor developed by the U.S. government in the 1960s. Credit: Oak Ridge National Laboratory.

China has put thorium nuclear on the fast-track. Ambrose Evans-Pritchard writes in The Telegraph that Jiang Mianheng, son of former Chinese leader Jiang Zemin and a prominent national research leader, “is spearheading a project for China’s National Academy of Sciences with a start-up budget of $350 million.” Evans-Pritchard writes that “[Jiang's] team plans to build a tiny 2 MW plant using liquid flouride fuel by the end of the decade, before scaling up to commercially viable size over the 2020s… He estimates that China has enough thorium to power its electricity needs for ’20,000 years.’”

Martenson says thorium represents “another way the U.S. is basically abdicating the leading role to China in energy technology. If we fiddle around another five years, we’ll ultimately have to buy the technology from them. We’re unlikely to see the United States get serious about this through the normal political process.”

Martenson thinks the motivation will have to emerge through the private sector. He is currently working on a consulting basis with companies who understand what energy and resource constraints mean for the future. “The answer turns on doing things in a fundamentally different way. The next five, 10 or 20 years are going to be completely dominated by access to the quantity and quality of resources companies are going to need to run their processes at scale.”

 

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