Can China Go Green?

Can China Go Green?

"CAN CHINA GO GREEN?
Fortune, June 27, 2005

When China's ministry of Science and Technology decided to build a new headquarters in Beijing, the government sought help from an unlikely partner - the Natural Resources Defense Council, best known for litigating and lobbying for stricter environmental rules in the U.S. The resulting green building uses the best available technology to save energy and water; since it opened last year, it has been toured by 2,000 local officials, designers, and architects. 'In terms of environmental innovation, China's going to kick our ass within a decade unless we wake up,' says Rob Watson, a senior scientist with the NRDC who works on China projects.

At least on paper, China is matching, if not exceeding, environmental standards set in the West. To curb its dependence on imported oil, China has adopted fuel-economy rules for automobiles that are more stringent than those in the U.S. or Europe. That is putting pressure on GM and Volkswagen, the leading foreign carmakers in China, to find ways to profit from selling small, fuel-efficient vehicles. The Chinese government is also investing in fuel-cell technologies for motor scooters, cars, and buses, hoping to invent an entirely new kind of auto industry. 'They've set the policy stage for innovation,' says Watson.

Desperation is driving the initiatives: Like so much in China, the scale of environmental problems is mind-boggling. China is home to five of the world's ten most polluted cities in terms of air quality. It burns dirty coal in more than 2,000 plants, generating clouds bearing mercury, soot, and sulfur dioxide that have been tracked all the way to the Oregon coast. China's industry is wasteful, requiring three to ten times more energy than industry in the U.S., Western Europe, or Japan to produce a dollar of economic output. Water is in short supply and deserts are expanding rapidly, according to Elizabeth Economy, the author of The River Runs Black, a book about China's environmental crisis.

Global companies are poised to capitalize. Immelt says that GE's investments in clean coal technology, wind power, nuclear energy, and fuel cells are being made with China in mind. "While Europe has been a driver for innovation in cleaner technologies, China promises to be its market," he says.

Because China relies so heavily on coal, for instance, it is likely to become the biggest buyer of a cleaner coal technology called IGCC (integrated gasification combined cycle, if you must know) that converts coal to natural gas, which generates fewer pollutants. The technology can be combined with a process in which carbon dioxide, which contributes to global warming, can be captured and buried deep in the earth. David Hawkins, an expert on climate change with the NRDC who has consulted in China, says, "I think we'll see the technology move forward there faster, conceivably, than in the U.S."

Bill McDonough, the architect and industrial designer, predicts that China will become a seedbed for environmental innovation. "The Chinese are very practical," he says. "They are asking what mistakes have been made in the rest of the world and how they can avoid them." McDonough, who is chairman of a nonprofit called the China-U.S. Center for Sustainable Development, says new building materials will be developed for China—he is working with the chemical industry giant BASF to develop a strong, lightweight, insulating poly- styrene to replace brick—as armies of Chinese people move to the cities. He foresees solar-power farms on a vast scale. "China is the place where the costs of solar collectors will drop once they go into mass production," he says. "It's a massive gift that China will give to the world."

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