China poised to go all out with clean tech DISPATCH FROM CHRONICLE FOREIGN SERVICE

BEIJING - DECEMBER 13: A mother and child walk past a wind turbine on the south bank of Guanting Reservoir on December 13, 2007 in Beijing, China. Beijing has put forward "Green Olympics" as one of the three themes for the 2008 Olympic Games. Guanting Wind Power Field will begin operation at the end of this month with 33 wind turbines producing 50,000 kw, according to local media. China has accelerated its development of wind resources and other clean energy to meet its vast long-term energy needs, and help to achieve the "Green Olympic" goal. (Photo by Feng Li/Getty Images) less BEIJING - DECEMBER 13: A mother and child walk past a wind turbine on the south bank of Guanting Reservoir on December 13, 2007 in Beijing, China. Beijing has put forward "Green Olympics" as one of the three ... more Photo: Feng Li, Getty Images Photo: Feng Li, Getty Images Image 1 of / 3 Caption Close China poised to go all out with clean tech 1 / 3 Back to Gallery

China is at a crossroads. This nation of 1.3 billion people is faced with the daunting task of building on its 30 years of unprecedented economic development without further damage to its environment.

Currently, one-third of China's rivers are polluted; one-fourth of its territory is desert while another one-third suffers from severe soil erosion and drought; more than three-fourths of its forests are gone; urban residents are forced to breathe air containing lead, mercury, sulfur dioxide and other elements of coal-burning and car exhaust. The number of cars is expected to grow from 33 million to 130 million in the next 12 years and every 30 seconds a baby is born with pollution-related birth defects.

Just last year, China overtook the United States as the world's biggest emitter of carbon dioxide. By 2030, the International Energy Agency says China's emissions will be 41 percent greater than those of the United States.

How China meets these challenges will have major global implications, says Peggy Liu, founder of the nonprofit Joint U.S.-China Cooperation on Clean Energy with offices in San Francisco, Beijing and Shanghai.

"China is the battlefront in the war of energy," said Liu, one of Time Magazine's 2008 "Heroes of the Environment."

Giddy over new energy

In fact, Chinese and Silicon Valley venture capitalists are giddy over alternative energy programs as the best way to maintain economic growth, stave off environmental devastation and turn China into the world's leading provider of clean energy technology. The nation already is set to become the global leader in wind energy, according to Greenpeace China.

"The domestic demand for technologies that clean up the environment and energy-efficient technologies represents a huge market opportunity for entrepreneurs," said Forrest Zhong, general partner at the Shanghai office of the Menlo Park venture capitalist firm, Kleiner Perkins Caufield & Byers.

"Clean tech, green jobs, climate change, this is what everyone is talking about," added Patrick Tam, a UC Berkeley graduate in bioengineering and general partner of the Beijing venture capital firm, China Environment Fund.

Liu points to several government laws and targets: imposing regulations backed by fines on industries that refuse to reduce emissions and adopt energy-efficient technologies; increasing industrial energy efficiency by 20 percent by 2010 and reaching 10 percent of the country's power output from renewable energy by 2010 and 15 percent by 2020.

In March, Beijing announced it would devote nearly $31 billion of its $586 billion stimulus package to "energy conservation and environment." China also recently announced plans to spend $3 billion to subsidize the purchase of as many as 60,000 hybrid, electric and fuel-cell vehicles by 2012 for use in 13 major cities, including Shanghai and Beijing and provide subsidies of $8,800 to local governments that purchase electric cars for their fleets. The government has already ordered fuel-efficiency standards to jump from 36 mpg in 2008 to 43 mpg in 2009 in contrast to the current 25 mpg in the United States

"China is not waiting for anybody," said Liu. "China has environmental policies that are eons more progressive than in the U.S. China has already made the decision to go green in full force."

But most analysts agree that China must solve its biggest environmental headache - coal. China, which uses more coal than the United States, the European Union and Japan combined - 39 percent of annual world coal consumption - fires up a new coal-fired power plant every week, according to the Woodrow Wilson Center of International Scholars. The sulfur dioxide in coal combustion not only contributes to global warming and acid rain that poisons waterways, but also causes some 700,000 premature deaths a year, according to the World Bank.

Coal, which currently produces about 70 percent of China's energy and half of U.S. electricity, is "not going to go away anytime soon," said Tam. "The U.S. has a long history of experience using coal in a cleaner way," and "a lot of that technology could be used in China to help solve its problems."

Two such joint efforts are already under way.

Coal agreement

Last December, the United States and China signed a $250 million agreement to develop a joint clean coal production plant in Inner Mongolia, which is expected to open in 2010 and produce 1.5 million tons of clean coal annually. Another initiative is a joint research project between Stanford University and Beijing's Tsinghua University on producing clean coal without emitting carbon dioxide.

Even though many environmentalists say clean coal is a fantasy - "it's like healthy cigarettes," Al Gore said last year - China hopes these joint ventures will develop technologies that focus on the environmental impact of coal extraction, the high cost of sequestering carbon, and improved management of resulting pollutants.

In the meantime, investors and consumers alike must overcome a "lack of confidence" in clean energy technologies, supporters say.

"Clean tech is still expensive to adopt and once everybody can afford it, it will become a huge industry employing hundreds of millions of people," said Zhong of Kleiner Perkins Caufield & Byers. "Very much like automotive and computer industries but in a much larger magnitude."