Revolting Future

In the next decade, the Peoples Republic of China will add nine times more new energy-producing capacity than will the U.S. The incredible demand gives China a powerful edge in becoming the world’s leader in the design and manufacture of alternative energy-generating technology. While most of both US and PRC new power will come from coal – which really isn’t clean (most “clean” coal plants just shove the “dirt” deep beneath the earth) – China benefits from massive direct investment from the government, exceptionally low-interest loans (2% is pretty typical) for new installations, and the fact they don’t have as many older legacy systems that have so much investment sunk into them that it is not economic to replace them. Energy is such a priority in China that the new super-cabinet ministry (National Energy Commission comprised of several existing cabinet ministers) is led by none other than Premiere Wen Jiabao himself.

So which country is the biggest manufacturer of wind turbine electrical generators? China. Of solar panels? China. Obama’s January 27^th State of the Union message chided us for falling behind in the energy technology race, where many countries (like Spain, Germany and Denmark) have beaten us at our own game: “I do not accept a future where the jobs and industries of tomorrow take root beyond our borders — and I know you don’t either,” he told the joint session of Congress. But even if the US could return to second place, we’d be doing well. Foreign companies are investing in manufacturing plants for new energy technologies in China, not the US. They know where the demand will be greatest and where labor costs are exceptionally moderate.

The January 30^th New York Times: “China intends for wind, solar and biomass energy to represent 8 percent of its electricity generation capacity by 2020. That compares with less than 4 percent now in China and the United States. Coal will still represent two-thirds of China’s capacity in 2020, and nuclear and hydropower most of the rest…As China seeks to dominate energy-equipment exports, it has the advantage of being the world’s largest market for power equipment. The government spends heavily to upgrade the electricity grid, committing $45 billion in 2009 alone. State-owned banks provide generous financing…

“China’s commitment to renewable energy is expensive. Although costs are falling steeply through mass production, wind energy is still 20 to 40 percent more expensive than coal-fired power. Solar power is still at least twice as expensive as coal…The Chinese government charges a renewable energy fee to all electricity users. The fee increases residential electricity bills by 0.25 percent to 0.4 percent. For industrial users of electricity, the fee doubled in November to roughly 0.8 percent of the electricity bill… The fee revenue goes to companies that operate the electricity grid, to make up the cost difference between renewable energy and coal-fired power.”

And China appears to be committed to making sure that its products remain cheaper than American manufactures by making sure that, despite the clear downward pressures on the U.S. dollar generated from our massive deficits, that the Chinese and U.S. currencies maintain parity, even if this distorts normal economic balance. As the Obama administration presses for a real currency adjustment to make our exports cheaper and Chinese imports more expensive, it’s a battle from a weak and over-borrowed U.S. government, with a house divided back home. The February 4^th New York Times: “China, they say, is determined to reignite its export machine after a global recession that sapped demand for Chinese goods. A cheap currency is vital to that goal. And China’s leaders have grown impatient with lectures on economic policy from their chief debtor, the United States…‘It will be like water off a duck’s back,’ said Nicholas R. Lardy, a China expert at the Peterson Institute for International Economics. ‘They’re puzzled by the criticism. They think they should be praised for keeping their currency stable at a time of global turmoil.’…Criticizing China’s policy, however, is likely to worsen a relationship already frayed by irritants on both sides.”

It is only a question of time before relatively inexpensive Chinese-made equipment becomes the only truly economic way of creating green power in this country and most of the world. As we dither with political bickering and a failure of leadership among our Congressional leaders, China is simply accelerating its technology development at such a pace that in the immediate future, they simply will be too far ahead of us to catch. But then, just think of how much money we can save by cutting the teaching budgets of the nation’s engineering schools and how many educated aliens we can exclude to protect American jobs for which there are no qualified Americans to fill?! Yeah, we’re on the smart path!

I’m Peter Dekom, and if only you could see my face.