This must be about the most important time to get our “practice” of fund management and investment right from the point of view of people and the planet as there has ever been. If this isn’t “the moment we’ve been waiting for”, then when the hell will it be!? And I’m thrilled because at Confluence’s Climate Solutions Summit, for the first time, we contemplated an important major change agent: China.
“China” is often looked at as a big monolith given its government structure and culture. But that’s about as informed as understanding the “USA” and its climate solutions potential without knowing first that electricity policy is really set by 50 states; that 18,000 authorities have jurisdiction over the cost structure of solar through local permitting (and is why the US has the most expensive PV in the world); or that a couple of States can drive the options of the others, as with Electric Vehicles. And, of course, there’s the role of the private sector and civil society (yes, China has some of both) in making the markets here and there.
All to say, our Nations are wide and contradictory. And as we strive to work together on climate and justice, a sense of who’s with us on the other side of the Pacific as we aim to address key issues is critical. It is right now that America needs to be informing itself – from the Confluence convening to the corridors of power in Washington DC, with more openness and understanding than ever.
As Joe Biden steps into Office there’s been much ado about new climate leadership. Given the US’ “worse than absence” on the climate stage for the last four years, here’s hoping humility is the resonant note of our first forays back into climate diplomacy. And I hope we also treat China (the 800-pound gorilla in terms of pollution and solution) with the respect it deserves. For the record, I am not saying we need to bow down in some way nor accept labor abuses in renewable energy supply chains or anywhere else. I do think that it’s time that as we adopt a climate friendly industrial policy, whether it is called a Green New Deal or not, and that we consider carefully that other great nation actively pursuing one.
Also for the record, China is now the leader in technology and innovation: foreign direct investment into China last year dwarfed inflows to the US for the first time ever, and R&D budgets by Chinese companies (many state-owned but economic engines nonetheless) growing gangbusters compared to those in the US. The USA even fell out of the Top Ten Innovation Nations according to the Bloomberg Innovation Index in 2020.
In short, Chinese clean energy and climate tech entrepreneurs are leading the world. At New Energy Nexus we are keen to build bridges with our partner across the Pacific as evidenced by our Chinacleantech.co podcast. And while China has now exceeded the US in terms of emissions, it is also outstripping the US in terms of clean energy technology production and consumption. This podcast gives you an insight into the people who are driving this change from the bottom up.
The reality is that the China narrative in Western media is often negative and replete with misinformation. China is rising to become the larger economic power, which the Economist projects by 2028. To make good choices in relation to our future it is important to have good awareness of reality as we face the climate crisis.
A simple example: did you know that China installed 23GW of solar last December? That’s one month in the middle of their winter. The USA did less than 20GW as a nation in all of 2020 – and that was our record.
Whether it’s wind turbines, solar power, electric vehicles or batteries, the answer probably has a Chinese component. For that we should be glad, because as this graph shows China needs solutions in all sectors of the economy and we should be supporting them to create these solutions. By percentage, close to 25% of the climate challenge this century is China’s emissions, whereas the US projected future emissions represent just 10% (our historic responsibility is much greater and cannot be forgotten – nor will it be by China and others).
It is clear the US and China relationship is and will continue to be a complex combination of cooperation and contention. Yet it is key. Reaching the Paris Accord’s climate goals, let alone “1.5 to stay alive”, will be impossible if the US and China, the two largest polluters in the world, aren’t taking significant steps towards decarbonization. And Paris famously didn’t happen without first a deal between Obama and Xi. One bit of good news is that the diplomats who brokered this – John Kerry and Xie Zhenhua - are back in the game together.
More good news is that the Chinese cleantech ecosystem is a booming market and therefore one the world can’t afford to ignore. Of the climate billionaires, an American immigrant is the biggest – though his batteries and fortune are largely being made in China – and then the next four are all Chinese. In the decade just ended, more venture capital went into Chinese tech hubs than US or anywhere else for that matter.
China is just getting started. Their 14th Five-year plan, which will be promulgated in April is already making some forecasters dizzy. There is serious talk of terrawatts of wind and solar being built in China alone by 2026. If achieved this would drive the final nails into the coffins of coal and gas much faster than expected. You can be sure that in the 2020s, with China recovering quickly from the pandemic, while many other countries stutter to start, it will be the site of ever greater investment in innovations and deployment of solutions.
To learn more and understand from the people doing the work stay engaged with Confluence’s Climate Solutions Collaborative. See you there. Shine on!
- By Danny Kennedy, CEO, New Energy Nexus and Confluence Board Member
Danny Kennedy is the CEO of New Energy Nexus, connecting entrepreneurs everywhere to capital to build an abundant clean energy economy that benefits all. New Energy Nexus is a global platform organization for funds and incubators, with chapters in the USA, China, Indonesia, Vietnam, Thailand, the Philippines, Uganda and India. He acts as Managing Director of the California Clean Energy Fund. This includes overseeing the CalSEED.fund of $25m for very early-stage companies driving innovation and building equity in the California economy and the $12m CalTestBed initiative with UCOP. He is an adviser to Young Greentech Entrepreneurs in China with the Asia Society. Kennedy also serves as President of CalCharge, a public-private partnership with DoE National Labs, universities in California, unions and companies, working to advance energy storage.
Kennedy co-founded Sungevity in 2007, the company that created remote solar design, and Powerhouse, an incubator and fund in Oakland, CA. He was the first backer of Mosaic in 2011, the $1B solar loan provider, and remains on the Board of Powerhive, a solar mini-utility in Kenya. He was a founding Director of Sunergise, the solar-as-a-service business out of Fiji and the EnergyLab Australia. He is also a Director of the non-profits Power for All and Confluence Philanthropy and adviser to the company Solar Philippines. Kennedy authored Rooftop Revolution: How Solar Power Can Save Our Economy – and Our Planet – from Dirty Energy in 2012. Prior to being an entrepreneur and investor he worked at Greenpeace and other NGOs on climate & energy since 1989
