One trillion dollars a year will be spent on energy infrastructure every year between now and 2020 – and US Department of Commerce Assistant Secretary for Market Access and Compliance David Bohigian is determined American companies will get a healthy share of the clean tech pie.
Bohigian is leading a two week clean energy trade mission to China and India, bringing with him 16 companies, representing “some of the best American companies in clean technology today.”
Blue Skies China caught up with the delegation as it made a brief stop in Hong Kong, on its way for another round of intensive trade talks in India.
“We’ve had hundreds of meetings,” said Bohigian. “It’s been a tremendous success.” Indeed, on the last day of the China leg of the tour in Guangzhou, delegation member Eaton Corporation watched 30 buses fitted with its advanced hybrid engines roll out in a ceremony to celebrate a deal with Beiqi Foton Bus Company. The 30 hybrid diesel-electric buses, ordered by Guangzhou Yiqi Bus, offer fuel savings of 27%, along with similar reductions in particulate and NOx emissions.
At the heart of clean tech trade stimulation between China and the US is the Pollution Prevention, Energy Efficiency (P2E2) programme, pioneered by Hong Kong based US Trade Department chief commercial consul Stewart Ballard.
The scheme encourages firms to improve energy efficiency and reduce pollution using money saved from improved energy efficiency and carbon credits.
Bohigian said he viewed P2E2 as an innovative finance solution to help deploy innovative world class technologies that US firms have. “I hear ‘I can’t afford it’,” he said, “and the more that a programme like P2E2 is able to alleviate that customer concern, the most often we can deploy these technologies to help clean up air and water and mitigate climate change.”
But overshadowing the excitement at the opportunities behind clean technology and innovative clean financing is the issue of intellectual property rights (IPR). Bohigian said China had gone backwards from its last tour, and said he hoped to re-establish talks on the matter in 2008.
“It’s the first thing I hear about from many firms in the US when they worry about doing business in China,” he said. “And it’s not just from the media standpoint, it’s engineers, in particular clean technology companies who would like to deploy technologies. For instance, we’ve heard from global firms they don’t want to deploy their best scrubbers for smokestacks [in China] because they are afraid they will be reverse engineered.”
Clean energy technology firms say the issue is hurting sales to China, said Bohigian. And he said the issue of IPR was critical “because that is the path towards innovation domestically and internationally.”
In 2007, the US asked the World Trade Organization (WTO) to intervene and oversee IPR disputes with China. But this harmed relations over the issue.
“After the WTO cases were filed in 2007, the Chinese wanted to suspend discussions,” said Bohigian. “So we look forward to continuing these discussions… for the betterment of the Chinese and American people both economically and environmentally.”
According to Bohigian, the Chinese cap of 20% on the value of intellectual property in foreign investment could hurt development. “Not being able to allow for proper valuation of intellectual property or any sort of intangible asset is going to limit what might happen otherwise,” he said.
Bohigian said he hoped to “re-engage” the Chinese in a very positive discussion in 2008, and said he had discussed the issue with both the National Development Reform Commission (NDRC) and the Chinese Ministry of Commerce (MOFCOM), which sponsored the China leg of the trade mission.
The IPR issue clearly isn’t scaring leading firms away, as Eaton Corporation’s new technology contract in Guangzhou shows. Kevin Beaty, leader of Eaton’s hybrid electric business, said intellectual property was “an open issue” for his company. “Not all our concerns have been put to bed,” he said. His major concern was the patentability of his technology in China. There may be parts of the system, he said, which are not patentable in the US; his concern is they may be patentable in China, and this would lead to problems down the road if someone other than Eaton patented the designs.
Nevertheless, Beaty said such issues were not holding Eaton back. “We’re just making sure we don’t make any mis-steps,” he said.
Economics and environment – no longer mutually exclusive
This trip is Bohigian’s second trade mission to China, and he says it has exceeded expectations. During a luncheon speech to trade mission delegates and interested parties in Hong Kong, Bohigian said the past had been a tradeoff between economics and the environment. “The future doesn’t have to be,” he said. “The future can be about economics and environmental technological progress, together. Hundreds of billions of dollars are going to be spent on an annual basis on clean technology opportunities, and we’re all going to be a part of that. This is an opportunity to do well by doing good.”
Bohigian pointed out the US commitment to clean energy. “We’ve heard [clean tech] is the third largest venture capital flow in the world, about US$18 billion in the past five to seven years,” he said. “What people don’t know is that the US government has spent more than that on clean energy technology – not even including our Future-Gen project. And we’re sharing that technology with the world.”
Bohigian, himself a former venture capitalist, said the time frames for investment payoffs were traditionally between three to seven years. “As these technologies get deployed globally, I think we’re on the cusp of exciting things,” he said.
Talking to Blue Skies China while trade mission delegates participated in a frenetic “speed dating” style trade-go-round with Hong Kong firms, Bohigian said such Department of Commerce trade missions were just one of the many activities of the US government in promoting its companies overseas. Within the Department lies the International Trade Administration including the Market Access and Compliance unit which works to knock down trade barriers and create a global operating environment; the Manufacturing and Services Department which provides data and information to be able to take a domestic startup to global markets; and the Foreign Commercial Service, which has 100 people in China alone, and helps companies export by introducing them to partners on the ground. These activities are on top of the broad range of government programmes through the US EXIM bank, and overseas private investment cooperation through the Department of Energy, Department of State and the Trade Development Agency.
“The US government has coordinated efforts to make sure US firms are able to deploy global solutions,” said Bohigian. Such government activities helped domestic startups compete globally.