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b2b Social Network Misses the Bear: understanding the green tech future

In a recent interview I did with a social networking site for b2b greening strategies, the CEO of the company said the company’s expansion depends on US demand for green energy (and the demand for US businesses to provide green technology). This b2b social networking site is particularly useful because one of its functions is to act as an enabler between businesses, creating a competition free space so that businesses can collectively and cooperatively find green solutions. But the CEO's missed the bear: It won’t be US green tech companies that will lead the world in green technology, they will be Chinese. If there’s any market that ready for green, clean business adjustment it’s China. He’s also betting on traditional growth and consumption models.

China recently abandoned it’s “buy Chinese” policy for wind turbines. In an era of increasing protectionism it seems odd that China would do this especially as it has been the target of protectionist policies itself lately. But it makes sense when we consider that China has the global market cornered in light weight wind turbines, according to a report by Climate Group (China’s Clean Revolution volume II). China will even be funding and supplying a wind turbine farm in Texas, to its advantage: 1700 net jobs created and 30% $1.5 billion financing is from US stimulus money. And while China is still heavily dependent upon fossil fuels for production, according to the Climate Group, its continued iterations of 5 year plans have placed a robust legal and regulatory infrastructure at the base of future green development.

Meanwhile (shocker!) the US lags behind: From “Energy Secretary Steven Chu warned that without a robust climate bill the US was in danger of being eclipsed in the burgeoning market for clean technologies by Chinese and European firms - fears that already appear to be being borne out.”

Somehow I doubt the US’s climate bill will be robust enough to give US businesses the impetus they need to beat or match China in green energy R&D, if for no other reason than whatever version of the climate bill passes the US is only seeking to reduce gHg emissions by either 17% or 20% by 2020 (8.5% of which is negated on account of economic recession-- here’s a question: why not go further?!), well behind most industrialized countries (17% by the way is also behind China). Both the Senate and House bills give too many carbon credits away to business (complimentary permits will keep the price too low) and do little to nothing about agriculture subsidies that keep us eating unsustainably (how you ask? corn subsidies = corn syrup for starters). Neither bill is tough enough on methane (one requires capture the other makes it optional, where methane is arguably a more malicious gHg than CO2).

Vivek Wadhwa has written about the Brain Gain phenomenon beginning to occur in Asia: if we consider universities as the R&D base of the world, then this is going to bottom out. His recent studies of US Chinese (and Indian) graduates find that these students are more likely to go home to what they see as more sustainable economic futures and a more supportive family life style.

The Chinese government clearly “gets” climate change a lot better than its counterparts in most developed countries: it has devoted 40% (Climate Group, Reuters says 34%) of its stimulus package to green projects. The US, by comparison, 12% (hate to think what that looks like if you put it in per capita measure). Despite the fact that they haven’t explicitly made emissions reductions commitments, their commitment to green tech R&D, efficient cars, and greening their energy shows that they are in a race to the bottom (lowest emissions) and they’re playing to win.

Anybody who has studied development knows that top down models work as long as the private sector is on board too. So is it? Sort of: According to Tang Hao in a commentary on, “China’s local government officials are evaluated by their economic successes – and so powerful companies are often treated leniently. From the point of view of many firms, law enforcement is the exception rather than the rule; any official who does otherwise will be seen as a trouble-maker.” Hao explains that it is a misconception that multinational firms are attracted to China only because of cheap of labour: it’s their lax environmental law as well. But business will reform because the government says so, and there is a trend in banking and investment towards green business. If it’s true that pollution is the result of bad business practice, then China is ripe for the kind of corporate cultural transformation that this b2b social networking site can offer.

Beyond China, looking at the US domestic market, the b2b social network CEO has also missed the bear on demand and consumption. A key to moving green forward is revaluing the economy and refocusing growth away from demand and consumption. It’s not possible that the US will demand increasing amounts of energy, at least if all goes well. Green energy is meant to be efficient and in terms of absolute demand should decrease. As it becomes more efficient the US should demand less energy, consume less not more. What would increase is welfare as the US goes green, but the capacity to do this and the future market drivers for clean green tech will be in Asia.

I’ve blogged before about China needing to step up and lead the world on climate change. Whatever agreement is reached at Copenhagen, by the time it needs to be implemented the Chinese will be the dominant world economy. Betting your company’s future on the UK and US green tech industries, Mr. CEO? Think you’ve missed the bear. Hire some Mandarin speakers and computer programmers, quick!

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