The use of public lands to spur the development of clean energy industries in China has been a contentious issue in recent months. While China’s aggressive growth in renewable energy manufacturing capacity has caused consternation over this lost American opportunity, few would argue that the Federal government should mirror the Chinese state and leverage federally managed lands to attract manufacturers (and the accompanying industrial waste). However, public lands overseen by the Bureau of Land Management can help drive domestic deployment of renewables and will be a critical proving ground for the next generation of energy technology.
Although reports on China’s efforts to nurture cleantech industries can be dismaying, such as the work by AEL’s Daniel Goldfarb on Chinese land hand-outs for manufacturing and contributor Leigh Ewbank additional commentary on the emerging Chinese, American trade dispute, it is important to note that America has not yet lost the renewable energy deployment battle. While growth in the Chinese wind market surpassed the US by almost 4,000 MW in 2009, America leads the world in wind power capacity by almost 10,000 MW (China is currently #2). Similarly, while China is investing heavily in renewable energy generation, Chinese solar power capacity stood at only 150 MW in 2008 compared to an EIA estimate of ~540 MW of in the United States. As is the case for wind, China is moving to aggressively increase solar capacity, targeting 2,000 MW by 2011. Geothermal appears to be a lonely bright-spot: America is far and away the world leader in geothermal generation, with more than 3,000 MW of existing capacity and an additional 4,500 MW in the pipeline. China ranks 17th, with less than 100 MW of geothermal capacity.
While the Race for Megawatts captivates the public, deployment is much more than a matter of national pride. Deployment drives both innovation, reducing technology cost through ‘learning-by-doing’, and economic growth, not only creating jobs through project development but rippling through ecosystem of suppliers, distributors, and manufacturers. A clear path to deployment is also critical if entrepreneurs are expected to invest the time and capital necessary to bring a new technology to market. As can clearly be seen in China (or Germany, Spain, and Japan), strong state support is the single most important factor currently driving the introduction of renewable energy onto the grid.
The good news is that the Bureau of Land Management has been evaluating the renewable energy resource potential of public lands since 2003 and now estimates that public lands have the potential to generate 2.9 million MW of solar, 206,000 MW of wind, and 39,000 MW of geothermal energy. An increasing number of proposals for large scale developments are progressing to the permitting and public participation stages of BLM review. The scale of these proposed projects is immense. The smallest fast-track solar energy project listed on the BLM website is larger than all but three existing solar power plants in America. The individual potential output of four proposed projects exceeds the total combined nameplate capacity of all existing solar plant in service in America. And that’s only the tip of the iceberg – sitting in the pipeline is the generating potential of future projects in the BLM’s 24 proposed “Solar Energy Zones” (recently released Draft PEIS available here).
However, as David Brower and the Sierra Club rose to oppose the Bureau of Reclamation during the American “Big Dam” era, a new generation of druids has risen to defend their beloved deserts and coastlines. Battles have already erupted over BrightSource and First Solar projects in the Mojave, while the Quechan Tribe recently won an injunction against Tessera’s Imperial Valley Solar Project in California.
This discord highlights the diverging paths of renewable energy deployment in China and the United States. Despite Secretary Salazar’s best efforts to play a modern-day Floyd Dominy, the disparate union of American States and interests simply cannot match the bulldozer efficacy of the Chinese State. Not only is all land in China essentially state owned, 90% of generating companies and 100% of transmission is government owned. Equally important are the cultural differences – China is a land where “not in my back yard” has not yet found a voice.
Whether it is a ‘New Sputnik’ or a “strategic inflection point,” we must recognize that the countries that develop the “green” technologies of today will be in a position to dominate the energy industry of tomorrow. However, China today has more in common with America’s robber baron era than with the current age of environmental impact statements and public review – China’s path to renewables is in many ways a refrain from our own Cuyahoga past and cannot be our path into the future. Additionally, although driving deployment today is critical to ensure that we develop experience in the energy technologies of the future, the demographic arithmetic does not favor America in the race for renewable megawatts. The rising demands of a hungry society of 1.5 billion will inevitably exceed even the most extravagant consumption of 300 million. While currently an export industry, China’s push to develop energy technology is not just aimed at industry domination – Chinese regulators are laying the foundation to ensure that development is not accompanied by the blackouts and power shortages that have plagued other developing nations.
Though China’s progress is enviable, America should focus on maximizing development the American Way rather than aping the success of a rising competitor. Despite the bureaucratic hoops, America has a strong business culture and climate and ranks 5th in the world on the World Bank’s “Ease of Doing Business” Index. Importantly, the US ranks 5th in protecting investors and 8th in enforcing contracts. China is far down the list at 79th overall, 93rd at protecting investors and 15th in enforcing contracts.
Companies cannot afford to ignore the rapid development of the Chinese market, as the New York Times Keith Bradsher reported in December. Still, they are beginning to understand that entry into China comes at the risk of training the next generation of competition. Renewable energy is a global industry and many of the multinationals that are exploring China have already invested in America; the fast-track BLM projects noted above include proposals by the Dutch Shell Energy and the Spanish Iberdrola. America must recognize that our open business climate is a great strength, and given the history of technology appropriation in the energy industry, perhaps the greatest selling point for developers comparing China and America.
In this respect, only the glacial pace of project permitting holds us back. The 10-year odyssey of Cape Wind – and the millions involved in paperwork and litigation throughout the process – stands in stark contrast to the rubber-stamped projects of China. The Department of the Interior appreciates this contrast and is working to accelerate the leasing process. Just as the BLM’s Solar Energy Zones are targeted at expediting solar leasing, the “Smart from the Start” wind initiative recently unveiled by Secretary Salazar is aimed at reducing the approval process to two years from the previous 7-10.
Expedited project approval is a start, but we can do more. The Department of the Interior should provide incentives to ensure that America’s renewable energy pipeline is actually developed and that leased lands are put to use. The BLM should fully transition away from the historical first-come, first-serve distribution of renewable energy leases to an auction system. This will ensure that the lands with the greatest potential are distributed to those with the greatest interest in development. Beyond this, the DOI should act to nudge current lease holders towards development. For example, an addendum that escalates lease cost in the absence of active development could be added to lease terms to increase the cost of squatting. This is particularly critical for the high-potential lands identified by the BLM. America’s greatest renewable resources should not be held hostage by speculators.
Opponents of public-land renewable energy have argued for distributed generation, envisioning a world of solar rooftops rather than solar farms in the desert. But large utility-scale projects are necessary to generate the economies of scale that will eventually drive down technology prices to the point where distributed generation becomes accessible to the masses and not just Tesla-driving elites. Distributed generation is the future and has an important role to play even today–but change is measured in MW not kW. The Department of the Interior is working now to make this change a reality.
Dean Chuang is a Policy Fellow in AEL’s New Energy Leaders Project and will be a regular contributor to the website. The views expressed are those of the author and do not necessarily reflect the position of AEL.