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Green technology may spark new US-China trade boom

(Xinhua)
Updated: 2009-09-06 15:21

Nicholas Hope, director of the Center for International Development at Stanford University, described green trade opportunities as "limitless." He said solar energy could become a significant power source.

"I don't think we've exhausted the technological capacity of solar," he said.

Some major US investors have taken interest in China's emerging solar energy sector. Investment banks Goldman Sachs and CDH Investment announced in December that they would pour nearly 100 million dollars into the Himin Solar Energy Group, a China-based solar module manufacturer. The funds are earmarked for research and development as well as boosting the company's growth.

China is gaining ground in the solar industry. China-based Suntech, fox example, is on its way to overtaking Germany-based Q-Cells to become the world's No. 2 provider of photovoltaic cells behind US-based First Solar.

But some US solar firms fret that they can't compete with their Chinese counterparts because the latter have access to cheaper electricity and less costly labor.

Wong warned that some issues over protectionism and tariffs could arise, but said there is more to gain from the free flow of goods and knowledge than from erecting walls.

The green energy partnership will not necessarily be a one-way street, either, Wong said. Some new technologies could also flow to the United States from China, the world's leader in advanced coal combustion, she said.

The two countries, Su said, need to move beyond lip service and begin developing tangible plans for action in their green energy cooperation.

An agreement signed at the recent US-China Strategic and Economic Dialogue calls for deeper ties on clean energy technology but provides little information on what shape that cooperation would take.

Details may emerge in December at the UN Climate Change Conference in Copenhagen, Denmark.

Philip Levy, resident scholar at the American Enterprise Institute, however, said it remains unclear how large the market for green technology will be and whether it will dominate trade in other products.

"I'm not sure we are all going to forget about oil and go for green technology," he said. "When you look at the United States and China, it's very ill-defined how big the market is going to be."

A US "cap and trade" bill -- companies buying permits to emit carbon with the government setting limits on emissions -- won't take effect until well into the future as lawmakers are still pushing it through Congress. That may mean US demand for green energy could remain low for years to come.

Also unknown is the cost of saving energy for US factories aiming to cut carbon emissions. Some companies may find it cheaper to purchase pollution permits than shell out large sums for new carbon-reducing products, Levy said.

Despite high hopes, alternative energy is still not as efficient as fossil fuels and it remains unknown when, and if, that efficiency will improve.

"It's hard to say whether this will be a giant booming market or whether it will be (a) small boutique market," Levy said.

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