U.S.-China Economic and Security Review Commission , "Hearing: U.S.-China Clean Energy Cooperation: Status, Challenges, and Opportunities (Webcast)," April 25, 2014

Friday, April 25, 2014
608 Dirksen Senate Office Building
Washington, DC 20002

Hearing Co-Chairs: Commissioners Robin Cleveland and Carte Goodwin

OPENING STATEMENT OF COMMISSIONER CARTE P. GOODWIN

Good morning, and welcome to the fifth hearing of the U.S.-China Economic Security Review Commission's 2014 Annual Report cycle. I'd like to thank our witnesses for being here this morning. I'd like to thank them for the considerable amount of time they have put into crafting their excellent written testimony.

In today's hearing, we will examine China's domestic and international clean energy policies, as well as look at recent collaborative efforts between the U.S. and China on clean energy.

After decades of rapid economic growth and heavy industrialization, China is currently one of the world's top energy consumers and the largest emitter of greenhouse gases. As a result, Chinese leaders have recently enacted a number of plans and directives with a specific focus on developing a cleaner energy policy and a lower carbon economy.

In the 12th Five Year Plan, the Chinese government set ambitious goals in this regard, including increasing the use of clean and renewable energy sources, such as natural gas, wind, and solar.

However, as China builds up its own clean energy industry, it has also adopted some policies that may disadvantage U.S. energy companies seeking to operate and sell their products and services inside of China. Indeed, China's "indigenous innovation" policy may preclude certain foreign manufacturing companies from qualifying for government-funded projects. We hope to explore these barriers to competition and others during our panel discussions today.

Despite these differences, however, bilateral cooperation on clean energy is an area that both countries have indeed embraced. As witness Dr. Jerry Fletcher, who will testify later today, noted recently, China and the U.S. account for nearly 60 percent of all the coal burned in the entire world. By working together and making joint budgetary commitments, the U.S. and China can accelerate advanced clean coal technology and enhanced environmental protection and help the economy in the meantime.

To help us better understand these issues, we will be joined today by experts from research institutions, like Dr. Fletcher, from the administration, and the private sector.

In particular, we are pleased to welcome Leocadia Zak, Director of the U.S. Trade and Development Agency, to present the administration's views on commercial opportunities in the U.S.-China clean energy sphere.

But, first, I'd like to turn the floor over to Commissioner Cleveland for her opening statement.

OPENING STATEMENT OF COMMISSIONER ROBIN CLEVELAND

Thank you, Commissioner Goodwin, and thanks to all of our witnesses for being here.

I'm pretty parochial when it comes to politics so in Kentucky, there are three things that matter: bourbon, basketball and coal. And that's in alphabetical order, not priority order. So I'm delighted that we're talking about coal today. Basketball is a sorer subject right now.

In November 2009, President Obama and President Hu Jintao announced the establishment of the U.S.-China Clean Energy Research Center, which is focused on spurring innovation, improving efficiency and achieving a low carbon economy through joint efforts by U.S. and Chinese researchers and industry partners. The three initial research priorities are: developing advanced clean coal technologies, including carbon capture and storage; developing cleaner vehicles; and improving building energy efficiency. We're pleased to welcome U.S. directors of two research consortia and the director of TDA to give their views on CERC research and efforts.

I would like to highlight some of the work achieved through the joint efforts at CERC. UK, University of Kentucky, for example, is working with Tsinghua University to develop membranes and solvents to separate or absorb CO2 from the burning of coal. But such efforts require considerable energy themselves. One project has managed to reduce the "energy penalty" or the use of electricity to scrub the CO2 from flue gas.

Another joint project with West Virginia and--I'm going to really mangle this one--Qinghua University is examining China's Ordos Basin and the Green River Basin in Wyoming for geological storage of CO2.

The scope of these projects and their implications for the future of global carbon reduction and energy sufficiency are really impressive, and I look forward to hearing more on their progress. I'm particularly interested in the fact that I think one of our witnesses talks about in the statement, about the fact that bilateral work on clean energy has been far more effective than working on these issues in a multilateral context, partly because we do bring the two largest economies and consumers of energy to the table.

So before we begin, I'd like to thank Chairman Patty Murray and her staff for letting us use this room this morning. And so let's proceed with Director Zak, who I now have to introduce. You have an impressive background, but the most important thing to me is the fact that you were a career civil servant, and the administration chose to promote you and make you the head of the agency. We can go through all your degrees here, which the staff has carefully prepared, but I think what impressed me in our brief conversation before we began is the fact that you are collaborating so closely with OPIC and Ex-Im because I think it's that cycle of support that really truly helps American businesses when it comes to positioning themselves at the beginning and through a trade cycle to assure their success. So if you'd like me to mention where you were a law partner, I'm happy to do so, but otherwise, I think let's just get to your testimony and hear your thoughts on how this process is going.

Thank you.

Panel I: Administration Perspectives
Ms. Leocadia Zak, Director, U.S. Trade and Development Agency (USTDA), Arlington, VA

Panel II: U.S.-China Clean Energy Cooperation Policy
Dr. Joanna Lewis, Assistant Professor of Science, Technology and International Affairs, Georgetown University, Washington, DC
Ms. Sarah Forbes, Senior Associate, World Resources Institute, Washington, DC
Ms. Jane Nakano, Fellow, Energy and National Security Program, Center for Strategic and International Studies, Washington, DC

Panel III: Case Studies of U.S.-China Energy Cooperation
Dr. Jerald J. Fletcher, Director, Advanced Coal Technology Consortium, U.S.-China Clean Energy Research Center; Professor, Energy, Environmental and Natural Resource Economics, West Virginia University, Morgantown, WV
Dr. Huei Peng, Professor, Mechanical Engineering; U.S. Director, U.S.-China Clean Energy Research Center-Clean Vehicle Consortium, University of Michigan, Ann Arbor, MI
Dr. Valerie Karplus, Project Director, China Energy and Climate Project, MIT Joint Program on the Science and Policy of Global Change, Cambridge, MA

You can see a video of the hearing at: http://www.uscc.gov/Hearings/hearing-us-china-clean-energy-cooperation-status-challenges-and-opportunities-webcast