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Deputy Secretary Daniel Poneman's Remarks at the 2011 U.S.-China Relations Conference - As Prepared for Delivery

October 24, 2011 - 12:00pm

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Thank you, Steve, for the introduction and for your work as one of America’s energy leaders.  In addition to his work at Texas A&M, Steve Holditch recently served as a member of a group of experts convened by Secretary Chu to offer recommendations on how to improve the safety and environmental performance of shale gas drilling.

I am honored to be here today with my distinguished colleagues Cao Jianlin, China’s Vice Minister of Science and Technology, and Zhu Weilin with the China National Offshore Oil Corporation.

Over the past decade, the U.S.-China Relations Conference, championed by former President George Herbert Walker Bush, has played an important role building relationships between U.S. and Chinese leaders in government, industry, and academia.  By bringing together many of our nations’ top thought leaders the conference has helped to sustain a robust dialogue and deepen collaboration between our countries, two of the world’s superpowers.

The relationships between China and the global energy market and between the United States and China are of tremendous importance.  During today’s panel, I will be focusing my remarks specifically on ways in which we are continuing to advance our collaborative research and development efforts and what principles and frameworks we need to make sure are in place to further institutionalize energy cooperation in a way that benefits both of our peoples.

Common Challenges and Interests

The United States and China face many common challenges and shared interests when it comes to energy.  We are the world’s two largest economies.  We are the two largest producers of energy.  We are the two largest consumers of energy.  And together, we account for more than 40 percent of the world’s greenhouse gas emissions.  As such, we are two of the biggest players internationally when it comes to addressing the global energy and climate challenges.

Even today, we see that both the energy and climate challenges are becoming more acute, and it appears likely that that trend will continue to accelerate in the years and decades to come.

As populations in nations such as China and India continue to grow and their economies develop further, the global demand for energy resources will grow as well.  And given the internationalization of energy markets around the world, the pressures on energy supplies will not only affect those countries, but rather will be felt by all nations.

In addition, since carbon pollution and greenhouse gas emissions know no country boundaries, increases in greenhouse gas emissions will similarly be felt around the world.  That is why the global community is increasingly coming together to stem carbon emissions from all sources and to accelerate the transition to lower-carbon energy resources.  But in order for these efforts to be successful, both the United States and China will need to play an important leadership role. 

Just as we share an interest in confronting the global energy and climate challenge, our national energy portfolios also share many of the same attributes.  Both of us remain highly dependent on coal for electricity.  Both of us rely heavily on foreign sources of oil to power our economies.  Both of us are committed to finding new energy resources that will help to diversify our energy mixes and to improve our energy security.

It may not surprise you then – that faced with these similar challenges and shared interests – our nations have both begun to invest heavily in clean energy technologies, including energy efficiency, renewable resources like wind and solar, nuclear energy, and shale gas.  This is because we both recognize the tremendous economic potential of the clean energy market and the opportunities for new job growth that will continue long into the future.

That is why over the last few years we have seen a central role for energy innovation in driving economic growth.  New clean energy companies around the world are growing quickly, hiring thousands of new workers, and developing cutting-edge technologies that are in-demand globally.

It is this potential for economic growth, job creation, and global leadership that is spurring both of our great nations to invest broadly in clean energy technologies.

Competition and Collaboration in Clean Energy

Understandably, this brings with it a healthy sense of competition.  We do not shrink from competition.  In fact, it is something we embrace.  In many ways, competition spurs innovation, and it challenges us each to be better.

Competition has been one of the main drivers of some of the great technological leaps we have experienced in the history of human kind, including putting a man on the moon within a decade from when President Kennedy issued that call to our nation.

But let me be clear, this competition does not mean there is not room to cooperate.  To the contrary, as we both work to expand our clean energy economies, cooperating with one another can benefit both of our nations.

As John Holdren, President Obama’s Director of the Office of Science and Technology Policy, has put it, “Cooperation and competition are increasingly being recognized as not incompatible, but rather complementary contributors to innovation.”

The United States and China have cooperated in a broad range of science and technology arenas for more than 30 years, providing an important foundation for our latest joint initiatives in the clean energy sector.  By leveraging our respective strengths, we can learn from one another, work together to accelerate the clean energy revolution globally, and support our respective companies -- as we both strive to realize the economic benefits of clean energy.

The United States and China currently have a broad portfolio of joint energy R&D programs underway - from clean coal and shale gas to electric vehicles and from renewable energy to energy efficiency. 

As we have designed our areas of cooperation, though, we have focused specifically on those areas that will provide substantial benefits to both nations. This includes a first-of-a-kind joint Clean Energy Research Center, announced by Presidents Obama and Hu Jintao in 2009. This $150 million flagship initiative is funded in equal parts by U.S. and Chinese partners and includes broad participation from universities, research institutions, and industry.

The Clean Energy Research Center is focusing initially on three R&D areas: clean vehicles, clean coal, and energy efficiency. 

I’d like to take a moment to talk through each of the areas.  And I think what you will see in each are the ways that collaboration is uniquely structured assures a mutually beneficial framework that leverages our individual areas of expertise to achieve a broader goal.

Clean Vehicles

First, clean vehicles.  This portion of the research center is led on the U.S. side by the University of Michigan and on the Chinese side by Tsinghua University.  I had the opportunity on my last visit to China to visit Tshinghua and I can tell you, it is certainly a hot bed of innovation, energy, and creative thinking.

The scientists and engineers that are part of the Clean Vehicles Consortium are focused on early, pre-commercial technology R&D.  By focusing on technologies that are still several steps away from commercialization, our scientists and engineers can work freely in partnership with one another to advance the basic science driving the development of advanced vehicles.

Let me give you some examples of the innovations that the teams are pursuing.

They are looking at more efficient and longer-lasting battery designs and chemistries for electric vehicle batteries.  They are looking at new processes for developing advanced biofuels from biomass feedstocks.  And new lightweight materials that can improve vehicle efficiency while maintaining the structural rigidity needed for safety.

In addition, through the Electric Vehicles Initiative, another element of our bilateral energy cooperation, we are working together to establish uniform standards and codes for electric vehicle infrastructure and charging stations.  This will expand the global market for these technologies, while helping to create a level-playing field for companies competing internationally.

This aspect of our cooperation is targeted at commercial or near-commercial products, rather than the focus on early science R&D that I mentioned a few moments ago. 

In this case, however, we are not focusing on the development of specific products or technologies, but instead are collaborating on the development of compatible policy frameworks – like standards and codes – that can support the free trade of these technologies.

That’s incredibly important because as we have an increasingly global market for vehicles, we will not be able to sell freely to one another’s markets if the basic standards and guidelines for these technologies are not aligned.

Clean Coal

Our second topic under the U.S.-China Clean Energy Research Center is focused on Clean Coal.  This consortium is led by West Virginia University and Huazhong University of Science and Technology, who are bringing together teams of researchers to develop and demonstrate new clean coal technologies in each country.

The United States and China together account for more than half of today’s global coal consumption.  Developing and deploying clean coal technology will allow both countries to continue using their abundant energy resources, while reducing a wide range of pollutants, from mercury to carbon dioxide, that do not respect national borders and that have significant economic and public health consequences for our nations and for the world. 

As part of this research, teams will work with major demonstration projects in both countries to deploy and evaluate some of the world’s most promising clean coal and carbon, capture and sequestration technologies.

Through these demonstration projects – conducted in partnership with the private sector and utilities in both countries – we will show the commercial-readiness of the individual technologies, and we will be able to generate invaluable data that will help inform efforts to deploy large-scale clean coal technologies around the world.

From a commercial perspective, these joint demonstration projects will help our companies to commercialize their products, to build new partnerships with one another, and then to expand export opportunities.

Energy Efficiency

Finally, the third element of our cooperation under the Clean Energy Research Center focuses on building efficiency.  Energy efficiency is one of the cheapest, easiest, and fastest ways to reduce energy use, to save money on energy bills, and to reduce greenhouse gas emissions.

Both of our countries have significant potential for reducing building energy use.  In the United States, we need to reduce the high energy consumption of our existing building stock.  And in China, we need to work to avoid the rapid growth in energy use that would otherwise follow its rapid construction of new buildings.

To give you a sense of scale, today, the United States has about 300 billion square feet of floor space in buildings.  China is projected to add that same amount in the next 15 or 20 years. 

The building efficiency team under the Joint Research Center is led by the Lawrence Berkeley National Laboratory in California and the Chinese Ministry of Housing and Urban-Rural Development.  Through this Consortium, we will be developing and deploying advanced building technologies, collecting data on building energy use, and developing new building codes and standards.

In the United States, we have found that building codes are one of the most effective means of directly reducing energy use in the building sector.  This collaboration builds on our experience implementing building codes over many years, and leverages the U.S. technical and commercial expertise in this sector.  This will provide for significant new trade opportunities in the coming years.

General Principles to Promote Free Trade and Open Markets

Now in each of these research areas, we targeted our collaboration to specifically enhance mutual benefits.  There are, however, important principles that are central to our cooperation that I want to take a moment to discuss.

First, the involvement of the private sector is essential. 

One of the goals of this cooperation, on both sides, is to promote global exports and expand access to new markets, leading to new opportunities for job growth in both countries.  From a U.S. Government perspective, in each of these initiatives, and in our broader outreach as a government, we work to promote U.S. commercial interests, working in close partnership with our companies to promote cooperation that they see as beneficial.

Second, as we look at ways to expand trade in this sector and across our economies, it is critical that we establish a fair playing field.

This includes strong protections for intellectual property, which is why the agreement reached last month establishing an innovative framework for protecting intellectual property under the U.S.-China Clean Energy Research Center is so important.  This agreement, which was signed by representatives from the U.S. Department of Energy and the Chinese Ministry of Science and Technology, defines how intellectual property may be shared or licensed in each country and protects American and Chinese researchers, scientists, and engineers by ensuring their intellectual property rights for the technologies they create.

Any time you have two great nations like ours, you are going to have genuine shared interests, along with genuine differences and genuine challenges that will need to be overcome.

The real challenge here is not whether we can avoid these challenges – since no one can – but rather, can we work together collaboratively to address them in a way that preserves the common areas of interest we do share.

So while we embrace the competition between our two nations, we need to do so in a way that promotes free trade and transparent markets and in a way that promotes compliance with the global rules of trade laid out by the World Trade Organization.

If we do that successfully and we are able to address the challenges to our relationship, the benefits to the world will be significant.

At the end of the day, I am convinced that we will either succeed or fail together, as partners.  If we succeed, we will guarantee for all of our children generations of prosperity, and we will leave to them the planet that they deserve. 

Thank you everyone for joining us today and for your work every day to deepen collaboration between our U.S. and Chinese colleagues both inside and outside of government.

 

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