China and U.S. Energy Giants Team Up for 'Clean Coal'

Duke Energy is working with ENN and China Huaneng Group on technologies both to produce fewer carbon emissions and to capture more of them

By Adam Aston

Inside the Beltway, China is often cast as an environmental villain. Some lawmakers point to Beijing's skyrocketing greenhouse gas emissions as their main argument against any policy to cut U.S. carbon output. Others see China as a competitive threat, stealing both conventional and green jobs from American workers while already pulling ahead in the cleantech race.

But a new dynamic is taking shape that may transform this perception. Led by the likes of Duke Energy (DUK), Southern Co. (SO), and their Chinese counterparts, utilities from the world's two largest greenhouse-gas-emitting nations are collaborating on crucial technologies that burn coal more cleanly and help capture and store CO2 emissions. "There's a perception that the U.S. leads in this technology and China lags," says Armond Cohen, executive director of the Clean Air Task Force, or CATF, which has created a network of a dozen Chinese and U.S. utilities to work on developing cleaner coal methods. "That's not so. In some key areas, China is more advanced. There's a lot to share."

Good News for Obama's Energy Policy

The timing of these deals may help move President Barack Obama's agenda forward on his upcoming trip to China. During his four-day trip starting on Nov. 15, watch for leaders from both countries to refocus relations on cooperation, rather than rivalry, by unveiling joint green efforts.

Obama would benefit from good news in this area to help rebuild momentum in his quest for a national climate policy back in Washington—and his drive to get the U.S. to sign on to a new global accord to succeed the Kyoto Protocol at upcoming talks in Denmark. "Progress in Beijing will give Obama more leverage in Washington," says Elliot Dirnger, vice-president for international strategies at the Pew Center on Global Climate Change. "And that could help him move the climate issue forward in Copenhagen."

For now, market forces are motivating big coal-burners on both sides of the Pacific to compare notes. After all, utilities in China and the U.S. face the same problems. They are highly dependent on coal—China creates 80% of its electric power from coal, the U.S. about 50%—and anticipate not just tougher environmental rules but more costly coal. "They share a common imperative: to develop ways to use the fuel more cleanly and more efficiently," says David Victor, director of the Laboratory on International Law & Regulation at the University of California at San Diego.

Innovation at "China Speed"

Sharing the work can cut the time and costs of developing unproven technologies. In just a few years, China has built a generating fleet equal to the entire U.S. power sector and is on track to double that build-out over the coming decade. China has not only moved ahead in a variety of technologies but is also an ideal testing ground for U.S. players, adds Victor. "Most technology improves incrementally, not revolutionarily," he says. "The Chinese are doing a massive build right now, so it's not surprising a lot of the learning is happening there."

Duke CEO Jim Rogers uses the term "China speed" to describe the hyperbolic rate of China's rollout of new plants and technologies. He aims to quicken innovation back in the U.S. by teaming up with some of the energy pioneers. "China is leading the world in investing in clean energy, and we can make greater progress…working together," says Rogers in a statement.

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