Marty Schoenbauer

MARTY SCHOENBAUER, interviewed at JUCCCE Mayoral Workshop in Beijing, China, June 30th, 2010

I'm Marty Schoenbauer, I'm the Executive Director of the U.S. Department of Energy Office here in Beijing, China.

: When you look around China, what do you see as the most interesting developments in sustainable energy?

Well, actually there's a lot of things to look at it when you're in China. The development, the rate of development here, is extremely impressive. They're building a new, equivalent of a new New York City every year. In the course of 20 years, they will have rebuilt the entire infrastructure that's in the U.S. All of that takes energy, and so it's very important that they use their energy well, and they're working hard to figure out the best ways to do that.

 

: What things can the U.S. learn from what's happening in China, what things can China gain from collaboration with the U.S.?

I think there's a lot of different opportunities. Together, we are the world's largest producers and consumers of energy, and also the largest emitters of greenhouse gasses. And so it's very important that we work together. Secretary Chu visited China twice now, and on his first visit he quickly realized that by working together, we can do much more than we could by ourselves. There's many different opportunities here where China has invested in research and development to advance things that are important to them, such as long-range transmission of power, because most of their energy-producing plants are away from the population centers, so they've invested a lot of money to figure out how can I efficiently transfer that electricity to where it's gonna be used. In the U.S., we've spent much more money on the distribution side to make sure that the electricity is distributed effectively, that our systems are reliable, and that we use state-of-the-art technology to best use the energy in an efficient way. And so by working together, combining those two things, they can learn from us on the distribution side, and we can learn from them on the transmission side.

: In your presentation, you said China is now number one in PV panels, number one in the biggest wind farms, yet it also relies a lot on coal. Can China's use of coal be offset by the innovations of cleaner technology, or is coal still a real challenge for China?

Coal will be available to both China and the U.S., actually. Both of our countries have large reserves of coal, and so it will be a long time before we're not using coal. But there are things that you can do more efficiently, and the use of coal to be more environmentally responsive, if you will. So both of our countries have set high goals to use renewable energies, to offset the need to produce new coal plants.

I've only been in China a little over a year: when I first arrived, China was producing a new coal plant every week. Today they're bringing a new coal plant online about every week and a half. So it's a substantial change when you think about it, but it's still a lot of coal plants. Because they have a wide resource of coal, and coal is essentially cheap to use. But there are effects that come from using coal. It affects the environment. There are other costs. There's the CO2 emissions and other emissions that result have a harmful effect, and so China recognizes that. They're recognizing that they're spending as much as six percent of their gross domestic product on environmental issues, not only the coal industry, but a lot of it from energy-producing or energy-consuming industries that are not very efficient. And so they recognize that that's also harmful to their economy, so they're working hard to correct that.

We have joint processes with them to look at how better to use coal: there's both the industry and government initiatives. Peabody is very big here in working with China to look at safe mining, which is another area of concern here in China. How do you better mine the coal? From a safety perspective as was an environmental perspective. So after you mine the coal, how do you restore the environment to how it was. How do you prevent the leakage of different harmful effects into the water supplies and other things. And so they're working with China on that.

In terms of how it's being produced and used to generate electricity, China's actually done a lot to advance the technology in that area because they are in fact producing more coal plants. So some of their coal plants are among some of the most efficient ones in the world. The typical coal plant in the U.S. if I have my numbers correct is about 40% efficient, maybe 39-40%. Where in China, some of their advanced coal plants is about 47% efficient, which is a big leap. The other thing though that we both need to do, is figure out how to cost effectively capture the CO2 emissions and store them. And so China has several different large projects as does the U.S., and we have several joint projects that look at, after we capture the CO2, how do we properly sequester it? What are the different likely areas in China and the U.S. where they can be safely sequestered? Also, China is doing some extra efforts to look at how can I use this CO2 in an economic way, either to enhance oil recovery or other means similar to what we use in the U.S., to do that. Also looking at infrastructure needs. After I capture the CO2, how do I move it? In the U.S. we have a large number of pipelines already in place to do that. They don't have the same thing here, so they need to invest in pipelines. So there is a whole range of different things to be looked at in this from a total systems perspective, as well as technology. The technology for capturing the CO2 today takes away roughly six to seven percent of the energy that you produce, needs to be used to recover the CO2. So by working together and improving on that technology, our intent is to improve the efficiency and reduce the cost so that will be more likely used by industry.

: You actually suggested we should go to the Shidongkou number two plant in Shanghai. What do you think is unique about that? Pace or technology?

I would say two things: one is China's decision process and the method in which they bring new technology online here is very different than it is in the U.S. From a good and bad perspective. The good meaning that once they make a decision they can work quickly to implement their decision. So to bring on a major plant here in China, from a nuclear plant or a major coal plant, is not quite half but close to half the time it takes in the U.S. Largely because in the U.S. we do a lot of environmental assessments, we do a lot of open public comment periods, and review the comments and the environmental impacts before we go ahead with the project. And so in the U.S., after we made a decision from a cost-benefit and engineering perspective to go forward, we still have to do that environmental step. In China they spend less time on that, and so they move their projects much quicker, and that reduces the time it takes to implement and, of course, the time it takes to bring them online. And so, here in China they are bringing many plants on the line in a much shorter time span that it takes us in the U.S.. One advantage of that is you can look at China, and many countries do, as a large laboratory …In the U.S. when we identify new technology, we'll typically prove that in a laboratory sense, in a small scale, prove it in, and then we'll engineer and raise it up to a larger full-scale deployment. In China, a lot of times what they'll do is they're willing to take the risk to build full-scale plant as a first step and so it's much more risky, but the payoffs are much greater. And so it's kinda like a baseball player swinging for a home run instead of a single. When they hit that home run, the payoff is much greater, but they lose some in the way. Most other countries aren't willing to invest that amount of money to go large scale first, where they are here. So that's an advantage. And so all countries actually can learn from China in that they quickly scale up. And so collaboration with China in that regard benefits the world, because it more quickly gets to large-scale deployment and you better understand the nuances associated with large scale versus laboratory scale.

: Tell me about how the prevalence of e-bikes is a different way of approaching battery development than what you've seen elsewhere, and in what way it jump starts the development of electric vehicles.

Very good question. Actually personally I own an e-bike and find it very good. It's a hybrid, it requires some peddling, (a) peddle assist e-bike, but I find them very efficient. China has a very different approach to electric vehicles than we have in the U.S. We have formed two different forums with China to best understand the infrastructure needed to support electric vehicles, as well as working together with them to advance battery technology, because the real showstopper, if you will, or what's going to make electric vehicles very successful or not, is the battery technology. And so if we can improve upon the battery technology so it's lighter, safer, lasts longer between charges and lasts longer for the lifetime, the more successful the electric vehicle infrastructure will be.

The other thing we don't have a good feel for is how will consumers that own electric vehicles operate? Will they travel long distances? Do they want to travel more than 40 miles? Do they want to recharge a vehicle only on the weekends, or what is the thinking of the different consumers? And what infrastructure? Like today in the U.S., you can go just about any block in a major city and find a Jiffy Lube or some other station there that will service your car. What are the electric vehicle requirements and what is the infrastructure needed to make the consumer want to own an electric vehicle, so that it's not inconvenient for them, if you will, to own an electric vehicle? So we're working with China on a couple different areas for that. We have, under the Electric Vehicle Forum, China's going to deploy electric vehicles, 1,000 electric vehicles in 30 different cities, and then collect data on how the consumers use those vehicles to better understand what infrastructure is needed for recharging and other things in the future. We're doing the same thing in the U.S. with nine different cities, and then we'll share the data between the two different cities. (Sic.)

In our joint U.S.-China Clean Energy Research Center, we're going to spend money with China: the U.S. is contributing $75 million over five years and China is contributing $75 million over five years, total of $150 (million) between us, to do a couple different things, but one of those three things we're going to do is look at joint battery research and development. So that we will use national laboratories and a consortia of universities and industries in the U.S., and they will use consortia here at the same level, to work on the next generation of batteries, if you will, to improve upon them, to make them more usable for the energy market.

You talked about how China wasn't afraid to do a lot of simple things to start pushing things forward, it doesn't wait for a massive technological breakthrough, it started from where people were at. How does that work to move the ball down the field?

…So, in China their marketing approach is different than it is in the U.S., and so what they're already contemplating is they have a large taxi fleet here, for example, and a large bus fleet. So, they are already contemplating, already in place as pilots (pilot projects) already, is mandating that X amount of taxis, X amount of buses use electric vehicles. And so that's a huge way of accelerating the deployment of electric vehicles. And they're using several different methods to look at how do I recharge buses, for example. Here in Beijing, they've built in conjunction with the Beijing Olympics, they've built a large battery change-out center, where they can drive electric buses into, they drop the electric battery pack out of those, and put in a replacement, then they can recharge the batteries when they need to. They're doing that similar-type setup for EXPO, where they're using electric buses down there, and they're also putting in battery charging, change out, stations there.

For their taxis and other vehicles, they're looking at putting recharging quick-charging stations, high amperage, high voltage charging stations around the Outer Ring, in places like the airport and train stations, where taxis come and wait in line to pick up passengers. They can do a quick charge at those stations and then go on their way.

The difference here I would say too, is because of the large number of electric bicycles and other electric vehicles here in China, the consumers are much more accepting of electric vehicles and much more knowledgeable of what their capabilities are. And so in the U.S. where we were born and raised on internal combustion engines, they don't have the same consumer thought process change to go through, I guess you could say, that we do in the U.S. They're already accepting of the electric vehicles, understand the recharging requirements, and are well suited to rapidly expand. In the U.S., our market will be driven differently I would expect. I would expect that our market will be a few people will buy them initially, and as word spreads and people want to be like the Joneses, and own the Joneses' electric vehicle, then more people will buy electric vehicles as it gets more accepted, where here the acceptance is already high.

: Are EXPOs and pushing to get the wind farm in place, and the Olympics, are those things just window-dressing, or are they real game changers that show what's possible that then mass production can pick up and run with the ball?

That's a very good question. I'd say they're a little bit of both. And so, part of it is how they write the policies here. I'll use a wind farm as an example. China had established a goal to deploy X amount of wind power by a certain time. And when they set a goal, and make it public, it's rare that they don't meet that goal. And so they pushed very hard to meet that goal. And they met that goal deploying a large amount of wind farm, electric producing capability. Unfortunately, their policy and the standard didn't require that that electricity actually be connected to the grid, or be used. And so what happened in their push to rapidly deploy these wind farms …the connectivity wasn't there. And so only roughly 50% or actually less than 50% of the wind farms deployed during that big push were actually generating electricity that was used by the consumer. And so now they're rectifying that, and they're going back and changing their requirements, working with the State Grid, working with making sure that, putting different tariffs and other things in place to drive different behaviors so that the electricity generated by the wind farms is in fact being used. And so at the outset, yes, it was a lot of window-dressing, "we're going to do this." In hindsight, though, knowing that China wants to be the number one producer of PV (photovoltaic) solar panels, be the number one producer of windmills, be the number one producer of a lot of different things, they want a whole, as I understand it, capture roughly 45% of the world market for electric vehicles, and electric vehicle infrastructure. To do those things, you need to ramp up your infrastructure for production. And so that might have been a goal that wasn't well published in hindsight, that to capture that large percent of the market, you have to have the infrastructure to produce the windmills. Well, by telling people to deploy X amount of windmills, you accomplish that because you've got to build up the supply chain management to do that. And so they end up doing that, but now they need to go back and fix the quality, and this is an area again where U.S.-China collaboration can come into play. We can help them with different predictive models to predict the wind flows, to help them decide where to place windmills. We have much better technology for putting, integrating the renewable energy that's generated into the grid because of the fluctuation with the wind and how much electricity is actually being produced at any given time, based on the wind. So we have different opportunities to collaborate with them. Also if you look at the technology for windmills in the West versus here, the bearing technology, other things that make them more sustainable over a longer lifetime with fewer maintenance requirements is there. And so there's obviously opportunities for collaboration there as well.

: In your presentation you talked about the vast amount of new office space, that China is now the number one market for automobiles… Can China have as many cars as in America to satisfy public demand, and also have clean cities in which people will be able to live? Can you have lots of development and also a clean environment?

It's a very good question. Certainly a major challenge. On the path, I would say that we're on today, the answer is no …So, China is very rapidly developing a lot of different sectors, including infrastructure for buildings, urbanization is very rapid here. Many rural people moving to the cities, at a rate of a new New York City every year, and it requires large amount of infrastructure to be built. China also has gone from the third or fourth producer of electric vehicles in the world to the number one, both the consumer and producer of electric vehicle. So the question is, is that path sustainable as it is? And my answer is, on the path that we're on today, I would say it's not sustainable. Is there a path out there that is sustainable? I believe there is. But I don't believe it's been put in place yet.

Uh, if you just venture out into the streets here in Beijing, my way here this morning I spent an hour in traffic, where if I came when there's no cars on the road it'd probably take me twelve minutes, because the congestion here is huge. And so the current path is not sustainable. So what do we do about that? What does China do about that? I think there's some easy fixes to help the traffic flow, but with the number of vehicles coming on line, it's not sustainable, without huge investments in infrastructure. And so working together, I think those things are achievable.

One of the things that China is doing because they know they're building this huge infrastructure every year, they're looking at things they call Eco-Cities. Which is a way of saying "reduce energy demands, reduce the demands on the environment for having a large urban area." And so they're looking at building large-scale facilities where you have people living on the top, say, 10-15 floors, office buildings on the medium floors, shopping malls and other things on the bottom floors. And so largely people can live there, work there, shop there without the need of transportation.

We have worked with China to help them design and build the Beijing Olympics site as an example, where the athletes were housed. That was designed to be a zero energy facility, meaning that the energy needed to operate it was the same as was able to be produced through renewable energies. It's not quite operating to design, but it's pretty close. And China's turned that into a residential area. The large areas that were used as gathering places for the athletes are now being used for elementary schools and other community centers and training centers, and the buildings that the athletes slept in have been sold as commercial condos. There's a waste treatment there, there's solar there, there's wind, there's other …geothermal is used for heating and cooling. The design of the building is such that it reflects a lot of the radiant heat during the summer. And the insulation allows it to be efficiently heated during the winter. And so, they are using that as one model, and they're expanding that in other different areas. And so I think there's a pathway, and with the large changes underway in China, there are opportunities today to implement those changes quickly, so that in fact, the future cities are much more energy efficient.

: You alluded to cell phones in your presentation… as an example of leap-frogging. Can India, can China, and therefore the world get to where we need to be without repeating the series of industrial processes that have led carbon emissions at the level where they are?

…I think they can, and I think we've seen a lot of different examples of that. You already mentioned cell phone technology here. It's rare to walk into a home in China and find a typical landline that you see in a typical U.S. home, because everyone is on cell phones. So they did a leapfrog there. I think in electric vehicles, they are looking to make a leapfrog because they don't have the infrastructure in place to build and service the internal combustion engine, and so they are rapidly looking toward electric vehicles and vehicles into the future. They are exploring a lot of different ways to move energy, electrical production, to where it's being used, using renewable energies, hydro- and other things to do that, and so they are taking advantage of the fact they are rapidly developing to implement new technology.

One advantage that China has, is that many of the other countries, if you will, have gone before them, and so they've worked their way to the technology development, and China has an advantage because they are such a huge market of growth here, that virtually every country in the world is here suiting (sic) them, trying to share their technology with them, and collaborate with them, and China is smart and taking advantage of that. And so I think that's good for us, and I think it's good for the whole world, for China to rapidly develop. You mentioned electric vehicles before – I forget the exact numbers, but I believe in the U.S. about 80-87% of the adults in the U.S. own a vehicle. In China it's more like 7-8%, not 87%. And so if 80% of the Chinese residents own vehicles, you can imagine what it would be like here. And I don't think they'll go that direction. They very efficiently use public transportation here. And so I think they are continuing to advance the use of public transportation, recognizing that not everyone in China can own a car because the infrastructure would not support it. Most of their population lives on the east coast of China, and the population is just too dense to support an electric vehicle, at the same rate we have in the U.S., as an example.

: Does China have a plan?

Very interesting question: China actually does a plan uh, they develop what they call a Five Year Plan, and they put that out. They're in the process of developing their 12th plan …that we expect to see out later this year. It's one thing that we have seen as very useful to them. I think it's very useful to every country. The U.S. has put out three different energy policies, and we're working on another one. I think it's very important to have that energy policy approved by Congress and put out, because it provides very valuable information to industry, and to all those who are looking to say, "Where do I want to be in five or ten years?" If you know the direction of the government, it's much easier to do your business case analysis to figure out where you want to go and where you want to take your business. And so in China, they have been very open about their plan. They have set very strong goals for implementing renewable energies. They have devoted a large amount of money to research and development, science and technology, to advance a new clean energy technology. They have set very strong goals for electric vehicles for all the different technologies we've talked about that produce, use or consume energy in some way. So it's very clear to the people that are responsible for implementation, what's expected of them. And they always have that five-year horizon in front of them to know what the government policy is. And so that is very positive for China. Where some of the question marks come into play is, how well is it being implemented? And I don't know the exact saying, but there's a saying in China about, you know, it's about how far can the Emperor see? And so what we see is that implementation, very close to where there's government oversight, is very exact to what the policy is, and the further away you get, the less exact it is.

And so some of what China I believe needs to do, what they are focusing on, is how do I better provide oversight to insure that the policies that we have are being carried out as we intended them? And so part of that is developing infrastructure to do that. In the nuclear energy area we see that happening very well, in that they have been working very close with our Nuclear Regulatory Commission to understand how do I do oversight of the nuclear power industry here, how do I verify the designs, how do I verify that the operations have been carried out safely and securely? Very inquisitive about how we do it in the U.S., how other countries do it to make sure that their models here will be successful in those different safety and security arenas, and so we applaud them for that.

: Should the U.S. be scared or be encouraged by China? What can the U.S. sell to or share with in addition to nuclear information?

…One of the things why the U.S. has always been successful is because of our innovative approach. We always look for new solutions. We're willing to take risks, we're willing to try new things. And that has served the U.S. very well over a long period of time, and I think it will continue. Competition is also very valuable for the U.S. And I think that as more people from the U.S. come to China and see what they're doing here, it's causing more competition if you will, healthy competition, where we're not trying to defeat each other, but we're trying to figure out how can I do better here? How can I learn from this person to improve upon what I do? You frequently hear the term one plus one equals three, and that's very clear here in China, that they have areas where, as I said earlier, you can think of China as a large scale laboratory because they're willing to deploy different technologies at a large scale. So it's different things that we can do here through collaboration that in fact we are doing.

With the Department of Energy alone, we have over 20 different formal agreements with China in nuclear security, science and technology and energy areas, and we're doing collaboration to take advantage of, collectively, to better both of us. And so in clean coal, carbon capture sequestration, electric vehicles, wind, solar, Smart Grid, policy, pricing of electricity, pricing of gas and oil, recovery of oil, better ways of doing coal mining, all of those different things we have collaborative efforts on. And a lot of it is sharing of information, sharing of knowledge, sharing of best practices, so that we can learn from each other and accelerate our growth.

One of Secretary Chu's initiatives is to accelerate the deployment of clean energy technology. A lot of the technology is in fact matured to the point where it needs to be deployed. You brought up the cell phone example before. When I first saw a cell phone it was in the early 80s and a realtor came to my house and he brought his cell phone into the house and it was the size of my briefcase and it cost so much that only realtors could afford it back then. Today, everyone has a cell phone, not everyone, but the large number of people have cell phones: they have GPS on them, they have Internet on them, they have e-mail systems on them, everything including a phone. But they're the size that fits in my hand, and they cost a third or maybe a tenth of what that realtor's phone did. And so our idea is by accelerating the deployment of technology, what it's gonna do is it's gonna reduce the cost of the technology, and it's going to improve the efficiency, and more and more people are going to want to use it and have it. And so whatever we can do to advance the deployment of technology is good for us and good for the world, and China here again is in this situation where they're rapidly deploying technology, and so why not take advantage of that for the world? And work with them to help them deploy the technology, to help us reduce the cost, make it more affordable, make it more usable, prove in, work out the different glitches, if you will, in technology, as they deploy, and then everyone can benefit from that.

: ETOM's last question was whether it mattered whether energy innovation was being done to cleanup the environment, reduce cost, or for economic development?

…Well, I would say that the U.S. Dept. of Energy has always been in the business of clean energy since it's inception back in the 70s. It was largely created because of the oil embargo back then, to figure out different ways of providing energy, and bringing different organizations that were working on that together. And so whenever you introduce a clean energy, a low carbon technology, you're having an effect on the environment. I think different models apply to different countries. Few countries are going to develop new technology and deploy it if it's not cost effective, only because it improves the environment. But I think that what we're seeing is that a low carbon energy has both national security and energy security implications because we reduce our dependence on foreign energy supplies, be it oil, gas or coal… whoever is importing whatever, reduce that dependence because you can create it yourself.

The other is, is it creates new jobs, because you're creating a new industry of clean energy, it automatically creates new jobs. They're typically high tech jobs, high paying jobs, and so it's good for the economy. And so by doing that, you benefit both your national security, your energy security, and your economy, and a by-product of that is you improve the environment. Because you're reducing the emissions caused by fossil energy, and other emissions used as you create cement, as you create rebar, steel, all those different industries that use, that require heat, in some fashion. If you're burning coal to generate the heat you're causing a lot more emissions. And so as you improve upon those things, you're automatically adding to the environment. But I wouldn't say it's the main purpose.