Unleashing Energy Efficiency in China: Business Successes and Challenges

May 22, 2013: The China-U.S. Energy Efficiency Alliance hosted a Roundtable discussion entitled “Unleashing Energy Efficiency in China: Business Successes and Challenges” at the Washington, D.C. Convention Center. The event, attended by energy efficiency experts from the public and private sectors, also marked the official launch of a new Export Promotion Partnership with the US Commercial Service.

Barbara Finamore, Alliance President and Natural Resources Defense Council (NRDC) Sr. Attorney and Asia Director, welcomed participants and thanked the Roundtable sponsors, including the Alliance to Save Energy, the Wilson Center’s China Environment Forum, and the Business Council for Sustainable Energy. Finamore also thanked the Alliance Partners and volunteers and gave a special welcome to the Alliance’s newest Partner – Honeywell. She explained that the Roundtable would focus on sharing practical experience related to doing business energy efficiency in China.

Introduction to the Alliance

Finamore introduced the Alliance by noting that it is a public-private partnership “dedicated to the mission of combating climate change by helping China implement practical strategies for energy efficiency that are appropriate for their local conditions.” While the initial focus of the Alliance’s work was to convince China of the value of energy efficiency, more recently, China has become an energy efficiency leader establishing targets for improved efficiency and carbon intensity. As a result, the Alliance’s focus has shifted to providing support for implementing these policies and programs. Finamore noted that the next big project for the Alliance will be a trade mission to China, with the goal of introducing participants to Chinese decision-makers who are looking for technology and expertise to support their efforts to improve efficiency.

California Trade Mission to China

Finamore welcomed Chair Robert Weisenmiller of the California Energy Commission, and member of the Alliance Leadership Council, to share a few remarks in light of his recent trade mission to China led by California Governor Jerry Brown. With the mission’s goals of addressing jobs as well as climate change, he described the valuable exchanges with government officials as well as non-governmental organizations. He also stated that California had begun cap-and-trade discussions with China, and hopes that these conversations will deepen, leading to substantive action. He concluded by expressing the desire to increase exchanges with Chinese officials and businesses to foster cooperation on low carbon technologies, efficiency, and renewables.

Alliance becomes Export Promotion Partner of Commerce Department

One of the highlights of the event was a signing ceremony with Antwaun Griffin (Deputy Assistant Secretary for Domestic Operations of the Department of Commerce, International Trade Administration) marking the new Export Promotion Partner status of the Alliance. Griffin told attendees that the Memorandum of Understanding seeks to promote energy efficiency (EE) in China through increased access to Chinese markets for American businesses that have energy efficient solutions for buildings and facilities. He noted that the MOU would allow the Commerce Department and the Alliance to “enhance energy efficiency products and services in both the U.S. and China.”

Panel Discussion on Doing Business in China

Next, Roundtable Moderator and Alliance Board Member Gene Rodrigues of Southern California Edison kicked off an in-depth discussion on doing business in China. Rodrigues welcomed the panelists: Andrew Bennett of the US Department of Commerce, Terry Fry of Nexant, Jennifer Layke of Johnson Controls, Theresa Sheils of Gensler, and Jay Sparling of Honeywell. Rodrigues said he expected audience members to be inspired by the panelists, sharing insights on doing business in China and creating jobs, while doing good and helping to address climate change.

Rodrigues started the conversation by asking the panelists why their companies are working there.

Fry summed it up by saying because China matters. There is an opportunity to do well and to do good. He noted that China needs support from people who have done this before, to transfer knowledge and experience. Sparling noted that Honeywell sees the business potential: “Practically, it [energy efficiency in China] is about funding mandates.” In 2012, the [Chinese] National Development and Reform Commission not only declared that energy efficiency is important, they allocated money, leading to the selection of four Demand Side Management pilot cities which have funding to meet specified goals as well as committed leaderships. He added that “China is a wonderful partner.”

Sheils noted that “we go where our clients go”, with Gensler opening offices in China starting in 2000. She also pointed out that “we push to do sustainable strategies in every project.

Layke stated that her company believes that they have services and products that can help achieve China’s goals: “We [JCI] see energy is an incredibly important topic in China.” She also said that energy efficiency is important not just for energy security and reliability, but also for addressing environmental concerns.

Bennett pointed out the government’s goal of doubling exports, with the Commerce Department focusing on those markets where it can play a role in providing support, such as in China where they have experts on the ground and experience to provide help. He acknowledged that there are challenges to doing business in China, but that Commerce’s role is to help US companies succeed in the Chinese market. He also added that working with China on energy efficiency helps the US government achieve other important environmental and international cooperation goals.

Rodrigues then shifted the conversation by asking: “how do you unlock potential in China to turn it into profits and solutions?” Layke noted that China operates on relationships, and her ‘aha moment’ came when she realized how much investment it takes to build relationship trust. Sparling concurred, adding: “from a practical perspective, people are key to success.” He added that, the definition of the project is also a key variable to success, allowing Chinese partners to understand if this is something that will work.

The discussion circled back to China’s new DSM pilot cities initiative, with Fry explaining that the initiative is “reflective of how China gets things done. Much is done from the inside out”. Central government planners try things out in smaller areas to see whether they can be replicated broadly.

Rodrigues asked the speakers to describe the work in China that they are most proud of.

Fry said that he is most proud of a project done with the Alliance – working with experts to prepare a volume of technical experience concerning Demand Side Management, which was condensed and adapted for local circumstances by the Central government, who then circulated the Chinese version throughout the country. This resulted in “something they could actually work with.” Fry added that the next big win will arise out of China’s 12th Five-Year Plan which will include a greater focus on the built environment, retrofits, and new efficient buildings.

Sheils proudest accomplishment is the Shanghai tower to be completed 2015, a success story of private-public coordination. It will be the tallest tower in Asia, and the objective is to obtain both China 3 Star and LEED program certification.

Sparling said that due to the groundwork that the US government has done, Honeywell was able to secure a project with the China State Grid Corporation. This project was completed in December 2012, and is only project in the world that has concluded a smart grid project in China. “We are extremely proud of this”, Sparlin said.

Bennett noted that he was most proud of the China-US energy cooperation program, which provides a platform for US companies to engage with Chinese partners. The program also provides resources for US companies to get assistance with implementation and to facilitate commercial deals. “That program has been a huge success,” said Bennett.

Layke cited the value of changing the minds of individual decisionmakers. She pointed to JCI’s renovation of the St. Regis Hotel in China as an example of success, where they were able to demonstrate payback on energy efficiency improvements within 2.5 years.

The Roundtable closed with a round of questions from the audience. Issues discussed included verification and compliance, data management issues in China, standards, energy price signals, and IP protection.

Rodrigues wound up the discussion stating:

“There is a massive opportunity awaiting us in China. This massive opportunity is ours for the taking but only if you have the personal courage to want to participate in China. Are there issues? Are there challenges? Certainly there are. But the message today is that by working with these great companies, and these great agencies, and working with and through the China-US Energy Efficiency Alliance, we can work together to help overcome these challenges and unleash the opportunities, as well as make a positive contribution to addressing climate change.”