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(originally published by Booz & Company)


China’s Clean Tech Boom

Looking ahead, something else interesting is happening in China with electric cars and battery technology. The country has experienced rapid growth in transportation infrastructure, and in some ways has a competitive advantage — the U.S. already has an infrastructure based on gasoline-powered vehicles, but because China’s is still developing, it is easier to make the transition to electric. We already see electric-powered two-wheeled vehicles everywhere in China, and I would be surprised if cars were far behind.

S+B: Do opportunities exist for other emerging economies to make a name for themselves in clean tech?
Emerging economies have one huge advantage over developed countries. To explain, I’ll use a cell phone example. Americans who travel to the developing world are often shocked by how well their cell phones work there. I often get better reception in the most remote developing countries than I do here in New York City, and that’s because these countries went straight to mobile, without a landline step in between. There are more cell phones in Africa than there are in North America today. Now, each subscriber doesn’t spend very much. They’re not going to have an iPhone or a fancy BlackBerry; we’re talking about very simple phones. But cell phone coverage is ubiquitous in the developing world.

So if that can happen in cell phones, there’s reason to think that in clean energy or renewable energy, similar forces may be at work. Because their energy infrastructure is often very poor to begin with, and because there’s rapid growth and demand for energy, developing countries can leapfrog the sort of dirty, traditional energy that we have in our infrastructure in the United States. Similar to the electric car example above, they can go straight from no energy to clean energy, and that’s a huge advantage because clean energy is still more expensive than dirty energy, but incrementally so, and if you’re going from zero to building something, you might be willing to make that incremental investment. Here in the U.S., if we have to scrap our current infrastructure, that’s a huge additional cost. We need to start all over again, and that’s a big challenge.

S+B: Besides China, what emerging economy is making notable progress?
I think Brazil, where we also did a fair number of projects, is an interesting example. What Brazil’s leaders recognized more than 20 years ago is that their country had a competitive advantage in its ability to produce cane sugar due to geography and expertise, and that it could convert that into an energy product — ethanol — at a competitive price.

Building on that success, I think Brazil is taking some fairly innovative approaches to managing the resources of the Amazon. For many years it was really a question of slash-and-burn and rapid development, and I don’t think any resource protections were in place. But that’s changed pretty dramatically in just a few years. Deforestation still goes on, no question about it, but the rate of deforestation has slowed significantly in the last couple of years, and government initiatives have contributed greatly to this improvement. Now, it’s not necessarily clean tech, but in many ways, it’s addressing a similar problem. It’s addressing climate change in a way that’s specific to Brazil.

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