Green Wombat

China’s voracious appetite for energy, its growing contribution to global warming and gargantuan pollution problems present huge opportunities for green tech entrepreneurs and investors, according to a panel of venture capitalists and seasoned China hands who spoke this morning on the People’s Republic’s impact on energy technology. "China will be the driver for clean tech in the future, more so than Europe and the U.S.," said Bryant Tong, a managing director at San Francisco VC firm Nth Power at the event sponsored by The Women’s Technology Cluster, a San Francisco-based incubator. Added Charles Wu, a partner at private equity firm TianDi: "The investment opportunity is enormous. One of my partners is involved in a company that went from $0 to $100 million in one year. You can’t do that in the U.S. In solar, wind and clean coal, there’s a lot of demand." The panelists identified wind power as a particular hot area for investment as China moves to build massive wind farms along its coasts. One overlooked opportunity: tapping China’s cadres of chemical engineers and other highly educated workers to develop green technology for export. "China not only has large numbers of IT engineers but large numbers of chemical engineers," said Wu. "How many chemical engineers do you see running around here?"

Former top Bechtel executive Cordell Hull, now chairman of Infrastructure World, said the fact that China is bringing online two 600-megawatt coal-fired plants every week and plans to build two 1,000-megawatt nuclear plants each year means that renewable energy’s portion of the power grid will be relatively small. But that’s a massive market, given China’s pledge to get 20 percent of its electricity from solar, wind and other renewable energy by 2020 and spend more than $60 billion to make that happen. "China has a history of pretty much fulfilling its national planning objectives," said Hull, who has 30 year’s experience working on China projects. "This is going to happen."  One growing opportunity: providing technology and solutions to alleviate the severe air and water pollution caused by China’s reliance on dirty coal for energy. As the 2008 Beijing Olympics approaches,  the Chinese government is ratcheting up spending on pollution control, he noted.

Still, pitfalls abound for green tech companies contemplating the Chinese market, cautioned the panelists.

The usual warnings about doing business in China apply to green tech: Laws that appear on the books are not enforced. Policy made in Beijing will often be ignored in the provinces. Success requires nurturing relationships among many players over time. And last but not least, exporting intellectual property to China is a risky move. "You’re going to have a problem, potentially, with any IP you bring to China that you can’t black-box here," said Hull. Putting intellectual property in a black box means parceling out information about a technology so that no one individual has complete knowledge of a process and thus it can’t be appropriated by others. One solution to the China IP dilemma, said Hull, is to sell services to go along with whatever technology you take overseas to ensure continuing demand. 

Worrying excessively about protecting your intellectual property, however, risks having the future pass you by, according to Hull. "The world of the future is not IP. That’s an Anglo-Saxon concept," he said. "The world of the future is open source. The world of the future is relationships."