On the heels of China's 12th Five-Year Plan (2011-15) formally released on March 16, scholars, governmental officials and business leaders from China and the United States gathered at the China Energy and Environment Conference 2011 in Boston, Massachusetts on April 9 to break down the Chinese Government's plan. They discussed the critical challenges and opportunities facing Chinese companies and their U.S. counterparts in the energy sector while addressing Chinese energy and environmental issues.

Sponsored by centers around Harvard University in Boston, GE Energy and New Ventures, the conference aims to improve U.S.-China collaboration towards sustainable energy and environmental solutions. New Ventures is the global sustainable enterprise intiative with the Markets and Enterprise Program of the World Resources Institute.

Given China's massive "going green" subsidies and incentives, panelists at the conference discussed a number of issues ranging from the future of renewable electricity in China to opportunities and challenges facing foreign direct investors and young Chinese entrepreneurs in the country's energy production, distribution and sales sectors. They also addressed issues such as clean energy vehicles, energy efficient buildings and environmental systems management in rural areas.

Shift from coal

Nuclear power, green energies and gas will likely become China's new domestic energy mix, and are expected to grow 10 percent, 18 percent and 12 percent, respectively, by 2020, said Christopher Dann, Vice President of the management consulting firm Booz&Co.

China became the largest wind market in 2009 and has recently emerged as the dominant solar photovoltaic(PV) exporter, Dann said.

But these green energies are not without their shortfalls. Large-scale wind technology deployment is limited by grid integration problems, and China's domestic use of solar power faces significant economic and infrastructure constraints.

"High costs are the biggest obstacle to increase development of PV power, and until PV electricity price, which is now more than three times that of thermal power, stabilizes without needing subsidies, the government will be reluctant to intervene," Dann said.

In addition to large barriers to grid connectivity and electricity transmission from renewable energy sources, high energy consumption and pollution caused by silicon production also contribute to government unwillingness to invest, he said.

Dann said compared with solar power, larger scale and proven power alternatives such as nuclear and natural gas are more likely to gain government backing.

That's where foreign investors come in—they see these opportunities to tap China's clean energy future.

Diverse strategies

To do business and succeed in China is a matter of localization, and localizing products is critical to any China strategy, said Peter Evans, Director of Global Strategy and Planning of GE Energy.

"We are relying on global energy initiatives and China's long-term goals and partnering with this strong energy player in the world energy market," Evans said.

"GE Energy's business and operation in China are quite diverse and resource focused," Evans said. GE has extended its China businesses to the wind power sector. It recently announced a joint venture in Harbin, capital of northeast China's Heilongjiang Province, to manufacture wind turbines.

"We are excited with all the opportunities China has to offer as China adds wind turbines to its mix. China will surely become the world's largest wind power country," he said.

"Wind power is really an exciting and dynamic industry right now—just 10 years ago, there were only four players, and now there's are over 60. So it's a pretty rough-and-tumble place to do business. But to meet the governments' 2020 targets for wind, the industry will need to grow by 500 percent by 2020, which is huge," he said.

Natural gas is the focus of technology-driven natural resources company Great Point Energy. "Natural gas has developed much more quickly in China than the rest of the world and there is a shortage of domestic supply," said Daniel Goldman, Executive Vice President and CFO of Great Point Energy. "Our near-term strategy in China is really focused on selecting an appropriate partner to work with, since we're very cautious about technology development here. "

Great Point has so far focused on talks with state-owned enterprises within the energy sector and several large private sector companies. 

Better IPR protection

Panelists all agreed that intellectual property right (IPR) concerns in China today are much better than before.

"I think the IPR issues aren't such a big deal as we once feared or they were in China. Well established companies usually understand the importance of these rights," Evans said. "It's important to have a sound contract with the right legal terminology, stipulate systematically what you want to share and what you don't, and make sure through training programs that employees understand that importance of IPR protection."

"Strategically, when we look at a potential partnership in China, we value whether they have an interest in protecting IPRs and not letting the technology leak to other Chinese companies," Goldman said.

But he pointed out clean energy-related IPRs are different from those in the manufacturing sector.

"Tactically, they are generally large and expensive projects that cost hundreds of millions of dollars. It's not easy for someone to come up with that amount of cash to deploy such technologies," he said.

(Reporting from Boston, Massachusetts)