US

1
US China Cooperation on Energy and Clean
Technologies ???????????????Todd GlassWilson
Sonsini Goodrich Rosati, PC???????????????
??????

• Presented to the3rd China Energy and Environment
  Summit???????????????
• The Great Hall of the People, Beijing,
  China?????????
• 20 August 2010 2010?8?20?

2
An Overview??

• China and US are Inextricably Linked and Share a
  Common Future??????????????,?????????
• Common Catalysts Giving Rise To Energy and Clean
  Technologies in the US and China?????????????????
  ?????
• A Call for Greater Cooperation ???????

3
China and US are Inextricably Linked in a Common
Energy Future - 1 ???????????????????????? 1

• China and the US are 1 and 2 in the
  world???????????????????
• Economic might????
• Industrial capacity??????
• Energy production and usage???????
• Need for new generation??????
• Coal usage (US 54 China 80)????(??--54
  ??--80)
• Carbon emissions???

4
China and US are Inextricably Linked in a Common
Energy Future - 2 ???????????????????????? 2

• China and US also share a golden opportunity for
  political and economic leadership regarding
  climate change?????????????????????????????????
• China and the US must work together to accelerate
  innovation and commercialization of energy and
  clean technologies?????????????????????????
• Drive technology innovation??????
• Finance RD, facilities, and projects ??????????
• Build pilot and first commercial
  projects????????????
• Reduce cost????

5
Significant Catalysts Driving Commercialization
of Energy Clean Technologies in the
US???????????????????

1. Energy market fundamentals????????
2. Need for new generation resources????????
3. Climate change risk??????
4. Energy security????
5. Serial entrepreneurs accelerating development,
   financing and commercialization of energy
   technologies ?????????????????????
6. Financing from traditional banks to private
   equity to venture capital to governments, money
   is flowing and growing ????????????,????????,???
   ??????
7. Federal and State policy initiatives ?????????

6
The Energy Clean Technologies
Landscape?????????

• Energy/Carbon Management??/?????
• Smart grid????
• Demand response????
• Demand management????
• Carbon offsets???
• Carbon trading???
• Carbon utilization???
• Carbon sequestration???

• Transportation??
• Propulsion???
• Components??
• Vehicles??
• Batteries??
• Related Infrastucture??????

• Alternative Energy????
• Wind?
• Solar??
• Biofuels/Biomass????/???
• Geothermal??
• Clean coal???
• Coal to liquid???
• Hydrokinetics?????
• Storage??

• Miscellaneous??
• Industrial processes????
• Server farms????
• Televisions??
• Motors??
• Packaging??
• Other consumer goods?????

• Built Environment????
• Materials??
• Design technologies????
• Heating / cooling??/??
• Lighting??
• Sensors / software / controls? ??/??/???
• Project development????

• Water/Air?/??
• Desalinization??
• Water treatment???
• Water efficiency????
• Emissions control????

7
Market Fundamentals Are Driving
Change?????????????
1993??2009?4???????????
?
??
???????????
???
?????
?
8
Energy Technologies Carbon-Constraints and
Energy Security???????????
??
???????
?
?
???????
???
???
?????
???
????
???
????/??
???/???
???
??/??
9
ECT and Technology Industry Life
Cycles?????????????????
Personal Computing/Software
Microprocessors Home Computer Apple II
IBM PC Windows/
RAM
MAC PCI, etc.
Mid-70s 1976
1977-1980 1981-1984
1990s
Internet Web Technology and
Commerce Academics
DARPANET/ DEC Net/ Mosaic/Browsers
Portals ebay Dial up
ARPANET SNA/XNS Netscape/Yahoo
e-Commerce Amazon




NetWare
1960s 1968-1970s
1980s early 90s late
90s 2000
???????????
?? DARPANET/ DEC Net/
Mosaic/??? ???? ebay
??? ARPANET SNA/XNS
Netscape/Yahoo ???? Amazon




NetWare
1960s
1968-1970s 1980s early
90s late 90s 2000
ECT Today
??????????
??
??
?? / ??????
Dollars / of Investments
??
??
Cottage
Standards
Second
Generation/
Mass Market
Background
Specialization
Environmental
Developments
First Generation/
Dabbling/Hobbyist
Proprietary
???
?????
???
??
??
??
????
??
??
???/
Phase
??/?????
??
10
Venture Capital In ECT Continues to
Rise ??????????????????
????????????
10???
??????
Source Cleantech Group Venture Investment
Database Cleantech Investment Monitor????Cleant
ech Group Venture Investment Database Cleantech
Investment Monitor
11
But venture capital and private equity is but a
small slice of the pie?????????????????????
VC PE
????
?????
Public Markets
6BN
Small Scale Projects
13BN
?????
20BN
9BN
Corporate RD
????
11BN
92BN
Government RD
Asset Financing
????
????
Global Clean Energy Investment Types 2009, US
billions2009???????????,10???
Source Green Investing 2010 Policy Mechanisms
to Bridge the Financing Gap, World Economic
Forum????????2010???????????,??????
12
US Federal Policies Stimulating Renewable Energy
and Clean Technologies ???????????????????

• Federal Tax Credits and Treasury
  Grants????????????
• Stimulus Package Is Pushing Billions of Dollars
  into the Clean Technology Arena??????????????????
  ????
• Renewable Fuel Standard???????
• Legislative Priorities Could Increase Speed of
  Deployment??????????????
• To date, however, the US has no federal carbon
  regulation or federal renewable portfolio
  standard??,???????????????????????

13
An Overview Of US State Policy Incentives????????
???

• State Renewable Portfolio Standards (RPSs) are
  creating unique markets but varying standards,
  complexity and risk ??????????(RPS)?????????????
  ???????????????
• Renewable markets are characterized by power
  purchase agreements with independent power
  producers using non-recourse project
  finance????????????????????????????????????
• Other state incentives are available see the
  Database of State Incentives for Renewables and
  Efficiency http//www.dsireusa.org/???????????
  ???????????????????http//www.dsireusa.org/

14
Renewable Portfolio Standards?????????
www.dsireusa.org / April 2010www.dsireusa.org/201
0?4?
ME 30 x 2000 New RE 10 x 2017
VT (1) RE meets any increase in retail sales x
2012 (2) 20 RE CHP x 2017
WA 15 x 2020
MN 25 x 2025 (Xcel 30 x 2020)
MT 15 x 2015
NH 23.8 x 2025
MI 10 1,100 MW x 2015
MA 22.1 x 2020 New RE 15 x 2020(1
annually thereafter)
ND 10 x 2015

• OR 25 x 2025 (large utilities)
• 5 - 10 x 2025 (smaller utilities)

WI Varies by utility 10 x 2015 statewide
SD 10 x 2015
RI 16 x 2020
NY 29 x 2015
CT 23 x 2020
NV 25 x 2025
IA 105 MW
OH 25 x 2025
PA 18 x 2021

• CO 30 by 2020 (IOUs)
• 10 by 2020 (co-ops large munis)

WV 25 x 2025
NJ 22.5 x 2021
IL 25 x 2025
CA 33 x 2020
KS 20 x 2020
UT 20 by 2025
VA 15 x 2025
MD 20 x 2022
MO 15 x 2021
DE 20 x 2020
AZ 15 x 2025
DC

• NC 12.5 x 2021 (IOUs)
• 10 x 2018 (co-ops munis)

DC 20 x 2020
NM 20 x 2020 (IOUs) 10 x 2020 (co-ops)
29 ?? ??????????????? (6 ?????)
TX 5,880 MW x 2015
HI 40 x 2030
29 states DC have an RPS (6 states have goals)
State renewable portfolio standard??????????
Minimum solar or customer-sited
requirement????????????

State renewable portfolio goal????????
Extra credit for solar or customer-sited
renewables?????????????????

Solar water heating eligible???????????
Includes non-renewable alternative
resources????????????
15
Four Trends That Will Shape the Chinese and US
Energy Systems of this Century????????????????

• Electrification ???
• electricity will become the principle form of
  energy delivery and use?????????????????
• De-carbonization ???
• easier to cut carbon dioxide emissions from power
  generation than from transport fuels?????????????
  ?????????????????
• Localization ???
• local control, more micro-generation and local
  heat production ????,??????????????
• Optimization ??
• more efficient and productive use of cheapest
  form of energy is the energy you save
  ????????????????,???????
• Source Ed Crooks, Energy Editor, Financial
  Times, 3 November 2009 ???? ????Ed
  Crooks,????,2009?11?3?,

16
An Opportunity for Greater Cooperation
1??????? 1

• To accelerate the commercialization of energy
  and clean technologies, the US and China
  should??????????????,??????
• Create stable legal and regulatory
  environments????????????
• Price carbon??????
• Create markets for renewable energy and energy
  efficiency???????????????
• Advance smarter energy infrastructure????????????
  ?
• Invest in first commercialization
  projects?????????

17
An Opportunity for Greater Cooperation
2??????? 2

1. Incentivize innovation and allow for return of
   profits????,??????
2. Protect intellectual property both US and
   Chinese ????????????????
3. Encourage and ensure fair and open competition
   between private enterprises, not
   governments?????????(????)????????
4. Reject economic nationalism (Buy American is
   stupid)????????(???????????)
5. Encourage cross-border joint ventures
   (contractual and equity)??????????(?????????)

18
Todd Glass tglass_at_wsgr.com 1.206.883.2571 1.415.
947.2071