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In China with Gov. Brown: Interview with Mary Leslie and Cathy Calfo

I sat down with Mary Leslie, Executive Director of the Los Angeles Business Council, and Cathy Calfo of California Certified Organic Farmers, to pick their brains about a recent trip to China with Governor Jerry Brown. Here's what they took away from the visit:

 

What made you decide to join Gov Brown on this trip?  Was there one aspect of China's economic policy you were particularly eager to see?

Mary Leslie: A key focus of the governor’s trade mission to China was to share California’s invaluable experience of growing its economy while reducing pollution and to learn how the world’s worst polluter is working toward the same goal.  Los Angeles has had several particularly innovative developments on this front in the last few months and years, including; the Los Angeles Green Building Ordinance, which is the most far-reaching plan of any big city in America to promote green building practices in the private sector;  The LA Commercial Building Performance Partnership which has a goal of a 20% reduction  in energy intensity by 2020, and the Clean LA Solar Program which is the nation’s largest municipal solar commitment that will create 4,500 jobs, generate over a half billion dollars in local private investment, and offset 2.5 million metric tons of CO2.

The opportunity to represent the members of the LA Business Council, share our successes, and be a part of this exchange of information prompted me to join this unprecedented mission.

Cathy Calfo: I joined Governor Brown’s trade delegation as a representative of California agriculture and organic agriculture in particular, but also have a strong personal interest in China’s climate and transportation policies. On the trip, I represented California Certified Organic Farmers (CCOF), which includes more than 2400 organic producers and processors from across North America. Some CCOF members have traded or have plans to trade products in China.

In China, there is growing demand for U.S. agricultural products, including organic, largely in response to food safety and health concerns. China developed its own organic standard which was implemented in March of this year. The impact of that move was to effectively block the import of most USDA certified organic products to China (due to difficult to meet regulatory requirements). I was eager to speak with Chinese certification officials and organic certifiers to discuss how we might partner to re-open the Chinese market to U.S. organic products.
In regard to energy, I was interested in Governor Brown’s efforts to work directly with China to secure commitments to reduce green house gas emissions and to develop clean technologies. I was also excited to ride the high-speed rail between Beijing and Shanghai – a distance about the same as that between San Francisco and Seattle. We made the trip in about three and a half hours.

 

What was your overwhelming impression of the Chinese economic growth model?

CC:  My family moved from Denver to Los Angeles during the mid 1960s. Visiting urban centers of Beijing, Shanghai, and Guangzhou brought back memories of my family’s arrival in Southern California – primarily the smog and traffic congestion. China’s population, pace of growth, and economic challenges far outpace what we have experienced anywhere in the United States. During the past decade, China’s economy has expanded rapidly, income has grown, and a heavy migration to urban centers has taken place. The Communist Party of China maintains a planned economic system and has laid out the nation’s 12th Five Year Plan under new leadership. The plan names among its key challenges declining resources, income disparity, weak domestic innovation, and a declining agricultural sector. It aims to maintain 7% annual GDP growth (compared to about 10% annually during the past decade), create 45 million jobs in urban areas, and research and development spending to account for at least 2.2% of GDP. The plan also lays out environmental and energy goals, plans to construct and renovate housing on a massive scale, and extends pension plans for rural and urban residents.

Regardless of the differences between China and U.S. growth models and their relative strengths and weaknesses, my lasting impression of the delegation visit was the potential significance of mutual engagement. As the governor’s office pointed out in the signing of the MOU related to air quality, today China’s pollution is California’s pollution. Economically we feel the impact of China’s emergence as a major player in global markets for renewable energy products, and the power of Chinese capital and investment, will shape the future of many U.S. industries and landscapes.

ML:  While China’s growth has been enviable, it has also become clear that the recent weakening of their economy is due to the government’s restrictions on free enterprise and that their unregulated growth has come with some high environmental costs. Since China’s downturn, many economists have urged the government to loosen controls over the financial system and increase foreign investment. And this is where our trade mission will prove a success.

As China now works to keep its economy humming while reducing its inefficiencies and dependence on fossil fuels, Californians can offer the kind of clean technologies they so desperately need. The accounting firm Ernst and Young calls China the world’s best market for renewable energy projects -- this opens up tremendous opportunity for California’s booming clean tech industry. In fact, a recent PEW report revealed that while the US is at a trade disadvantage with China in other industries, we are enjoying a $1.63 billion advantage from our clean tech industry.

 

China is often referred to as the manufacturer to the world. But the country is trying hard to compete with the US in innovation as well. Did you see signs of this trend? Is it working?

ML:  I saw competition in China but I also saw so many opportunities for partnership and collaboration. Sierra Energy, a Davis-based company that converts waste to energy that joined the trade mission, is working on an $80 million deal to build a plant to power 20,000 Chinese homes. McWong Environmental Technology of Sacramento, a wastewater treatment specialist, reportedly signed a $100-million deal in China last week to build and operate a water treatment facility at a chemical plant in the Anhui province. And Scripps Institution of Oceanography signed an agreement with Ningbo University that includes $50-$100 million of Chinese funding for a University of California, San Diego research center for development of renewable technologies at Ningbo University along with the formation of $25 million technology fund for commercialization in China of Scripps/UCSD discoveries.

Recognizing the need to nurture and accelerate more of these opportunities, the U.S. Department of Commerce earlier this year created the US-China Clean Tech Center (UCCTC). With offices in Los Angeles and Beijing’s Central Business District, the UCCTC provides U.S. clean technology firms with a platform to showcase American clean tech products and services in China.

As Governor Brown said to an audience at Tsinghau University, “We’re in one world and we’ve got one big problem.” Finding ways to work together to solve that problem proved a theme throughout the trade mission.

CC:  The Chinese Five-Year Plan calls for significant spending on research and development, speaking directly to the priority placed on innovation, as does visible investment in high-speed rail and other modes of clean public transportation. The landscape between Beijing and Shanghai bears witness to the massive push toward employing a broader, more up to date range of energy sources – newer nuclear power plants dotted the horizon alongside old coal fire chimneys. And the 33-kilometer drive to a new deep water port on an island off of Shanghai (the road and the port all constructed in just three and a half years) was lined with windmills capturing the offshore gusts. Focus on innovation also shone from the city skylines of Beijing and Shanghai – where cranes, dubbed the “national bird” perched upon buildings competing (perpetually) to become the tallest in the world.

 

China simultaneously has extremely bad pollution and extremely progressive energy policies. Did you see signs they are trying to reconcile these two sides of their economic model?

ML:  One must first understand the enormity of the pollution problem in the country. With more than 1.35 billion residents and an economy that has grown exponentially in the last 30 years without appropriate environmental regulations, China is responsible for roughly a quarter of the world’s greenhouse gas emissions. But there are clear signs that they are trying to get the problem under control.

The Chinese government is rolling out pilot cap and trade programs in five major cities and two provinces, with plans to expand nationally by 2016. China is planning its own low carbon fuel standard, similar to California’s pioneering program, which will reduce smog and boost the emerging low carbon fuels industry.

While it may be hard to see evidence of improvements in China’s air quality in the air, we do see proof of their commitment in China’s 12th Five Year Plan. At the top of their main targets in this plan is resource conservation and reaching environmental protection targets. Specific markers to bring the share of non-fossil energy down to 15% by 2020 include a 70 million kilowatt increase in offshore, large wind power bases capacity and a 5 million kilowatt increase in solar energy capacity.

With the scope of the problem, it is clear that there is much work yet to be done. But yes, there are signs they are working to reconcile their economic growth with their pollution.

CC:  It is still tough to see the impact of China’s newer energy policies on pollution, especially in the major cities, but the Five-Year Plan calls for 15% of primary energy to come from non-fossil sources by 2020. China’s 1000 most energy-intensive industrial enterprises are targeted to meet new energy efficiency goals. The country is now the third-largest site for installed wind power and the world’s largest supplier of photo-voltaic panels (which account for about one third of global production). China is also making major investments in batteries and fuel economy standards for vehicles. So, the hope would be that over time, air quality will improve -- but it will be challenging to match these steps with the massive pace of urban population growth.

 

This trip resulted in a new agreement between California and China to deal with air quality. What is your sense of China's commitment to solve its AQ problems?

ML:  During the trip, Governor Brown signed a MOU with the southern province of Guangdong as it embarks on a carbon-pollution trading market. California is providing China with timely best practices and low carbon solutions as the nation works to develop its own emissions trading system, like California’s AB 32, our landmark clean energy and climate law. 

Given the evidence found in their 12th Five Year Plan and the nature of many of the dialogues presented during the trip, we all sensed a strong level of desire and commitment from our Chinese counterparts to make these programs successful.

CC:  Governor Brown signed an agreement with China’s Minister of Environmental protection to strengthen and coordinate efforts to improve air quality.  We will learn more about both parties’ commitment as they embark on cooperative efforts related to regulatory strategies, policies, programs, and incentives to reduce pollution.

China’s commitment to solving air quality problems will directly impact California, where nearly 25% of our air pollution is made up of particulate matter from China. As mentioned, China’s current Five-Year Plan memorializes a commitment to improving air quality. And it was clear from interactions with many Chinese people that quality of life – including safe air and safe food – is a growing national concern. The success of the Chinese economic model will rely in some part on its responsiveness to these popular concerns.

 

Just after your trip, we learned about an agreement between the US and China to collaborate on climate change. Did climate change issues come up on your trip? Do you agree with what some China observers say, that the country is trying to separate the issues of AQ and climate change and not talk about them in the same policy?

CC: Climate was the focus of two delegation events. First, a summit held at Tsinghua University and then at the signing of an MOU to enhance cooperation on low carbon development (Guangdong Province). On the trip it was often noted that provinces tend to be at the forefront of new policy initiatives, which may be why the separation you mention was not prominent at either of these events. At Tsinghua, Governor Brown called directly for unified action to combat climate change and was joined by Deputy Secretary-General of China;s National Development and Reform Commission (NDRC).

After the summit, an agreement was signed by representatives of California and Guangdong Province which called for formulating low carbon economic development plans, increasing energy conservation and efficiency, expanding renewable energy, enabling low carbon transportation, constructing low carbon green buildings, promoting low carbon sustainable agriculture, and advancing research and development of low carbon technologies.

ML:  I saw no evidence of a separation between the issues of air quality and climate change. Governor Brown began every session by underscoring the very real threat of climate change and the science behind it. In fact, there were two full forums dedicated to the issues of climate change during the trade mission; one in Beijing and one in Shanghai. At no point during the trip did I sense that they are not taking the issue seriously.

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