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  1. Analysis
June 9, 2015

The US and China – united on energy?

The US Department of Energy (DOE) has issued $12.5m in funding towards the US-China Clean Energy Research Centre, an amount China will match, to address the water-related aspects of energy production and use. Set up to increase collaboration and open opportunities for mutual research, the centre is tasked with nothing less than to 'ensure our collective energy and water security'. So what has the project achieved and how have relations improved because of it?

By Adam Leach


In March, the latest in a lengthening line of US-China deals on clean energy was unveiled as part of the US-China Clean Energy Research Centre (CERC) to tackle what was termed the ‘energy-water nexus’. "Water resource scarcity, variability and uncertainty are impacting energy systems in the US and China," said Ernest Moniz, US Secretary of Energy, as he announced the agreement. "Increasing collaboration through the CERC engages the technical resources of both countries, opening opportunities for researchers and industrial partners to address our common challenges in the energy-water nexus. By leveraging science, technology and innovation, we can ensure our collective energy and water security."

Economic competitors become environmental collaborators

As to the motive for this latest collaboration, which will see each country contribute $12.5m in funding opportunities to tackle the issues involved, both countries are becoming acutely aware of the risks within the context of water and energy.

In its report ‘The water-energy nexus: challenges and opportunities’, published last year, the US Department of Energy outlined a number of serious and intensifying challenges that needed to be addressed to preserve energy and water security. The report identified the long-term challenges from both the effects of climate change and a growing population but also stressed the need to work on improving the energy efficiency of water management and the need to optimise the use of water in energy production.

Highlighting the growing pressure to take action, the report pointed to the growth in domestic shale resources, stating: "The recent boom in domestic unconventional oil and gas development brought on by hydraulic fracturing and horizontal drilling has added complexity to the national dialogue about the relationship between energy and water resources."

In the case of China, the need for action is even greater. With its economic growth ambitions, the country is forecast to require double the amount of energy generation in 20 years’ time and the OECD has stated that this would in turn require 65% more water to be used.

According to Sinead Lehane, acting research manager at the Global Food and Water Crises research programme, solving that demand and supply balance is of utmost importance for the Asian superpower. "Access to water and energy and continuity of supply are the two most critical issues facing China today. Historically, the two have been managed separately, but today it is critical that China’s strategies address shortages of both together," she said.

China has signalled plans to invest $16bn into its electric vehicle (EV) charging infrastructure, a move that could stimulate massive growth in EV sales.

While the country must address water use across the board, from tackling water pollution to improving access to fresh water sources, reducing the demand on supplies from power generation is of the utmost importance. "These choke points are in large part driven by energy development," said Jennifer Turner, director of the China Environment Forum. "Of all the water consumed in China, somewhere between 15% and 20% goes just to the coal sector."

Such closely intertwined interests, with the rise of fracking ramping up pressure on the US and China’s strong – yet slowly declining – reliance on coal power, appear to finally be engendering a firmer sense of cohesion between the two countries when it comes to making energy more efficient with regard to water use. And it is the latest track within CERC that is at the centre.

On the practical level, the agreement sees the combined $25m rolled into a funding opportunity announcement in order to attract interest and applications from US and Chinese industry for the development of technology and solutions that can assist with resolving the issue. Included among the priorities of the programme are water use reduction at thermoelectric plants, treatment and management of non-traditional waters and improving sustainable hydropower design and operation.

Considering that in addition to being the two biggest energy users, accounting for more than half of all electricity consumption, the US and China are also the world’s two biggest economies, a total of $25m in funding might appear low, but the overall value of the programme goes far beyond that money. This collaboration – like the previous tracks within CERC to address building efficiency, clean vehicles and advanced coal technology – will enable academics and industry to not only work together with colleagues from the other country but will also ease the route into its market.

Bringing benefits to both US and China

Enabling this, a central component of CERC is a legal framework to ensure intellectual property rights. In the past, US companies have been hesitant to enter the Chinese market over concerns that its data and patents could be copied without proper legal recourse. To counter this, the agreement put these concerns front and centre, stating: "The framework enables research partners to share information with confidence and to retain appropriate right for new technologies they create."

Due to the recent announcement of the funding, there are not yet any examples of the commercial benefits that can be achieved, but successes have been shown in previous CERC programmes. Through its advanced coal technology consortium, CERC enabled US-based engineering firm LP Amina to test and sell its coal classifier – which cut NO2 emissions by 15% by preventing large coal particles from entering the boiler – into China, having been unable to sell it to US operators until it had been trialled. Following the successful trial at the Fengtai Power station in the Anhui Province, the company is now selling the solution to both countries and other global markets.

On the academic and industrial collaboration side, CERC has brought together Yanchang Petroleum, the University of Wyoming and the China Academy of Sciences to work on an enhanced oil recovery project in the Shaanxy province, while Huaneng Energy is collaborating with the Lawrence Livermore National Laboratory and Duke Energy to improve the cost modelling of carbon capture technology.

"By leveraging science, technology and innovation, we can ensure our collective energy and water security."

CERC has also provided the foundation for a partnership between US-based General Electric and the State Grid Corporation of China to work on mutually agreed standards for smart grid operation. "State Grid wants to provide an open market to develop smart grids. Meanwhile, foreign companies will be able to get better market access by unifying different standards," explained Yao Jianguo, director of the State Grid smart grid research centre.

Moving forward on water together

Despite the previous successes, critics have suggested that the results have failed to live up to the potential. Shortly before the latest initiative was announced, it was strongly speculated that funding for CERC as a whole would cease.

In November 2014, President Obama and President Xi Jinping announced that it had been renewed and highlighted the water-energy nexus as a priority. In its early days, hesitance and uncertainty remained a significant barrier. Relations between the two countries were strained, companies were suspicious of their counterparts, and climate change objectives were anything but aligned.

Today, relations between the two, at least in the areas where mutual benefits can be achieved, are smoothing and trade is increasing. In addition, both countries have significantly increased support for renewable energy and sustainability across the areas covered by CERC in response to increasing domestic pressure to address the challenges of climate change and in particular in preparation for the Paris negotiations where each will be expected to take on a leading role.

In the area of water and energy and how they interact, the US and China have been explicit about the scale of the challenge. Both see it as ‘critical’, but both have the technological, commercial, and economic resources to try and tackle it. CERC has had successes but is yet to make its major mark, but if the warning of Wang Shucheng, China’s former minister of resources, is heeded, it will have to with the water-energy nexus: "To fight for every drop of water or die, that is the challenge facing China."

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