Chinese Investment in US Clean Energy

Chinese investment in clean energy in the United States is still small, but its growth may offer benefits for American businesses and US-China relatons.

by Linden J. Ellis, Devin Kleinfield-Hayes, and Jennifer L. Turner
The seven bilateral clean energy agreements signed by PRC President Hu Jintao and US President Barack Obama in the fall of 2009 focused on renewable energy, advanced coal technology, energy efficiency, electric vehicles, and many other technologies to promote lower carbon growth. These agreements have propelled numerous public and private sector collaborations, such as Duke Energy Corp. and China-based ENN Group's solar power, smart grid, and energy efficiency projects. But these agreements and new business partnerships have been downplayed as the United States and China have grappled with how to properly compete in the clean energy sector. Strikingly, clean energy was barely mentioned during PRC Vice President Xi Jinping's visit to the United States in February.

Quick Glance

• Chinese investment currently makes up a small but fast-growing portion of clean energy projects in the United States.
• Some Chinese companies have established local manufacturing in the United States to address US regulators' concerns about job creation.
• Some local governments in the United States have encouraged Chinese investment in clean energy by offering supportive policies such as tax credits.

As trade tensions rise between the United States and China, energy experts say it is an important time to dig deeper into whether Chinese investment in US clean energy can be profitable and a sound platform from which the two countries can build stable relations.
Recent deals made between US and Chinese companies indicate it should be possible. In early 2012, new clean energy deals targeted manufacturing in the United States. For example, Yingli Green Energy Holding Co., Ltd. agreed in February to purchase materials from E.I. du Pont deNemours and Co. to produce photovoltaic (PV) panels. EmberClear Corp. and China's Huaneng Clean Energy Research Institute agreed to build a coal-to-gas plant that could create more than 1,000 jobs, according to the two companies. And China's Wanxiang (USA) Holdings Corp. invested $420 million in Massachusetts-based GreatPoint Energy to develop technology that converts coal to gas.
Although the costs of wind and solar power have significantly dropped, the US clean energy industry is still in its infancy and many companies are not able to stand on their own without government support. The collapse of Solyndra, Inc. in 2011, which had received $535 million in federal loan guarantees, has made domestic investors and the US government wary of the entire industry. In stark contrast, Chinese policymakers and investors have been pushing ahead on clean energy, both at home—with an ambitious new five-year strategy—and in foreign markets.