China's solar energy may be enough of a bright point and its wind power a breath of fresh air to dispel the gloom surrounding the green energy industry, after the ongoing financial crisis dropped fossil fuels prices and cast doubt on its financial viability.

American alternative energy companies are upbeat about their business prospects in China and say the country is ripe for solar, wind, hydro, biofuel and clean coal investment.

"This economic downturn is not going to stop the world's need for better infrastructure and more energy," says Kate Wang, a spokeswoman for Caterpillar, widely known as a construction equipment manufacturer, but also one of the world's leading energy development companies.

"China's economic growth will still outpace any other major market. The development of the complete Caterpillar business model in China is progressing rapidly," she says.

The company expects its revenue in China to reach $2 billion this year and double by 2010.

Jack Wen, president of GE Energy China, said his company is "bullish" on renewables. GE has supplied more than 1,000 gas, steam, hydro and wind turbines to China and has obtained 37 licenses for gasification technology.

The panic after the crumble of the credit bubble still hovers and the future remains dim for many companies on both sides of the Pacific, but the buoyancy of Caterpillar and GE suggests new energy may be a future cornerstone of China-United States business relations.

"As strategic partners, Beijing and Washington want to find a new foothold to facilitate closer cooperation and new energy is undoubtedly providing an excellent platform," says Liu Feitao, professor with the University of International Relations in Beijing.

"Both sides need to understand that their alliance in energy and environmental protection is vital not only to bilateral economic and trade relations but also to the world's long-term sustainability," Liu adds.

US president-elect Barack Obama recently announced plans to invest $15 billion a year in the green energy industry and said during the presidential campaign that climate change demands the United States and China, the world's two largest oil consumers and two largest greenhouse gas emitters, quickly develop a higher level of cooperation.

Chinese Vice-Premier Wang Qishan and US Treasuray Secretary Henry Paulson also signed a series of agreements on energy cooperation at the fifth round of the Strategic Economic Dialogue (SED) earlier this month, including cooperation between China's southwestern Chongqing municipality, the US city of Denver and carmaker Ford on an electric and hybrid automobile project.

"The past 30 years of China-US business relations saw both cooperation and friction. New energy will undoubtedly be one of the driving engines that will uplift relations," says Li Wei, a senior researcher with the Chinese Academy of International Trade and Economics Cooperation.

If Washington shows willingness to loosen restrictions on exporting clean energy technology to China, it will mark a breakthrough in the bilateral business relations, Li says.

The Chinese government invested a total of 48 billion yuan last year in energy conservation, renewable energy projects and forestation, according to the National Development and Reform Commission.

Beijing also laid out an ambitious goal in its 11th Five-Year Plan (2006-10) to increase the country's renewable energy consumption from the current 2.5 percent to 10 percent of the nation's total energy consumption by 2010. If the government achieves its goal, renewable energies in China will be a US$200 billion market in 2010 and a $555 billion one by 2020.

"It is going to be a new area for closer China-US cooperation," says Yang Fuqiang, chief representative of the US-based Energy Foundation in Beijing. "China needs expertise and technologies from the US and the US views China as an extremely promising market."

The green energy industry may be the greatest investment opportunities in the 21st century for companies salivating over the potential in the Chinese market, despite fears that the ongoing financial crisis may hinder alternative energy development worldwide.

"Meeting energy demand while reducing the carbon footprint is still a global need. It shouldn't be significantly impacted by shorter-term financial fluctuations," says Wen, president of GE Energy China.

GE is now investing heavily in cleaner coal technology, wind and solar power and biofuel projects in China. The company projects its total investment in China's green technology market will reach US$15 billion by 2010.

"The opportunity is huge," says Wen. "Our energy strategy is diversity. Wind, solar, coal and nuclear all should be a part of the equation."

The promising outlook of renewable energies in China, particularly the solar sector, is also drawing venture capital from Silicon Valley.

The venture capitalists have seen significant gains in recent years from 10 major Chinese solar companies, including First Solar and Suntech, which are publicly listed with an aggregate market capitalization of over US$7 billion.

But experts caution that, given China's current situation, popularizing renewable energies will take time. Traditional energy such as coal and oil still accounts for over 90 percent of the country's total energy consumption.

The American business community in Beijing is now betting on the next US president putting Washington at the global forefront of green technology and environmental protection.

"I think there is going to be some change," says James Zimmerman, chairman of the American Chamber of Commerce in China. "It is critical that the US and China cooperate."

"It's going to take commitment from the leadership of the Obama administration as well as President Hu Jintao to really push that forward," he says.

(China Daily December 16, 2008)