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Cablegate: Doc 'Clean-Energy' Trade Delegation Visits Guangzhou

VZCZCXRO9755
RR RUEHCN RUEHGH RUEHVC
DE RUEHGZ #0042/01 0240737
ZNR UUUUU ZZH
R 240737Z JAN 08
FM AMCONSUL GUANGZHOU
TO RUEHC/SECSTATE WASHDC 6817
INFO RUEHOO/CHINA POSTS COLLECTIVE
RUCPDOC/USDOC WASHDC
RHMCSUU/DEPT OF ENERGY WASHINGTON DC
RUEATRS/DEPT OF TREASURY WASHDC
RUCPDOC/DEPT OF COMMERCE WASHDC
RUEAIIA/CIA WASHDC
RUEKJCS/DIA WASHDC
RHHMUNA/HQ USPACOM HONOLULU HI

UNCLAS SECTION 01 OF 03 GUANGZHOU 000042

SIPDIS

SENSITIVE
SIPDIS

EMB BEIJING FOR DOE
USDOE FOR OFFICE OF THE SECRETARY
USDOE FOR INTERNATIONAL AFFAIRS
USDOE FOR FOSSIL POLICY AND ENERGY
STATE FOR EAP/CM, EB/TRA, AND EB
STATE ALSO PASS USTR FOR CHINA OFFICE

E.O. 12958: N/A
TAGS: ENRG ECON EMIN SENV PGOV TRGY CH
SUBJECT: DOC 'Clean-Energy' Trade Delegation Visits Guangzhou


1. (U) Summary: During meetings with key government agencies in
Guangzhou on January 11, Assistant Secretary of Commerce for Market
Access and Compliance David Bohigian, along with 16 members of his
'Clean-Energy' Trade Delegation, discussed environmental protection,
IPR, energy conservation, monitoring and rule of law, as well as
innovation and technology-sharing. The Chinese side welcomed the
entry of world class clean energy American companies into the
market, though initial conversations between U.S. and PRC companies
yielded few concrete results. End summary.

--------------------------------------------- ----
Economic Development and Environmental Protection
--------------------------------------------- ----

2. (SBU) On January 11, DOC A/S Bohigian and a Clean Energy Trade
Delegation representing 16 US companies met with Guangdong Executive
Vice-Governor Huang Longyun and the Development and Reform
Commission to discuss the development of an energy-efficient economy
in Guangdong province. During the meeting, Governor Huang outlined
the province's 2008 development theme, 'Energy Conservation and
Emissions Reduction,' with its priority on economic development,
environmental protection and energy conservation. Huang noted that
during 2007, Guangdong reduced energy consumption per unit by 3%,
while also reducing SO2 and CO2 emissions by 3-5%.

3. (U) As it works to increase economic development yet protect the
environment, Guangdong plans to restrict market access in certain
areas (highly polluting industries, for example) and strengthen
government monitoring of how these companies comply with government
regulations. The Development and Reform Commission has revised its
catalogue for 'encouraged' and 'discouraged' sector development,
making 'green energy' a part of Guangdong's ever changing energy
mix.

4. (U) Guangdong currently has a 'green energy' supply shortage and
relies on other provinces, like Guizhou and Yunnan, for, among other
resources, water which can be used for the development of wind
power. The province, Governor Huang noted, is investing in water
conservation equipment; he invited U.S. companies to bring their
rich technical and management experiences to bear in helping develop
this potentially large clean energy market.

--------------------------------------------- ----------
Promoting Innovation & Intellectual Property Protection
--------------------------------------------- ----------

5. (U) The 'Clean-Energy Trade Delegation' also met with the Chinese
Academy of Sciences-affiliated Guangzhou Institute of Energy (GIE).
The GIE, an advisory board for the government's environmental
policy-making efforts, engages in research in renewable energy
(biomass, solar, ocean, geothermal), new/alternative energy
(hydrogen and natural gas hydrate), and energy
efficiency/environmental protection.

6. (SBU) DOC A/S Bohigian said that innovation and intellectual
property protection are fundamental to future economic development
in China. In response to A/S Bohigian's remarks, Wu Tsongzi, the
Institute's biomass expert, assured the delegation that China's
government agencies are dedicated to IP protection. Within the
Institute itself, multiple efforts have been made to comply with
government guidelines and general IPR standards. Wu noted that the
difficulty of IPR protection lies in understanding how laws apply
across countries. He said that efforts to increase IPR protection
will include signing cooperative agreements between partnering
corporations and learning more about the practice of IP protection.

7. (U) With regard to innovations in China, the Clean Energy
companies highlighted the use of landfills to create renewable
energy, specifically with regard to solid waste management. Wu said
that waste disposal energy is still in its infancy in China, though
he noted the large market potential. Based on Institute analysis,
Wu identified characteristics associated with China's waste
management system:
-- the need for technology diversification to tackle waste
conversion,
-- restrictions in urban-area land for waste storage (making it
necessary to utilize incinerators), and

GUANGZHOU 00000042 002 OF 003


3) alternatives for small cities, where incinerators can not be used
economically.

8. (U) In response to a question about innovation and technology
transfer, A/S Bohigian said we needed to further examine the issue.
Innovation and IPR protection should go hand-in-hand.

---------------------------------
The Demands of Energy Consumption
---------------------------------

9. (SBU) In a meeting with A/S Bohigian, members of the Guangdong
Economic and Trade Commission (ETC) outlined a plan of 'how' to
create partnerships and policies that will aid in promoting
U.S.-China economic and trade cooperation in accordance with
energy-efficiency standards,. According to director Chen Bing,
energy conservation is a key challenge. In 2005, energy consumption
per unit GDP amounted to 0.7 metric tons of coal. In 2006, this
amount was reduced by 2.93%, with an expected reduction of 3.3%
(pending final 2007 data). In spite of Beijing's target of reducing
per unit consumption by 16% as of 2010, Guangdong's consumption
remains high, approximately 2.3 times higher than U.S. consumption.
Although Guangdong ranks number one for GDP output in China (latest
figure is 1/8 of all China's GDP - up from 1/9 a year ago), its
supply of energy, relative to demand is low. To subsidize the
shortage, energy sources such as coal and oil are imported from
other provinces and from abroad, leaving the province dependent upon
external supplies.

--------------------------------------------- --
Energy Conservation: Monitoring and Rule of Law
--------------------------------------------- --

10. (U) To meet these challenges, ETC has implemented a variety of
mechanisms to promote energy conservation, including the
establishment of a monitoring system and the promotion of rule of
law. With regard to monitoring, ETC in 2005 established a
leadership group, comprised of 23 representatives from various
provincial agencies, to target conservation and environmentally
friendly practices. In addition, the Commission instituted a 'per
unit GDP energy response' system.

11. (U) ETC also monitors 1,000 high-energy consuming enterprises.
These enterprises, which are subject to provincial, municipal, and
local supervision, fall into one of six main sectors: power
generation, petrochemical, iron and steel, textile, paper making,
and building material. Among the 1,000, 25 have signed agreements
with the Guangdong provincial government to reduce consumption, 128
have signed similar 'provincial agreements' with the ETC, and 800
remain under city/local supervision. These enterprises are required
to undergo energy audits, which the ETC acknowledges is merely an
administrative effort. They must also plan their overall energy
consumption in coordination with government regulations. By March
2008, the Central Government will also conduct energy conservation
appraisals on 1,000 enterprises, 25 of which are located in
Guangdong.

12. (U) The ETC has made a great effort to strengthen legal
accountability. A recently amended version of the Energy
Conservation Law has been passed at the state level with regulations
regarding penalties for violators. A policy is now being developed
to impose mandatory standards for 25 key products in the 6
above-mentioned sectors.

--------------------------------------------- ------
The Future: More Cooperation and Technology Sharing
--------------------------------------------- ------

13. (U) ETC future goals include increased international cooperation
with individual countries and international organizations as it
seeks to promote energy-efficient projects and technology exchange.
ETC welcomed cooperation from foreign companies with 'world-class
technology' to enter the energy conservation market.

14. (U) A/S Bohigian did not have an opportunity to clear this
cable.


GUANGZHOU 00000042 003 OF 003


GOLDBERG

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