Ambitious Energy Entrepreneurs Are Heading to China

What is the future of coal?
Nov. 21 2012 3:19 PM

Want Cleaner Coal? Go to China.

Why American entrepreneurs are testing their technology overseas.

(Continued from Page 2)

Powerspan and Huaneng began operating the Miyun carbon-capture test in October. Finding the site, building the machinery, and getting it running took no more than six months and cost only “a couple million dollars,” Alix says. That shows, he says, “what you can do in China that you could never do in North America.”

But scaling up clean-coal technology in China raises nettlesome questions for U.S. executives. A big one is how to protect their intellectual property in a country that U.S.-based multinationals gripe has pirated everything from CDs to cars. (The U.S. critics aren’t alone; even leaders of some Chinese companies complain about insufficient intellectual property protection in their country.) For Alix, it’s a strategic concern. Like many U.S. energy entrepreneurs working in China, he says he has decided that relying on documents and lawyers to safeguard his technology isn’t enough. He is changing the way he does business when he’s in China.

He tells his Chinese business partners only as much about Powerspan’s technology as he thinks they absolutely need to know to help keep the technology running. “Even though they’re building it and testing it, they don’t know what’s in it,” he says. “It’s a black box” to them.

“We’ve written software that we don’t let them know about. We have certain trusted suppliers that are exclusive to us,” Alix explains. “My particular approach has been to have trust to a degree but to also keep stuff internal and not explain.”

Powerspan is just one of several U.S. firms racing to roll out clean-coal technology in China. Another is LP Amina, whose founder and managing director, Will Latta, is a Florida native who’s now raising his family in Beijing. He moved here in 2005, when he worked for Alstom, a French company that’s one of the world’s largest manufacturers of power-plant equipment. Two years later, he left Alstom and founded his own firm.

Today, LP Amina—“Amina” stands for America and China—is headquartered in a shiny Beijing office tower. The lobby boasts all the comforts of Latta’s home across the Pacific: a Dairy Queen, a Starbucks, and a Papa John’s. The company’s 11th-floor office affords a bird’s-eye view of Beijing’s haze. The office, a comfortable cube farm, is filled with young Chinese engineers at computer screens designing components for coal-fired power plants. “We build big things,” says a poster on the wall.

On a recent afternoon, one engineer was at his desk designing a new type of “classifier,” a device that sifts pulverized coal powder into uniformly sized particles before the powder is sent into a power plant’s furnace to be burned. Similarly sized particles burn more efficiently and completely, minimizing both smog-causing and greenhouse-gas emissions from the power plant. LP Amina installed the first of this new type of classifier about 18 months ago, and now it’s rolling them out in power plants across China, Latta says. 

A classifier designed by the firm has been installed in the United States at a power plant partially owned by Duke Energy Corp., according to officials at Duke and LP Amina. Duke, based in Charlotte, N.C., where LP Amina also has an office, is by most accounts the biggest coal burner and carbon-dioxide emitter in the United States.

Jim Rogers, Duke’s chief executive, views China as an inexpensive testing ground for the United States. Today it’s China that has to build massive numbers of new power plants to satisfy its soaring electricity demand. But in a few decades, Rogers says, it’ll be the United States, which by then will have to replace many of its aging coal-fired plants.

“If they build it first,” Rogers says of China, “it’ll be faster and cheaper for us” down the road. The United States today needs to accept a sobering new reality, he says: “We’re not made for first-mover risk.” 

Jeffrey Ball is scholar-in-residence at Stanford’s Steyer-Taylor Center for Energy Policy and Finance. He was environment editor at the Wall Street Journal.

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