Solar energy has grown massively in recent years, but it will become big enough to make an environmental difference only if governments and investors approach it significantly more economically efficiently than they have in the past, according to The New Solar System, a major new report that we at the Stanford Steyer-Taylor Center for Energy Policy and Finance released on March 21 and that is drawing widespread public notice.
The report, the result of two years of work, points up key and little-understood changes in China’s solar sector, the largest solar enterprise in the world. Based on those findings, it assesses China’s comparative advantages in the global solar industry and recommends that the United States undertake a variety of changes in its solar policies and its solar-investment approach. Those changes would involve adopting a more-nuanced U.S. stance toward China – one that leverages, rather than trying to circumvent, China’s strengths. The report argues this sort of evolution in the U.S. approach would yield two benefits: It would help scale up solar for the world, contributing to reductions in global carbon emissions, and, in the process, it would maximize solar energy’s long-term economic benefit to the United States.
I wrote The New Solar system with Dan Reicher, executive director of the Stanford Steyer-Taylor Center, and Xiaojing Sun and Caitlin Pollock, who spent a year at the center as co-managers of research for the project.
On March 21, to launch the 220-page report, Dan and I published a New York Times op-ed, “Making Solar Big Enough to Matter,” and we gave a presentation at The Brookings Institution in Washington, D.C. The op-ed, which the Times ran in Chinese as well, drew widespread social-media notice and follow-on coverage. The Brookings event was attended by some 200 people. The New Solar System was covered by China Daily, Xinhua News Agency, the Stanford Report, CCTV, and the MIT Technology Review, among other outlets. The MIT Technology Review called The New Solar System’s proposal for a U.S. solar policy based on a sober assessment of China’s strengths “powerful” and “an idea that could work.”
The New Solar System busts five myths about China’s solar enterprise — myths that are widespread in the West and that we argue need to be debunked to facilitate a smarter solar strategy:
Myth: China’s solar industry is a financial bubble about to burst.
Fact: Chinese solar companies are reforming their capital structures to make them more economically efficient.
Myth: China doesn’t innovate.
Fact: China is innovating significantly in solar—not only in manufacturing processes but also in underlying R&D.
Myth: The global solar industry is centralizing in China.
Fact: The global solar industry, led by Chinese companies, is starting to decentralize geographically.
Myth: Tariffs imposed by the West on solar products imported from China are hobbling the Chinese solar industry.
Fact: The tariffs have pushed the Chinese industry to get more efficient; their effect on U.S. manufacturing is mixed.
Myth: China’s solar market is largely closed to foreign investment.
Fact: Chinese leaders want sophisticated investment structures from the West – an opportunity for U.S. players.
On Wednesday, April 19, we’ll hold two events at Stanford Law School around The New Solar System: A public event to explain the report’s findings and a private workshop in which we’ll roll up our sleeves with a small group of experts to discuss the next stage of the research. Please join us at the April 19 public event if you’re interested. We’ll send out more details about it in the coming days. And in May, we’ll host launch events and discussions around The New Solar System in Beijing and Shanghai.
The work underlying The New Solar System was funded by a research grant from the U.S. Department of Energy. The grant gave us full independence to frame the inquiry, conduct the research, and write the report.
Students from Stanford Law School and from other Stanford schools and departments — including business, engineering, international relations, and East Asian studies — participated in the research for the report through a policy lab that Dan and I taught for a few quarters.
Special thanks go to several people at Stanford Law School: Liz Magill, who served as the project’s principal investigator and supported the work at critical points; Luci Herman, who provided helpful counsel about writing structure and style to a number of the students enrolled in the policy lab and whose enthusiasm about the project was infectious; Mark Lemley, who offered valuable guidance in discussions about the interplay between intellectual property and technology, an important topic of the report; Sergio Stone and George Wilson, who lent their time and considerable research skill to helping locate data for the study; and Joel Greene, who helped consistently with administration of the Department of Energy grant. An especially loud shout-out goes go to Ginny Smith, who put in countless hours of work formatting the report and whose insight, attention to detail, skill in managing multiple tasks on tight deadlines, and general good cheer were invaluable to this work. The New Solar System would not have been possible without her.
The publication of The New Solar System marks the culmination of the first phase of work at the Stanford Steyer-Taylor Center into ways that China and the United States, the world’s largest energy consumers and carbon emitters, could scale up cleaner energy more economically by playing to their comparative strengths. In the next phase of the work, we at the center plan to pursue what we see as one of the most important findings of this research: that senior leaders in China are eager to import to China more-efficient clean-energy-investment structures pioneered in the West. Improving the efficiency of clean-energy finance in China has thus far been little discussed. If it’s developed, we believe, it could help significantly to achieve global carbon-reduction goals.
Jeffrey Ball is the scholar-in-residence at Stanford’s Steyer-Taylor Center for Energy Policy and Finance and a lecturer at Stanford Law School. He writes widely about energy and the environment and was the primary author of The New Solar System.