July 23, 2007

Intellectual Property is Green

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Tomorrow morning, a conference begins here in Shanghai run by the U.S. Trade and Development Agency (USTDA) intended to introduce the leaders of the Chinese energy sector to the potential use of IGCC as a “clean coal” technology. IGCC, or Integrated Gasification Combined Cycle, is an advanced technology for using coal or other long hydrocarbons to create syngas (and concentrated waste effluent), which can be then combusted cleanly and efficiently in a gas turbine to generate electricity, with the waste heat being used to generate electricity from a steam turbine. Although this is still a coal technology and thus has serious environmental challenges, it uses 33 percent less NOx, 75 percent less SOx, etc. than conventional coal technologies.
To spare you the technical and emissions details of the technology, I’ll jump straight to the morals. The USTDA, created by the Foreign Assistance Act of 1961, is an independent agency of the U.S. federal government with the mission to “advance economic development and U.S. commercial interests in developing and middle-income countries.” Joint ventures between advanced technology corporations in the developed world and lean manufacturers or any other corporations in the developing world are an extremely controversial subject. Part of that controversy is that these collaborations have sometimes resulted in extremely significant intellectual property theft. At a 2003 Shanghai auto show, for example, GM found that a $9,000 van it was just releasing had an exact double, going for $6,000, just down the exhibition aisle. Yet can Western corporations afford to ignore working with and selling to these markets?
Thomas Friedman has nailed the crux of this issue best in a series of opinion pieces where he argues that, just as Europe has stimulated economic growth through investing in and supporting environmentally sound business, the U.S. too has no choice but to make clean technology development the forefront of our business agenda. He’s right on this simply because, China doesn’t yet fully understand how to solve environmental issues without compromising economic growth, but Western corporations do. Just look at the $30 billion carbon trading market, the sizzling growth in the solar industry, and dare-I-say-it: the gradual weaning of the wind industry off of subsidies in North America and Europe.
Given the human costs already being incurred by environmental issues in China, it is inevitable that awareness of this issue will continue to grow here. And in order for American corporations to be there to capture that growing market, they will need to outsource some portion of their manufacturing to stay alive in the global market. But this can’t happen in an environment where IP is not protected. So – the take-away is: a critical component of solving China’s environmental issues (and protecting both the U.S.’s and China’s economic vitality), is greater IP enforcement.