POLITICS & ECONOMICS: “Clean-Energy Firms Make Pitch to Asia: U.S. Trade Mission Aims to Capitalize on Growing Commitment in China, India,” by Jane Spencer, Wall Street Journal, 18 April 2007, p. A9.

India and China gear up to spend billions on renewable energy as that $10T gets spent on new infrastructure by 2030 (six in energy, four in water). Naturally, our clean-energy businesses want in, which is smart.

Accessing the build-out in Asia is re-learning how to sell to the bottom of the pyramid--pure and simple.

The usual hyperbole from a investment fund manager looking to profit: “Either we have a complete environmental collapse, or we have to quickly evolve the entire global economy to a much more energy-efficient, resource-efficient and environmentally conservative model.”

Hmmm.

I’ll take Option B, but can I stretch out the payments some?

Commerce is involved due to fears of IP loss, which makes good sense.

When we did the Cantor Fitzgerald-Naval War College “NewRuleSets.Project” economic security exercise on future environmental damage in Asia back in the summer of 2001, Cantor kept saying, this is going to be huge within a decade, and we want a big role in shaping the markets that make it happen--thus their new energy-trading business whose debut was trumpeted at the event. Can’t remember the name off the top of my head (probably blocking, cause the CEO who attended, Carlton Bartels [see bios as bottom], died on 9/11), but have a mug in my office (CO2e.com). The side biz was designed to anticipate, shape, and exploit future cap-and-trade regimes, which they believed would grow, bottom-up around the world (national and regional first) versus a global rule set like Kyoto being imposed from above.

So here’s the first bit that interests me:

The clean-energy mission is part of a wave of initiatives developed by the U.S. government that seek to harness the forces of the free market to address Asia’s environmental problems, creating business opportunities while dealing with global pollution problems. The projects are part of the Asia-Pacific Partnership on Clean Development and Climate--the U.S., China, India, Japan, Australia and South Korea--that was organized as an alternative to the Kyoto Protocol.

The signature program, Pollution Prevention and Energy Efficiency (P2E2) is rolled out later this year.

This is the second cool bit:

P2E2 aims to help companies in Hong Kong turn profits while cleaning up heavily polluting factories in China. It will ultimately be backed by $1 billion in funding from the Asian Development Bank and other sources that will grease the wheels by eliminating capital costs for the companies involved.

The basic idea is to match environmental-service companies based in Hong Kong with individual factories in China’s Pearl River Delta region, one of the most heavily industrialized--and most intensely polluting--places on the planet. The service companies will conduct environmental audits at the factories and then install new energy-efficient technology and machinery to cut both costs and pollution at the factories. In effect, the Chinese factories will outsource their clean-up to the Hong Kong environmental-service companies.

The trick is that neither party will face any upfront costs or capital investment. The Hong Kong companies will finance their work with loans from the Asian Development Bank and other sources. The factories get the technology free and later pay the environmental-service companies a cut of the cost savings generated by the new technology over a period of years. The Hong Kong companies then pay off the loans and pocket the remainder as profits.

That is sweet. It just needs to be marketized by private capital markets so it can be scaled up.

Brilliant quote to end:

“We can’t fund enough regulators or prosecutors to solve Asia’s environmental crisis,” says Stewart Ballard, chief commercial consul for the U.S. Commercial Service at the American Consulate General Hong Kong and Macau. “We need to start looking at the environment as business opportunity.”

Couldn’t have said it better.

Enterra’s doing similar stuff on the security angle first for a waterway stretch from Philly out to the mouth of the Delaware bay, another hugely concentrated chunk of intense industries (energy and chem.) Tons of conflicting rules to work. Perfect for us.

Eventually we’ll be working this stretch in China too--my prediction.