Jon Powers: Welcome to Experts Only podcast sponsored by CleanCapital. You can learn more at cleancapital.com. I’m your host Jon Powers. Each week we explore the intersection of energy, innovation, and finance with leaders across the industry. Thank you so much for joining us. Jon Powers: Welcome back to Experts Only podcast. This is Jon Powers your host. This summer we saw records soar and break around the globe, not just here in the US, including in China and today we have a really interesting guest, David Sandalow who’s from Columbia Center on global energy policy and he just published a guide on Chinese climate policy. He served as the under secretary of energy at DOE but now as a fellow at Columbia and working across the university but also spending a lot of time teaching in China as well. The 2019 guide to Chinese policies, it’s an updated report on China’s climate change policies. The report covers information on Chinese emissions, impact of climate change in China, the history of China’s climate policy and its policies response today. It was first published in 2018. This is an updated version and I think you’ll see in the conversation today, there’s a lot happening overseas and a lot of opportunity if you can figure out the market. So we look forward to the conversation and we’ll get started. David, thank you so much for joining us on Experts Only podcast. David Sandalow: Thanks for having me, Jon. Jon Powers: You’ve had a really illustrious career in government working in academia, focused on a variety of really critical global issues. And I want to get into those and get into what’s happening in China and talk about the report. But first of all, how did you even get interested in China? David Sandalow: So I’ve been interested in China since I was a kid and when I was young, when I was in high school and in college, it was impossible for Americans to travel to China. Just to date myself. Back in that era, the two countries did not have diplomatic relations, you literally couldn’t go there. And then in the late ’70s we establish diplomatic relations with China, the United States. And when China started exchanging people in a variety of different walks of life and I started looking around for a way to get to China and looking for a exchange program that I could join and the internet didn’t exist back then, but I looked around and I ended up with a … I was in law school at the time and I found a program run by Columbia law school and Columbia sent a group of students over to Shanghai in the summer of 1981 and it was just an extraordinary experience. David Sandalow: It was a very different Shanghai than the one that people visit today. That summer there was exactly one international telephone line in the entire city of Shanghai. It’s just remarkably different. But it was fascinating and I’d been interested in China ever since. Jon Powers: And this was basically less than a decade after Kissinger had gone over and really started to open- David Sandalow: Yeah, that’s right. The Nixon Kissinger diplomacy happened in the early 1970s. It was 1978 when Jimmy Carter and Deng Xiaoping normalized relations between the two countries. And so then I, as I worked on energy and environment, which was my principal career interest, I kept on looking for ways to engage with China. And in the 1990s I had the privilege of working on the White House staff and the national security council staff and was able to travel with President Clinton to China in 1998 and help organize an environmental event that he did as part of his trip to China and worked on issues around climate change in China during that period as well. David Sandalow: And let’s see, then just carrying it forward. I spent a big part of the decade after that at the Brookings Institution in Washington DC and wrote some reports and monographs on the United States and China and climate change and how we might work together. And then I had the honor of going into the Obama administration and trying to implement some of the ideas that I been recommending and I was … In the Obama administration, I was at the US Department of Energy in couple of different jobs, but my main focus during those years was on China and I traveled 14 times, I guess in four and a half years to China working both on disagreements in the relationships and the agreements in the relationship. And there were both and we built up a strong architecture of cooperative programs on clean energy and climate change and also managed some pretty serious disagreements during that period as well. Jon Powers: How much of that work was focused on the energy side versus the climate change work? David Sandalow: Pretty intertwined. Jon Powers: Yeah. David Sandalow: I was a climate negotiator in the 1990s, very deeply involved with the climate negotiations. The 25th conference of parties in the climate change negotiations are coming up in Santiago, Chile this fall. I would say US … I was a White House official at the first conference of parties for the climate change convention, which was held in Berlin in 1995 so I’ve been doing these climate change negotiations for a long time and was involved from my energy department perch some during the first Obama term and we were working with China both on climate negotiations, but more from the energy department, more directly on energy cooperation. Jon Powers: So in parallel you’ve got this China interest that’s blossoming and it’s really run a track in your career. What interests you in climate and energy? David Sandalow: I started as an environmental lawyer. I’d always been interested in the out of doors. Early in my career, I spent time at the environmental protection agency as a clean air act, the clean water act lawyer and then during the Clinton administration got detailed over to the White House and then never went back. Then was hired over at the White House and have been doing policy work ever since. And at the White House, I had the privilege of spending a lot of time with Vice President Gore and with President Clinton working on climate change issues. And that’s what really sparked my attention and focused me on the importance of energy issues and from there got into energy issues. Jon Powers: Yeah, I mean, so having been tackling this for over 25 years we’re coming to the tail end of a summer that had not one but two presidential forums on climate. We had these worldwide strikes led by an amazing teenager coming out of Sweden. Incredible climate discussions that happened last week in New York. I’ve been talking a little bit on this show about how I think we’re living in a bit of a climate moment that’s a little bit unique, but you’ve been working at this for 25 years, building the momentum. How do you gauge where we are today to where things have come in the last two decades? David Sandalow: Jon, I think you’re exactly right and there’s good news and bad news. The good news is that the attention has never been greater. I mean, just in the past couple weeks we’ve seen demonstrations all around the globe. Unprecedented level of attention in the media. Certainly in the US political process, there has never been more attention than there has in the past year. I mean, listeners to this podcast are probably familiar with the fact that there were no questions asked about climate change in the 2016 presidential election debates and now it’s really become one of the major topics of attention, certainly in the democratic primary dialogue. So that’s the good news. The bad news is that the action is not catching up, not yet caught up with the attention and we need not just attention but action. And the UN climate summit just last month, the commitments from national governments were very disappointing and we are way, way off track in solving this problem on the current path. We’re going to be in very serious trouble as a planet, as a result of all these heat trapping gases that we’re pouring to the atmosphere. Jon Powers: Yeah, it’s a fascinating and challenging time. And so I think one of the interesting trends here in the United States is the detractors often say that we don’t have to act until India or China acts. They use them actually quite often. But I think what your report shows is that China is actually acting. How do you empower folks here at home to push back on those type of attractors? Like what are some of the really interesting, and we’ll talk more about the findings here in a second, but is there any interesting stories that you grabbed from your research that can help people combat the detractors here at home? David Sandalow: Well, let me just start with the basic fact just for any listeners who may not know, that China leads the world in emissions, of pre trapping gas last year more than in the US and Europe combined. So there is no solution to climate change without China playing a very important role. On your question, the Chinese government is taking some very serious steps that are addressing climate change, and I talk about this in my report and let me just list them in a minute. The same time the Chinese government has policies that are not helpful when it comes to fighting climate change. So it’s not surprising the biggest country in the world would have a complicated and multifaceted set of policies, but anybody who says China is doing nothing is getting it exactly wrong. The Chinese government is doing a lot to fight climate change and one critical distinction between Chinese government and the US government, in this regard, there are no known climate deniers in the Chinese government. David Sandalow: And certainly none with any observable influence on policy. In fact, in the 2016 period I had a number of Congress patients in China with people who at some level I could tell they were just deeply skeptical that the United States was going to be run by somebody who didn’t believe in the science of climate change. That didn’t compute for them because there are literally tens of millions of Chinese who are looking for opportunities to come study in science and technology issues in US universities that the respect for US science and technology runs so deep in China. The notion that we might be run by somebody who didn’t believe in the science, it didn’t quite compute. Now I think people understand that in fact that’s the case. Jon Powers: Right. So let me ask you a question. Is a lot of the, and we’ll talk more about what they’re actually doing, but is a lot of it driven by just that core belief in the science or is there a cultural movement happening there because of some of the environmental impacts of their growth? How does it all come together? David Sandalow: So, yeah, I think there is a basic respect for science and scientists, which in my experience runs very high in China. I witnessed this. I worked during the Obama administration for secretary Steven Chu of the energy department who was a Nobel prize winner in physics and I got to see the respect, that really extraordinary respect, that he received in China for that. Of course, respected everywhere for that, but I think there’s a particular quality of respect for science and technology and leaders in science and technology in China. At the same time as you were just suggesting, air pollution problems are extremely vivid in China. China has just horribly polluted air in some cities, in many cities. And it’s a major political issue in China. In some ways, similar to what it was in the United States in the 1960s and 1970s. I actually talked to somebody recently who older than me, he is retired, but he was telling me that when he used to go to work on wall street in his 20s he would bring two white shirts with him because the air was so polluted that his white collars would get dirty. David Sandalow: I think it’s extraordinary success story in the United States, how we’ve cleaned the air in our cities and I think the Chinese government is trying to replicate that success. It’s going to take them awhile, but they, the number of policies in place to do that and including in particular phasing out the coal, which heats much of Northern China and replacing it with natural gas and with renewables in the power sector. And so this is a big issue in China and it’s getting the attention and this has very positive impacts on the fight against climate change as well. And if you read Chinese material about climate change, they identify the transition away from coal as a key part of that. Jon Powers: So I think there is a lack of understanding here in the US about just Chinese infrastructure as a whole or we’re living on a grid that’s been around for decades. China is now on the tail end of 20 plus years of incredible growth of course, but they didn’t have even a national grid, right? They had a series of grids, they’re patched together and it’s actually provided them an opportunity with distributed generation and to grow but also challenges, right, in how they move the power across the country. Are you seeing the demand for renewables driven there more by just the need for electricity or is it government mandates that are pushing these things forward or like here in the US where we have the Walmarts and Amazons and others really clamoring for it? David Sandalow: I think policy’s been the major driver in China and the Chinese government has had very strong incentives for the deployment of renewable power over the course of the past decade. Last year, once again, China led the world in deployment of solar power. 45% of the panels deployed globally in the world were in China. China led the world again in wind power- Jon Powers: 45%- David Sandalow: 45% of the solar panels in the world were in China last year. Yeah. And by the way, more than half of the electric vehicles sold in the world last year were in China. So the commitment is strong. Now the Chinese government is in the process of changing its renewable energy policies. They’ve had pretty generous feed-in tariffs and they are switching over to an auction system. And one of the most interesting developments is in this auction system, if solar power can come in lower than the benchmark price for coal, it gets land allocations and other types of benefits. And in Western China and in just the past year for the first time we’re seeing bids for solar auctions coming in at less than the benchmark price for coal. Jon Powers: That’s amazing. So do you see that governance system they have, we’ve haven’t really talked about this yet, but we did offline. For folks that aren’t aware of the central government designs, these five year plans and has a obviously a pretty centrally managed way of approaching things like the climate and energy or any really policy, which is obviously in our day and age in the US hardly imagine a federal energy policy coming out right now. Has that strengthened the execution, but has it hurt innovation or are we sort of misreading that? David Sandalow: So the Chinese system has both strengths and weaknesses when it comes to fighting climate change. I think its biggest strength is the one you just pointed to, which is the planning process, which is so different than anything we do here in the United States. The Chinese government is on its 13th five year plan right now. It’s preparing for its 14th five year plan. And these plans very much shaped government policies. They don’t always hit every five year plan target, but everybody in the bureaucracy is charged with trying to hit those targets and they have very significant impacts on what the Chinese government does. And then in addition to these five year plans, they have these incredibly long term goals. The Chinese government has a 2049 goal of becoming a prosperous middle-class society by 2049 and it shapes policymaking and it affects the political value. Here in the United States, when we pass a one year appropriations bill, it makes headlines and everybody celebrates. I mean it’s a real difference and we just don’t have anything like that. David Sandalow: And when you’re talking about an energy transition, which is what we need to fight climate change, that type of planning I think is very helpful. Now there are some real issues in the Chinese system that cause problems. One of them is their implementation culture is not nearly as strong as ours is and in the United States, once we pass a law, we have pretty good mechanisms for enforcing it. In China there tend to be more ways for people to avoid compliance and so that can be a problem. Corruption has been a problem. Their statistical systems are not as good as ours. So there’s some strengths and weaknesses. I elaborate on this in the book, but there’s some strengths and weaknesses in the Chinese system when it comes to fighting climate change. Jon Powers: So as you look at what the Chinese are doing there’s obviously the current administration, there’s a clear trend of demonizing China, the push on tariffs and all the risks and challenges that we face doing work with them. Do you see like what … How has their response been to that message? Obviously not from a geopolitical perspective, but from a climate and energies perspective, one and then two, is there still a lot of opportunity to collaborate or is that starting to get shut down by the broader narrative. David Sandalow: So the trade wars had a negative impact on the fight against climate change. I mean, actually not just in China, but in the United States. I mean, the first tariffs that were imposed were actually on solar panels, I guess in washing machines at the same time. But that tax on Americans buying solar panels that President Trump imposed has hurt the solar industry here. In China, I think the leaders have focused far more on economic stability and energy security as a result of the trade war. And in some ways that aligns with climate change goals. Well one way for example is there’s been a very strong push on electric vehicles and part of that, the big part of that, not the only part, but a big part of that is the energy security aspect of being concerned about their dependence on oil imports. David Sandalow: And it’s also good from a climate change standpoint, but I think climate change is received less priority as a result of the focus on some other issues in the past year or so. I think there remain very strong opportunities for cooperation for sure. I mean this is a period of really enormous tension between the US and China politically and I think that’s going to shape the relationship for years to come. But this is an area that kind of clean energy and environment that has been a good area for cooperation in the past and it’s got tremendous opportunities to do that in the future. And in fact, not just in the future, it’s happening right now. It’s happening mainly at the sub national level right now. The state of California and some other states, state of Washington have some very strong bilateral cooperation programs right now. So there’s a fair amount of activity going at that level between the US and China. Jon Powers: As you pointed out in the book, right, 43% of the world’s new renewable energy capacity is coming online in China. So if you’re here in the US and looking at that as an opportunity as a market that maybe you should … you or your company should enter into, what advice would you give to those entrepreneurs or even the more mature investors that are looking that maybe not have entered that market before? Because it can be obviously clearly pretty challenging, right? David Sandalow: Yeah. I would say spend time with professionals who are doing business in China who understand the ins and outs of doing that. The Chinese markets very challenging. There are opportunities there, but there are risks. Market access can be a challenge. But there’s an American chamber of commerce, the community of people who know how to navigate China. And I’d make sure that you’re working closely with those people. I don’t think we’ve had a chance to say something important about China, which is fine before we sign off. I think it’s important to say the Chinese government is doing a lot of good things when it comes to climate change. I don’t want anybody to walk away with rose colored glasses about this. At the same time, the Chinese government is pursuing some policies that are not good with respect to climate change. And that includes in particular continuing building of coal plants both within China and then supporting that abroad in other countries. And so it’s a very important issue for the globe as a whole. And unless that coal build slows down, it’s going to be much harder to hit any type of global climate targets. Jon Powers: So I do want to talk about the Columbia Center on global energy policy for a second where you’ve put together the book, what is the role of the center and what’s it doing at Columbia? David Sandalow: So our center is a policy research center within the school of international public affairs at Columbia University. We’re only just a little over six years old, seven years old and have grown enormously doing research across a wide range of energy topics and our goal is to provide information that’s useful to policymakers and the public and private sector more broadly as well. And so this book that I’ve just done on A Guide To Chinese Climate Policy is part of that. And one example of that and we spent a lot of time figuring out how to make our research accessible. And so this Guide To Chinese Climate Policy, you can access it three ways actually. You can go to our website and get the entire content, which is there, you can download it for free or you can buy it on Amazon and go to Amazon and it will arrive at your door several days later. So we’re trying to make this useful to anybody who’s interested in this product and that’s the type of thing we’re doing at the center on global energy policy is looking for ways that are useful for policy makers. Jon Powers: And you can find that an energypolicy.columbia.edu and one of the things I love that you guys are doing there, going back to what you just mentioned, is you, I’m often seeing the experts from the center in the media, right? Whether it be in op-eds or being quoted in articles. And it’s really important to have that level of expertise in the dialogue that we’re facing today in both here in the US and of course what you’re doing abroad. David Sandalow: We try to make a contribution. Indeed. Jon Powers: Excellent. So one last question. We’re facing some major elections here in the US hopefully for climate sake and for many other sakes, so maybe a change in the leadership of the White House here in 2020. Is the relationship repairable after the fights we’ve been having? Can we get back on the same page to start working together on things like climate and energy or is it going to take another entire administration before we’re there? David Sandalow: I think that the US and China can absolutely resume working together on this issue. And I hope for the world’s sake that’ll happen where the world’s two largest emitters and the bilateral agreement between the US and China, I think provided a foundation for the Paris agreement. So now it’s not going to be easy. There’s no question about it. One thing I found going back and forth between China and the United States is there’s enormous mutual suspicion and both countries have lots of suspicion of the other. But I think that this is an issue set where we actually have common interests where we both need to work with each other and other countries in order to avoid some really dangerous impacts. And so I think it’s an area where we can absolutely work together and I predict that we will. Jon Powers: That’s good to hear. So, David, thank you so much for joining us. David Sandalow: Jon, it’s a delight. Thanks so much for having me. Really appreciate it. Jon Powers: Absolutely. And you can get The Guide To Chinese Climate Policy at energypolicy.columbia.edu. We’ll also be hosting it at our website, cleancapital.com. You can get more Experts Only podcast episodes there as well. And please, as always, please send notes on folks we should be talking to or interviews we should be having. We appreciate everyone listening. I want to send a special thanks to our producers, Carly Battin and Nicole Waddington for their hard work and research ahead of these episodes. And as always, I look forward to continuing the conversation. Jon Powers: Thanks for listening in today’s conversation. Find more episodes on cleancapital.com, iTunes, or wherever you get your podcasts. If you like what you hear, be sure to subscribe and leave us a five star review. We look forward to continuing our conversation on energy, innovation, and finance with you.