Reyad Fezzani, CEO of BP Solar, a subsidiary of British Petroleum (BP), spoke to a seminar room filled with Stanford students and professors Wednesday on the burgeoning solar energy industry and the key role China will play in its future.
The talk was part of the weekly Energy Seminar series, which hosts events every Wednesday on a broad range of energy topics.
Fezzani had just completed a 10-day trip to China, where BP, the fourth largest company in the world and third largest in energy, has invested $5 billion in the country — the largest sum by any foreign investor.
He said China — one of the largest emitters of greenhouse gases and consumers of coal and crude oil — is also a dominant force in fighting pollution through its investment in renewable energy. Efforts from government and industry have made it into the world’s largest solar product producer; its green economy could reach $1 trillion a year and be a whopping 15 percent of the nation’s forecasted 2013 GDP.
China’s vision of its future, Fezzani explained, is highly ambitious. On a chart showing China’s current and future economic goals, the red line representing GDP shot right through the top of the graph, toward a quadrupled GDP by 2020. At the same time, however, China is seeking to drastically reduce energy consumption per unit GDP, aiming for a 20 percent reduction by 2010 and a 45 percent reduction by 2020.
“Every time China sets a target,” he said, “it surpasses it very quickly, and then sets the bar even higher.”
Fezzani attributed China’s growth in the green industry to government action in providing infrastructure and subsidies to spur growth. The “Golden Sun” project promises to subsidize 50 percent of the construction and distribution costs of solar projects.
Citing an example where a solar energy producer went to the government for help, Fezzani told of his surprise at the government’s willingness to help.
“Local government said, ‘We’ll give you even bigger plots of land and give it to you for free,’” Fezzani said.
In response to an audience question about whether he feels rooftop solar systems are superior to solar farms, he chose the latter, arguing that while profit margins may be better with rooftop, solar farms provide a much better opportunity for expansion in the long term.
A major emphasis of Fezzani’s talk was how other countries such as the United States, where $38 billion of the latest stimulus package has been allocated to renewable energy projects, can learn from China in its investment in the green industry.
Fezzani argued that “feed-in tariffs” — a policy mechanism that reduces risk involved in adopting renewable energy through long-term contracts and guaranteed access to grids — play a key role in effective government investment. He argued that the United States’ primary means of spurring growth, a system of tax incentives, is empirically ineffective in comparison.
Fezzani also reminded the audience of renewable energy’s relationship to higher education. He highlighted how the Chinese labor force plays a big part in this growth.
“Labor is not just cheap, but intelligent,” he said, noting the 600,000 engineers that China’s universities produce annually.
Rather than viewing the educated Chinese labor force as a threat, Fezzani argued that industry’s growth should be considered an invitation for talent, no matter its national origin. In what he called a “democracy of education,” he highlighted the surprising number of non-Chinese students in Chinese universities and firms, and emphasized the need for outside talent to meet the demands of China’s growing solar industry.