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[Episode #28] – Transition in Cities

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It is widely assumed that the ongoing migration of rural peoples to mega-cities all over the world will help reduce humanity’s per-capita energy footprint, while giving people a higher standard of living and accelerating energy transition. But the world is full of old, inefficient cities in desperate need of an eco-makeover, and of experts who understand the principles of “smart urbanization” and who can help identify how to transform a city from brown and dumb to smart and green. What’s the potential for replacing concrete with living things in cities? How can autonomous and electric vehicles help make cities cleaner and more livable? Why isn’t China promoting its phenomenal success with e-bikes to the rest of the world? Is China’s commodity demand going to continue to weaken as it moves away from a manufacturing economy? And will the emissions it was generating just move elsewhere when it does? All these questions and more are answered in this wide-ranging conversation with an expert on smart urbanization and China.

Geek rating: 3

Guest: CC Huang works to advance sustainable development in the United States and China. She is currently working with Equilibrium Capital to accelerate investment in sustainable technologies and the Energy Foundation China on urban development strategy. She led the creation of the Green and Smart Urban Development Guidelines, which are now being used to train government officials and guide large-scale urban development projects in China, inform urban planning in Mexico City, and to promote sustainability principles in Sweden. She has written for or been featured in Science, Forbes, Fortune China, Next City, and Caijing, among others. She has also worked at Energy Innovation, Lawrence Berkeley National Laboratory, and the Natural Resources Defense Council. She obtained her MPA from Princeton University and completed her BA at George Washington University.

On Twitter: @cc_huang

On the Web: http://energyinnovation.org/greensmart/

Recording date: October 13, 2016

Air date: October 19, 2016

Chris Nelder: So let's bring her into the conversation now. Welcome, CC, to the Energy Transition Show.

CC Huang: Thank you Chris. Thank you.

Chris Nelder: You've made a deep study of what makes cities truly sustainable. You've interviewed over 100 experts and reviewed hundreds of papers about green low carbon and eco city development. So maybe we could just start with that. Like what are some of the basic principles or meta characteristics that you identified that characterize the green city?

CC Huang: Yeah that's a really important question. And you know something we found through all of our research is the most important part of a green city is really the urban form. Once you have in place a sustainable urban form which at its foundation is small blocks, mixed use, and transit oriented development with a heavy emphasis on walking and biking, everything else can fit in naturally. So when you have a dense road network than when you have buses or cars they can really optimize traffic. And if you have a dense road network that can also be very conducive to walking and biking. And in most of the sustainable cities we found all over the world, walking and biking make up a majority of the mode share. So that I think is sort of something that most people don't think about. We call them almost sort of these invisible design features because when you're walking on a sidewalk you don't think about the sidewalk density, but that's really what can make the difference between good urban form and bad urban form.

Chris Nelder: OK but apart from like personal mobility, what are some of the other characteristics?

CC Huang: So other things would be what types of transport people in a city are using. Is it biking or is it personal vehicles? You'll notice in cities in the U.S. like Houston or Atlanta that are very car dependent. You can see this reflected in the roads. So the speed of a road that's built for a car which is usually you know 40 to 60 miles an hour is very different from a road that's built for pedestrians which operates at you know five miles an hour. So that's something that's very different as well. Something else would be green buildings. Green buildings can be sort of a lock-in energy sink for cities if they are built well and managed well they can be a huge source of energy savings if they're built not green, or built green and not managed well, they can be a huge energy sink. And I think finally of the energy and resources part of the puzzle which is the water system and waste system, whether or not you're using solar energy. And we've classified these in our green and smart urban development guidelines into three categories which we call urban form, transportation, and then energy and resources. And we see those from the urban planning aspect as the most important characteristics that characterize a green city.

Chris Nelder: Interesting. You know one of the things that has really struck me every time I go to Europe is how different their approach is to zoning. Like here in the U.S. you know you have these residential districts that might have a little bit of small commercial and then oftentimes there's going to be like a shopping district where there isn't that much in the way of places to live. And then outside the city boundaries is where all the industry and manufacturing is and then way outside the city is where the power plants are.

CC Huang: Yep.

Chris Nelder: And if you go to Europe you'll often find like you know there's residential stuff mixed right in with industry and manufacturing mixed right in with commercial shopping spaces. I mean what are some of the pros and cons of that from a smart or eco city standpoint?

CC Huang: Yeah. So one of the biggest improvements of a mixed use development over a single use development which is sort of the biggest distinction in terms of what you're talking about for Europe and the United States. First is walkability. So why do people love you know San Francisco? San Francisco is a very neighborhood heavy city which means that every neighborhood sort of has its own cluster of stores and restaurants and cafes. If you go to a city that's more single use you'll have huge residential areas and all the residents will have to drive 20 minutes to get to the closest grocery store. So this sort of access to amenities is one of the biggest advantages to mixed use. The second advantage to mixed use is sort of the energy cycles that mixed use makes possible. So when you have single use developments you have these high peaks of energy use. You know if it's all residential then everyone's home from 5 to 9 pm and energy use is sort of peaking. If you have mixed use districts, then you have a more balanced load which means that you have office and residential use during the day. But then you have also commercial restaurant and bar activity at night, which for a well-designed grid can really offer a lot of energy benefits as well.

Chris Nelder: That's really interesting and makes perfect sense but I just never thought about it.

CC Huang: Yeah.

Chris Nelder: So as you look around the world what are some of the cities that stand out to you as examples of how to do things the right way and what do you like about them?

CC Huang: Yeah that's a great question. So one thing we've really noticed is that there are very few cities that really do all the green things well. Every city has a few standout components and a few that we've studied in detail. One is Hammarby, which is a green district very close to Stockholm in Sweden and Hammarby really boasts this amazing waste to energy system. So every residential development will have these pipes where residents literally throw their trash into the pipes and through a vacuum system their waste becomes energy and this powers all of the heating for Hammarby. Another example would be Portland, Pearl District where there's been really great urban redevelopment which the opportunity cost in energy savings is really significant. Instead of building a dozen brand new buildings you save all that energy and materials and the construction and building process by redeveloping old buildings. And that also contributes to sort of the historical preservation and character of the Pearl District combined with their biking and light rail. I think Portland is another great example. Another cool example I think is Madrid which is the city with the world's largest e-bike sharing program. Now Madrid is relatively hilly and it has a very dense road network which makes an e-bike sharing system very feasible. It's also a slightly larger city. So for access to you know distances that are more than a mile or two away this can be really sustainable. So those are just a few examples but I think there's now a lot of innovation and smart technologies in different cities that are really interesting, but again I think it's important to emphasize that the foundational urban form must be prioritized for a city to be sustainable.

Chris Nelder: Right. So from a foundational standpoint I can imagine how if you were setting out to build new cities as China has done. We're going to talk about China in a minute. It's one thing to you know really come up with a good foundational strategy and build a good green city or design from the ground up but what do you do about the really old cities? You know that the path dependency of their very layout makes it difficult to change much particularly where transportation is concerned. I mean you know you look at a place like London like all you can really do is go down and build a subterranean subway or go up and build some kind of overhead light rail or something. How can we make our oldest cities greener and cleaner especially given how difficult it is to do things in them in an integrated way based on original design principles?

CC Huang: Yeah that's another great question.

Chris Nelder: I'm full of great questions.

CC Huang: Yeah haha. So I think something that is often overlooked with many of these old cities is they were actually built at a time where cars were not a primary transit option. So I think the number one thing these old cities can do are things like rezoning or encouraging mixed use so that people can access their major destinations by walking or biking. Second, there's a really low cost public transit strategy that is now being used in cities like Curitiba and Guangzhou which has bus rapid transit. To do bus rapid transit you don't have to dig deep underground these expensive subway systems you merely have a dedicated lane for buses and onboarding and offboarding stations for the public. Now bus rapid transit systems can be 5 percent the cost of what a subway would be but have the same load capacity so it can carry the same amount of passengers. So these are just two examples of ways. And of course looking at things such as retrofitting buildings can be really powerful or installing a building management system into an existing building. These are all really easy things to do to sort of retrofit or revitalize in older districts.

Chris Nelder: Interesting. But what about the layout aspect of it? You know I think one of the things that makes a city really jump out of you as being green or as being friendly or a healthy place to live is it's got some open spaces it's got some green places even you know these little micro parks seem to really make a difference. How do you work with those concepts with some of these old dense cities?

CC Huang: Yeah. So one thing that a lot of cities are now doing for example in terms of green roofs or urban agriculture. It's really a way to expand the public's green space in a city without taking up additional space. Another underused asset in a lot of these already developed cities are parking lots or parking garages and as public transit or walking and biking networks improve, I think these are also additional spaces that could be used for urban agriculture or you know installing bike sharing systems or EV charging stations. I think there's a lot of unused space in these older cities that's been dedicated to the development of cars that can now be reallocated to human centered approaches.

Chris Nelder: That's a very good point. I'm trying to remember. You probably know off the top of your head the kind of standard metric of how how much of a typical American city's footprint is devoted to cars. Like you know the roads and the parking spaces and all that.

CC Huang: Yeah yeah. It's it's really crazy. So we talk to a lot of people who are working on autonomous vehicles. And one interesting thing with the autonomous vehicles is they're not going to need as many parking spaces. So that's actually one of the big selling points of these new autonomous vehicle companies to cities is saying we are going to free up a lot of space within your city just because we don't need such big parking infrastructures. So that's really something that we'll see shifting in cities that were built after cars in the next decade.

Chris Nelder: How much space are we talking about here. I mean how much of a typical city space is devoted to cars or how much could we maybe free up?

CC Huang: I think it varies a lot. Based on the city if you look at a city like San Francisco I think it's a lot less. You know I would guess 10 to 15 percent. If you look at a city like Houston I think it's going to be a lot more ranging from 30 to 40 percent. So it really depends on the city. And you know in China a lot of Chinese cities are built more after Houston. So I think if you look at the wide boulevards and the large parking spaces this is actually a lot of potential there to redevelop and rededicate those spaces to a better use.

Chris Nelder: Yeah. So let's talk about China. In your previous job with Energy Innovation you did a lot of work on smart urbanization in China which is surely an important climate lever and an ultimate driver of energy transition globally. I mean after all the migration of many millions of people from China's rural communities to big cities is widely touted as one way that China will reduce its per capita energy footprint and improve its energy intensity. But the way that China began its urbanization drive over the past couple of decades produced, as you put it in an article in March of this year, a lot of single use car dependent Soviet style superblocks with really poor energy efficiency, single pane windows and buildings, no insulation. Just horrendous sprawling urban areas that replaced over a million villages, historic areas, and ancient landmarks. I mean what happened there? Why do you think China proceeded with its urbanization push in what seems like such a thoughtless fashion? What was the rush?

CC Huang: Yeah I think it's it's really interesting to look at China's development trajectory in retrospect. At the time when China was planning these cities, you know it really was the cutting edge model. They were modeling after the Soviet Union. They were modeling after the United States. You know the way Detroit or Atlanta was being built that's what China was modeling after. So I think a lot of that symbolism really characterized the rush. After Deng Xiaoping came into power he really had to prove his economic model was going to work and that it was going to raise people out of poverty. And so when Chinese citizens saw these wide boulevards and saw a lot of cars going onto the roads, to them that was a sign of economic prosperity. So I think that's one of the biggest reasons was just that China was a) trying to catch up with the West and b) trying to prove its own new development model after Mao. I think the second reason that started to become more of the driving factor in the 90s and after 2000 is the local governments having to make money from selling land because of China's complicated history with sort of landlords and property taxes, the local governments in China cannot collect property taxes. So selling land was really one of their major revenue sources. And I think third, the Chinese government realized that housing and vehicles are going to be two of the biggest and most expensive things people usually purchase. So when you're trying to you know grow economy at eight to 10 percent a year that's largely going to be steel cement and manufacturing. And housing and cars were just two of the easiest things to push at that time.

Chris Nelder: OK. Now that's a perfect segue to the next thing I want to talk about which was the city construction boom that China did. I mean it's absolutely... I still can't get my head around it. I mean it just doesn't seem to make sense. How utterly huge it's been. I mean literally hundreds of completely new like many cities districts and towns built in just about 30 years including I don't even know how many so-called ghost cities which were apparently built in the expectation of people needing places to live but which were never actually populated. I mean to me it just looks like an absolutely massive misallocation of capital and resources and everything. I mean why did they do that? Was it a miscalculation of housing demand or was it as you say just sort of an economic stimulus plan or was it a speculative building bubble or what?

CC Huang: Yeah no I think all of the reasons you cited are contributing factors but I think one thing that's often overlooked in media articles about this is the role of bad urban planning. So if you look at these ghost cities, most of them are not built close to transportation. And when...

Chris Nelder: They were built out in the country, weren't they?

CC Huang: Yeah they were built in the middle of nowhere essentially.

Chris Nelder: Just to clarify, how many of these things are there really?

CC Huang: The statistics on ghost cities is really blurry right now. I've been working with a group...

Chris Nelder: Come on man! These are cities! These are things you should be able to count! Like...

CC Huang: Yeah. So there's there's actually a lot of efforts to figure out what is a ghost city? So I've been working with a group called Beijing City lab, headed by Professor Long Ying of Tsinghua University and he's been looking at satellite data from Baidu, or you know social media data from WeChat and Weibo to see where are these ghost cities and how can we actually classify a ghost city? So it's actually under a lot of controversy right now, not necessarily from the central government but from local governments who are trying to say you know we're not building ghost cities and just because it's come under so much scrutiny... So the data for that I'm honestly not sure.

Chris Nelder: Wow. Yeah that just blows my mind.

CC Huang: It's fascinating. I think also because you know the speed at which it happened... I have two theories about this. My first theory is that we're judging China too quickly. You know it takes decades for a city to mature. And after you build a lot of residential It takes a while for there to be enough consumer presence for things like grocery stores or schools or hospitals to also make sense. And a classic example that developers will cite in China right now is Wangjing which is a district in Beijing. Wangjing was you know purely residential. It was close enough to Beijing so that it didn't become a ghost city but it later got public transit which meant that now it's becoming sort of a mixed use development because some developers are now selling units in this residential complex to become offices, so you know my optimistic hope for these ghost cities is that some of them will just take five to 10 more years to mature as more and more rural residents are moving into cities and public transportation improves. You know the Chinese government just announced in the past month that they're going to be helping millions more rural residents get urban hukou, which is often sort of the gateway for these rural Chinese to move into a city and have access to schooling and hospitals and things like that. So that's sort of the optimist's view on ghost cities in China.

Chris Nelder: Wow that's really amazing. It probably goes without saying that these cities could achieve their ambitions of being so-called eco cities or green cities or they could turn into some sort of a William Gibson style urban hellscape, you know rife with pollution and low quality of life. It seems like we have some really important choices to make as to which path we take. So what are some of the pathways by which China's cities of the future can become more green and smart?

CC Huang: Yeah. So one of the great things that came out of Paris climate agreements is an alliance of early peaking cities and China was created. So these are cities that are promising to peak their emissions by 2020. And for a lot of them that's actually a really difficult commitment and they're looking for new ways to do that. So some of the things I talked about before, you know better urban form, green buildings, waste systems... that's not going to be enough. They're going to have to capture more positive feedback loops from integrated design patterns. And I think that's really going to be one of the more innovative pathways that Chinese cities can take compared to their counterparts in the West. So what does integrated planning look like? It means that when the first step when you start zoning for a city, you start thinking what's the best place I can put a distributed energy center? You think what's the type of way that I can design the street network so that I can have great piping for waste energy network? So when you start planning just integrate in a holistic way from day one that will capture a lot of additional energy savings that cities in the West, it's going to be harder to do just because there's already more built up environment in those cities.

Chris Nelder: But what about these - as you were saying earlier - these kind of Soviet style superblock things with these you know kind of badly built buildings with no insulation and single paned windows I mean is this just like a giant retrofit project or what?

CC Huang: Yeah I mean I think China is facing a harsh reality that a lot of its urban areas will have to be retrofit. Luckily there's some sort of easy fixes I think that these neighborhoods in China can adopt. So for example a lot of these superblocks are just these huge residential courtyard compounds, which recently this May, the State Council issued new guidelines that said you know a lot of these superblock courtyards have to be torn down. So if you look at ways to tear these down there's actually very natural ways to create greenways or pedestrian only paths through these superblocks. Another really easy fix to you know encourage mixed use development is seen in a neighborhood in Guangzhou. And what they did was simply allow the first floor of a lot of residential buildings to commercialize and then implemented a lot of car control strategies, so literally just setting up bollards or putting up big planters on the road so that cars can't get into certain areas of this residential development. And now it's this very walkable mixed use development that has great nightlife great shopping and a lot of cafe culture. So some of these easy tweaks would be really important first steps for these superblocks that we've been talking a lot about to adopt.

Chris Nelder: Interesting. And if they're going to be just tearing them down or rebuilding them you know in a better way I guess that has the kind of a side benefit of being an ongoing and continued stimulus for the economic growth that sort of picking up where building ghost cities left off I guess.

CC Huang: Yeah yeah. And I think that a lot of these ghost cities will see different development strategies in the next decade. So one thing that's shifting right now among developers in China is that a lot of developers aren't willing to do property management. So when they built these ghost cities they were just thinking wow we'll sell the buildings, make our profit, whatever. We don't care what happens after that. But as land becomes more constrained and there's less land to sell these ghost cities will have to be revisited and property developers will have to say okay what are the details on the ground level property management decisions we can make to really attract new residents or new businesses to these areas?

Chris Nelder: Interesting. You know one of the key questions I guess in China's energy future is certainly transportation. China accomplished an astonishing build out of high speed rail capacity. I mean they built the world's largest high speed rail network in just about a decade, which has really helped them avoid a lot of emissions from air travel and long haul road traffic. But what about urban transportation? I mean are they just going to continue following the U.S. model and building a lot of roads for personal vehicles with all the emissions that entails and the dependency on oil imports? Or are they actually looking to cleaner alternatives like electric vehicles and light rail and subways and even e-bikes?

CC Huang: Yeah. So I actually think this is one of the most under-looked areas in which China is heavily investing in and doing a fantastic job at. They've really invested like you said in their high speed rail system which is now 19000 kilometers. They've really invested in subways. If you go to the subway in Beijing just within the last five years they've added five or six separate lines which I don't think has happened in any other city in the world recently. So I think these things are heavily overlooked by the West when they're talking about China's green infrastructure or their investment in renewable energy. Other things that China's investing in, a great example is electric buses. So there's now electric buses in southern cities in China that can charge within 15 seconds to go from stop to stop. So as passengers are getting on and getting off the bus the bus has already become fully charged to get to the next station. And this opens up a host of new opportunities for public transit especially in the realm of bus rapid transit, as I was talking about earlier. Finally I think one of the most interesting transit options that China's really the first country in the world to use very heavily is electric bikes. There's over 200 million electric bikes in China right now.

Chris Nelder: Wow!

CC Huang: Two hundred million. Yeah. Really insane. And what's amazing is it's the world's largest alternative fuel vehicle fleet that happened completely organically. You know the Chinese government is subsidizing $20,000 for an electric car but they have this amazing electric bike fleet that the government's just completely ignoring and I think because there's a lot of complexities in managing and regulating electric bikes, some Chinese cities are actually banning them from some of the major roads. So it's really a fascinating story though in terms of all the different ways that I think China could really leapfrog on green transportation if they really you know encourage the growth of their electric bike industry.

Chris Nelder: Wow. That is mind blowing. I really had no idea. So let me just dig into a couple of those things. First of all, obviously banning e-bikes is not what you want to do.

CC Huang: Yeah.

Chris Nelder: We should be encouraging them and banning the cars if anything.

CC Huang: Exactly.

Chris Nelder: Where do you think the resolution to that problem is going to be?

CC Huang: Yeah. So I think a lot of it right now is due to honestly a lack of information. I think local governments don't have the right information about e-bikes. So what turned me on to sort of the potential of e-bikes is I read a quote in China Daily by Qiu Baoxing, who is a former vice minister of China's housing and urban development department. And he actually says verbatim, I do not want to support electric car companies like Tesla. He says electric bikes are much more space efficient and make much more sense for China. And he says... let me quote him directly: "Electric Bicycles never get public endorsement by any ministries but grow at 35 percent annual pace. Policymakers should reflect on that." And it's really interesting because you notice that there's actually controversy within the Chinese government on how to regulate electric bicycles. And there's a few a second and third tier cities that are now experimenting with providing licenses and registration for e-bike users which makes tracking violations or fining them or even taxing them much more convenient. And these cities are finding that just by regulating them, accidents and any traffic violations are actually decreasing despite the rate of electric bike registration increasing at very high rates.

Chris Nelder: Wow that is impressive. Would you send me a link to, I don't know, some kind of a web page that I could put in the show notes, preferably one in English, where the listeners could look at some of the specifications for like a typical e-bike in China?

CC Huang: Yes I definitely can.

Chris Nelder: Because I think my listeners would really love to be able to see what 200 million people are getting around on.

CC Huang: Yeah. Just some other statistics: even if an electric bike is running on a very dirty energy source like coal, it's still getting a thousand miles per gallon right? So even if it's the dirtiest energy source in some ways it's still more efficient than something like bio methane or natural gas. Also in terms of carrying capacity for electric bikes I've worked with Chris Charie who is a professor at University of Tennessee Knoxville and he's done research. He's probably the e-bike expert in the world and he found that there's about 1.12 people per e-bike but only on 1.24 persons per car. So in terms of load and efficiency for carrying capacity e-bikes are also very competitive with cars. I mean if you look at the United States during peak traffic hours there's one person per vehicle. You know if you're going to move a toothbrush you don't put it in a shoe box. So I think a sense of having an e-bike for a very commuter heavy urban area, it just makes a lot of sense.

Chris Nelder: Wow. Makes so much sense.

CC Huang: Yeah. And you know my vision for a lot of second tier and third tier Chinese cities... These are Chinese cities that people in the U.S. have never heard of. They all have over a million people and often have more than five million people and they can't afford metro. Light rail is also pretty expensive. So I really think bus rapid transit and electric bikes combined could solve more than 50 percent of the commute problem.

Chris Nelder: Wow.

CC Huang: And I think that should be a vision for urban transportation for other cities in developing countries across the world. I mean if you go to Bangkok the best way to get around is on a moto taxi you know because you don't see that same congestion that cars run into. And I think you know in cities like Jakarta I think it's going to be a lot of the same trends going on.

Chris Nelder: And conversely when I went to Bali last year I saw just horrific congestion with people riding little gasoline mopeds. With just terrible terrible exhaust coming out of them. I mean it just seemed like an absolute melee on the road out there.

CC Huang: Yeah it's awful and I mean the cost of e-bikes and China right now is extremely low. So I think it's a huge potential market for China to export. You know an e-bike in the United States I think is usually about 800 to 1000 dollars. You know in China you can get a great e-bike for under 200 dollars.

Chris Nelder: Wow.

CC Huang: And the labor infrastructure for fixing e-bikes. You know there's an e-bike technician on every block in every city in China. So that's really things that I think the Chinese government needs to take advantage of rather than you know due to lack of information and proper statistics and laziness from unwillingness to regulate you know sort of let slide by and miss this wonderful opportunity for green and better transportation.

Chris Nelder: Hells yeah!

CC Huang: Yay!

Chris Nelder: China should be promoting the hell out of that to the rest of the world.

CC Huang: Yeah they should be bragging about it you know. And something else I think that's really interesting now with e-bikes is with the rise of e-commerce, e-bikes have been one of the best ways for companies like Baidu or any of these food delivery apps to get their services completed. So a lot of cities are now finding it difficult to ban e-bikes because of the e-commerce industry. So I think in the next five years you'll really see a lot of of these struggles sort of fixed in terms of will e-bikes when or will cars win? Which I think will be a really interesting battle to watch.

Chris Nelder: Yeah absolutely. You know I want to go back to a point you made earlier. You were saying that their electric buses can actually get a little bit of a recharge in a short period of time that they're at a bus stop.

CC Huang: Yes. Yes.

Chris Nelder: All right. I got to understand more about this. How does this work? I mean are we using inductive chargers or are they actually plugging in or...? I mean what's the output on these charging stations? I mean it must be like super high speed stuff.

CC Huang: Yeah it's super high speed stuff. Basically what it is is that at the bus stop the battery for the bus is on top of the bus so when the bus stops at the station there's an inductive charge system in the wires that go over the bus that give the bus a 15 second shock. And I think these buses are also highly efficient. So this 15 second shock is enough for the bus to go three or four kilometers before it gets charged in its next station.

Chris Nelder: Wow.

CC Huang: So it's really amazing. And when you think about how wide a lot of the roads in these Chinese cities are this probably is going to be one of the best ways for China to improve its public transit system is electric buses, sort of, after e-bikes of course. In my opinion.

Chris Nelder: Yeah yeah. And you know one of the specs on these charging stations? I mean what what are we talking about here? There's got to be like close to 80-100 kilowatts at least.

CC Huang: Yeah I'd have to look up the details but I might have the link somewhere in my files so I can send that to you.

Chris Nelder: That is amazing. I have never heard that before and I've been researching EVs. This just blows my mind. All right let's move on from transportation here a little bit and urban design and talk about some of the other things that China can do to reduce its energy consumption and be more energy efficient or reduce its carbon footprint. I mean everybody knows that you know there's just this massive smog problem especially in the big cities. It's one thing to reduce your emissions in certain cities or on a national basis but it's kind of another when you're really looking at a country like China that is so dependent on coal to get rid of that. So you know what's your perspective on kind of China's larger energy transition task and how it can become more energy efficient?

CC Huang: Yeah definitely. This is largely related to you know I think why China is placing so much emphasis on urban development is China has to get away from manufacturing as its primary economic driver. So a big way to do that is to encourage more consumption of goods and services within urban areas. And this is also why China is pushing a lot of rural residents to move to cities, why China is advocating concepts like the China dream or bringing back a lot of Confucian things because they're creating a new model of development that they want to be uniquely Chinese. So this is slightly a tangent I guess but in terms of bringing back a lot of Confucian and principles, it's because China's very worried about you know its aging population and how that will impact its economic growth. So that's also a very unique problem that China is facing.

Chris Nelder: Well it could also be a very unique asset because it means the demographics are working in its favor in terms of reducing its energy consumption.

CC Huang: Yes that's actually very true. You know that's why urban development is so important is because this is where a lot of the service based industry is going to grow. So if you look at China's savings rate as a percentage of GDP it's about 50 percent. If you look at the United States it's about 18 percent. So there's a lot of room there really for the Chinese government to encourage consumer spending. And I think that's also where a lot of the economic growth in China in the future will really be. And you can already see that happening just in the past few years I think consumption rates have increased while manufacturing rates have decreased a few percentage points each. But I think the challenge will be how do we give the Chinese public a sense of economic stability so they feel this security to spend their savings? Which right now I don't think the Chinese economy is providing the public.

Chris Nelder: Interesting. You know I guess it'd be worthwhile refreshing here exactly what China's objectives are under the Paris Agreement which - hurray! - is now binding. Do you think it can meet those targets?

CC Huang: Yeah. So China's biggest commitment from the Paris Accords is to peak carbon emissions by 2030. And honestly I think it will be on track to meet those targets. But the downside of that is I think China meeting those targets is not enough for China's economy at large. Like you were talking about there's air pollution problems there's water scarcity issues there's energy scarcity issues. And I think for China to really have a robust stable economy it's going to have to go beyond the Paris climate agreements and really redefine green economic growth even more than the United States. And you know probably at the level of a lot of European countries like Sweden or Norway in terms of investing in long term term economic growth.

Chris Nelder: And as China decarbonizes by getting out of manufacturing I wonder you know who's going to start making this stuff that China used to make and isn't that just going to wind up moving the emissions problem to another country?

CC Huang: Yeah I definitely think so. And that's one of my greatest fears. When I was working with the Natural Resources Defense Council in Beijing my main project was focusing on energy efficiency and textile factories. And we saw firsthand that a lot of these factories instead of upgrading their energy efficiency would just move to Vietnam or Thailand, or the Philippines and there's this zero sum game that I think international companies really have to look at because they're the ones with the ability to stop it. So I think having responsible sourcing, different business models where people aren't just buying something to use for a year or two but you know a service based model that I think internet companies are now modeling very well for other sectors. I think that's really going to have to be a big part of the future.

Chris Nelder: Well I agree. And you know it's more than just an industry that's culpable here. I mean governments are too. You know the U.S. and European governments have been all too happy to claim their energy intensity. Energy consumption per GDP has been improving while they were outsourcing their manufacturing to China.

CC Huang: Exactly.

Chris Nelder: And just sort of ignoring that or just pretending like oh well you know we're just advancing our economy, when in fact all they did was displace the emissions to somewhere else. And exactly how China can do the same thing and say hey our energy intensity is improving too. And meanwhile the global load of emissions just keeps going up. I mean this is not what we're trying to do.

CC Huang: Exactly. So you know I think that's why we really need innovation and technologies rather than just looking at these simple metrics such as GDP growth or energy and carbon intensity on a country level basis.

Chris Nelder: Yes.

CC Huang: We have to look at more balanced indicators such as what William McDonough is doing with his cradle to cradle standard.

Chris Nelder: Right.

CC Huang: Or you know what China is now really trying to do with its circular economy strategy. And I think this is the real type of innovation that has to take place. Otherwise we're going to see this zero sum game going through its vicious cycle over and over again.

Chris Nelder: Well you know in a previous episode of this podcast we talked about switching to metrics that would actually look at the carbon emissions per activity or per service. I could also see a more accurate metric being what's the embedded CO2 output in an item.

CC Huang: Yes.

Chris Nelder: Like what if when you went to buy a car there was a little sticker on there that said it took X tons of CO2 to produce this car.

CC Huang: Yeah yeah definitely.

Chris Nelder: No matter where it was made you know.

CC Huang: Yeah that would be fascinating. And you know I still don't think there's enough pressure from consumers and the government to pressure manufacturers to do things like this. I mean Patagonia I think is one of the few brands that even looks through its entire supply chain to understand where its carbon emissions are coming from and where its products are coming from. Something else I wanted to mention earlier that I think is really interesting coming out of China is China's Ministry of Health recently set a new standard to decrease meat consumption across China by 15 percent.

Chris Nelder: That's a big one.

CC Huang: Yeah and that's a huge source of emissions. I think globally the emissions from animal meat production and consumption are even higher than all transportation emissions combined. So if you're talking about a green economy I think you can't ignore the food system you know compared to the United States. I really think that that's an important model for the U.S. to follow which is saying how do we cut down on meat consumption? Because U.S. and European meat consumption right now is double China's. And I think the carbon footprint from that is also quite significant.

Chris Nelder: No there's no doubt about it. You know one of the things that I struggle with I mean one of the big macro questions I think a lot of people in the energy trade are wondering about right now is just how much of global demand for commodities owed to China's rapid city building boom which would make it more of a kind of a one time boost in demand versus how much of it might actually just be sustained secular demand that's going to go on for a long time. And one example of this would be how much of world oil demand over the past few years has been going to fill up China's new strategic petroleum reserve because if it's been significant and that reserve is nearly full, it could actually mean weaker global demand for oil in the near future like in the next couple years and lower prices which would have really potentially serious consequences for investment and future supply just as the oil industry is hoping that you know we can do some small cuts here and there and we'll get supply and demand back in balance and we'll enable the big oil producers to start investing their cap ex again. If China's done filling its SPR, I wonder if that's going to undercut that. So do you have any sense of that? Of like how much China's demand for really all sorts of commodities is really firm sustainable demand and how much of it was just sort of the artifact of a short term building spree?

CC Huang: Yeah. I honestly think a lot of it will be this short term building spree. I think one principle that China's really learned and is largely reflected in its new 13th Five Year Plan which is very different from the 12th Five Year Plan is that market demand for things such as steel cement and oil will never truly be sustainable. So the Chinese central government I think gained a new awareness, looking at the 13th Five Year Plan that they really have to reconsider what growth means. And you see the Chinese government trying to revitalize aspects of sustainability that are very different from the American dream. There's no way that every Chinese can own a three storey suburban house with a minivan. Right now only 10 percent of Chinese people own cars. And China has more congested cities than almost any other city in the world. So I think China like we were talking about earlier will have to look at different types of indicators. You know energy and carbon intensity, rich poor gap, the size of their service based economy, amount of spending on education and health. And you know another important metric would be land efficiency to really have sustained growth and I think the commodities market needs to be aware of that.

Chris Nelder: I completely agree. I really have a sneaking feeling there are some nasty surprises lurking out there for us in terms of weakening China's demand. Because I mean I think that really had a lot to do, the weakening Chinese demand curve had a lot to do with the fact that you know with the reasons for oil and gas prices starting to crash two years ago.

CC Huang: Yes.

Chris Nelder: I think it's an underappreciated fact. Meanwhile Chinese demand was cooling. And you know this oversupply condition was evolving and prices started to fall. All anybody could talk about was OPEC overpumping But you know what? OPEC was not overpumping. What was happening is demand was getting weak and nobody was looking at that.

CC Huang: Exactly. Yeah I completely agree Chris. And I think even though there's still 300 million Chinese people in poverty and a huge source of economic growth I think the Chinese government is really counting on is lifting these people out of poverty. But I think the way that the Chinese government is going to do that is very different from the model that the government has really been following from Deng Xiaoping since the 1980s. And I think that model does not work anymore.

Chris Nelder: Wow that's a sobering thought. Well we've covered China pretty well and I don't want to let you go without talking about India a little bit because in 2014 you coauthored a report with some of your fellow Princeton grads about financing rural energy micro-grid projects in India and fans of this show will recall that we discussed various aspects of that topic in episodes 11 12 and 21. So let's talk about that for a little bit. Why is the emphasis here on micro-grids? Was your team actually skeptical about the prospects for building out a you know a Western style centralized grid that would actually bring power to rural communities in India?

CC Huang: Yeah. So I think one reason we focused on micro-grids was that there's been a rise in the number of NGOs that have really been working to install micro-grids in different villages in India but through our research we actually found that you know micro-grids aren't going to be the best solution for every village. There's a number of factors at play. One is sort of how far away is this village still from the grid so you can really do a very simple back of the envelope calculation. What's the cost of extending the grade one kilometer? How much energy demand will realistically come from the spillage? And then compare that to the cost of a micro-grid. So we found that there's a few hundred villages where realistically the grid will never reach. So for these villages one of the best options is a micro-grid.

Chris Nelder: So what were some of the things that you discovered about the financing side of that problem?

CC Huang: Yeah. So I think one area we found interesting that almost became more of a philosophical question about development is after you install a micro-grid, then what? Is there sort of a development pathway that comes from financing the micro-grid? We visited a village in Pune India called Daravati and the villagers there had had a micro-grid for about seven years and they only used the micro-grid to charge their phones for light bulbs some kitchen appliances and they were most excited about was to watch cricket games on TV. So you know we found that it really wasn't sort of the ideal situation from a development perspective which is they're using the micro-grid to improve their economic or labor productivity. So in terms of financing a micro-grid for a village like this we found that village buy in was the most important sinse most of the reasons they were going to use the micro-grid were sort of you know individual level lifestyle decisions, the financing for that had to be on a decentralized village or villager or basis. And then for other micro-grids where there was potentially a cell phone company needed a tower nearby. Then this micro-grid could really be financed perhaps by the cell phone company as an anchor load. The problem with this is most of those micro-grids have already been set up. So the cases left are mostly sort of these very small villages from 70 to 200 people who are still missing power.

Chris Nelder: Yeah. One thing that did jump out from that report for me was this emphasis on rural communities investing directly in these micro-grids and having that ownership in that direct involvement with the systems operation and management and a path to long term buy-in and even though you know it was mainly through micro-payments as opposed to you know kind of the old model of having some NGO or a development bank helicopter in and just drop a bunch of money on a grid infrastructure project and then helicopter away. I mean isn't this a difficult path especially in these impoverished rural communities to like pay for something so expensive with these little micro-payments and is it really the way forward?

CC Huang: Yeah. So we found that many of the NGO or development led projects were often one off projects so they would set up one or two micro-grids as a pilot to show proof of concept and then it worked and then they found that it was actually really difficult to scale to other villages. And this is one of the biggest reasons we recommended village buy in was because the villages where micro-grids were built with village buy in, you know there was a local villager trained as a technician, villagers each paid through micro-payments for the micro-grid, the maintenance and operation of the micro-grid was much longer and it actually needed fewer repairs throughout the lifetime because the technician was there constantly trying to maintain the quality of the micro-grid so that I think was sort of the on the ground experience we found and a different NGO we talked to in India also had the same experience with bio gas projects. So across these different energy sources you know it's really the village that has to drive the sustenance of that infrastructure project.

Chris Nelder: Yeah that makes perfect sense actually. You know both a sort of "stitch in time" aspect of maintenance but also just kind of having that integration into the daily life of the people who live there's got to be just a crucial aspect of this.

CC Huang: Yeah yeah. And we looked at also calculations of training a village technician versus having an external technician come in and you know again there's different prototypes. So there's some instances where there'd be a number of villages clustered together. In that case an external technician kind of made sense because to come in and kind of have the accumulated scale of having five villages pay for his services. But many times there was one village that would just be really far away. So the transportation costs and sort of the difficulty of even getting this technician to get to the village would make it very unrealistic to have an external technician. So we found that it really is a village by village basis on which you have to decide the business model for the micro-grid. And I think that's really important.

Chris Nelder: And I guess most of these micro-grids are probably solar powered, huh?

CC Huang: Yes yes. Most of them are solar powered. And so the most expensive part of the micro-grid that was hard to sustain and that really made the difference between whether a village could afford it or not was the battery because oftentimes the battery has to get replaced every 10 to 15 years. So the best micro-grids would sort of go through multiple battery cycles whereas the ones without village buy in might only go through one cycle because of the cost of the battery.

Chris Nelder: And so there's another potential benefit to the fact that our battery costs are dropping so rapidly now with you know the development of electric vehicles and more battery backed solar systems. It's going to be good news for rural communities in places like India.

CC Huang: Yeah definitely. And I think what's also interesting about micro-grid technology is I think a lot of the potential has not been realized. I think there is a lot of potential for micro-grids to charge electric bikes for example through different distributed energy centers across cities. So I think once these other uses of micro-grid are sort of captured by businesses their cost and efficiency will also increase the same way what we saw for solar panels has happened in the past 10 years.

Chris Nelder: Yeah. You know earlier this year I did a report on the potential for dynamic charging of electric vehicles as a grid asset, you know as a distributed energy resource. But now I'm I've got to go figure out what what electric bikes can do in playing that role because much smaller loads, but it could be a super interesting as a kind of a grid balancing asset.

CC Huang: That would be really interesting. I'm actually working on a report about electric bikes right now with ITDP, The Institute for Transportation and Development Policy. They're one of the largest transport oriented NGOs in the world. And you know I think that's really something we want to paint a vision for which is what is the vision of how electric bikes can be integrated into the energy system of a city? And if you look at some cities in Europe they're actually doing that with their boats. They're using their boat batteries to help balance the load the same way that it's being done with electric vehicles.

Chris Nelder: Really?

CC Huang: Yeah.

Chris Nelder: I've never heard that before.

CC Huang: Yeah I'll send you the link. I thought it was fascinating.

Chris Nelder: That is.

CC Huang: But I think there's a lot of potential, you know in the flexibility of how energy intrinsically works that markets and grid system still have not captured.

Chris Nelder: Yeah. Wow. Wow. Well you know this conversation was full of surprises for me. Thank you, CC. That was really fun.

CC Huang: Awesome! Yeah I'm glad you learned a lot. Yeah. And you know if you have any follow up questions or anything please let me know. I think it's really fun talking to you.

Chris Nelder: I certainly will and once you get on with this next report and you have some intel on some specifics to share on how electric e-bikes can function as distributed grid assets, definitely want to get back on the program to talk about that.

CC Huang: Yeah that'll be great. We can have an e-bike episode.

Chris Nelder: Thanks a lot. Yeah that would be great.

CC Huang: Okay thanks so much Chris.