Much has been said in recent days of a massive, $1.25 billion investment by the Chinese conglomerate China Wanxiang Holdings in the U.S. energy company Great Point Energy.
It looks like another example of a U.S.-based, venture-funded company turning to China to scale up its technology because it can’t get enough government funding, or financing from risk-averse banks, in this country (battery maker Boston Power also recently chose to move its manufacturing and R&D to China.)
But in the case of Great Point, there’s more to the story. Its technology just doesn’t make sense in the United States, but just might in China.
Great Point converts coal into natural gas, and in the U.S., with natural gas prices at 10-year lows, there’s little need for this. China, however, relies heavily on coal for its electricity, and much of its coal reserves are such low quality that they aren’t suitable for use in the most efficient and cleanest coal plants. So it has to import higher quality coal from abroad, including from the U.S.
Great Point’s technology works on a range of materials—so it’s likely that it could transform low-grade coal into a natural gas, which is much more useful, and far cleaner.
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