MELISSA BLOCK, host:

From NPR News, this is ALL THINGS CONSIDERED. I'm Melissa Block.

ROBERT SIEGEL, host:

And I'm Robert Siegel.

In Copenhagen, time is running out. World leaders will soon gather to sign a climate change agreement that has yet to be agreed upon. In a few minutes, we'll put your questions about the summit to our reporter Richard Harris, who's in Copenhagen. But, first, no matter what shape the agreement takes, one thing is clear: the race to develop green technologies has begun and it is happening in China.

NPR's Louisa Lim reports from Shanghai.

LOUISA LIM: The future of sustainable energy is here. These words are emblazoned on a wall at the world's largest nongovernmental solar research center. It's built by an American company, Applied Materials, but it's not in the U.S. It's in the Chinese city of Xian.

Mr. CHARLIE GAY (President, Solar Division, Applied Materials): Hi, I'm�

Unidentified Man #1: (Foreign language spoken)

LIM: Here's Charlie Gay, president of Applied Materials solar division. He says two years ago the company predicted the cost of manufacturing solar panels would drop rapidly. One reason for that is China. It's now the world's biggest producer of photovoltaic solar panels, making about 40 percent of all panels, mostly for export.

Ms. ELIZABETH MAYO (Process Engineer, Applied Materials): So, when was the last time you celebrated?

LIM: At Applied Materials' Xian Center, Elizabeth Mayo, a process engineer from Santa Clara, is working with local staff testing solar panels. She's impressed by the facilities.

Ms. MAYO: We don't have facilities like this in the U.S. We don't have anything of this magnitude.

Unidentified Woman #1: Oh, yeah, (unintelligible), so maybe (unintelligible).

LIM: Magnitude would be right. We see vast empty hangars waiting for new production lines to be installed. Pilot lines for crystalline silicon and thin film solar technology are being developed. My tool guide is Catrina Ren, an enthusiastic English-speaking engineer.

Ms. CATRINA REN (Engineer, Applied Materials): I'm very proud of - have a chance to work here because this is the most advanced technology center in the world. I graduated from university only two years. So, I'm very proud.

LIM: And Applied Materials is no doubt overjoyed to have Catrina and her classmates on staff. After all, an engineering graduate here in Xian earns just a tenth of her American counterparts. Costs here in China are much cheaper than in the U.S. And the biggest draw is the eternal lure of China's fabled market. Here's Gang Zhou, the general manager of Applied Materials' Xian facility.

Mr. GANG ZHOU (General Manager, Applied Materials' Xian Facility): But China today is the number one producer of solar panels. That's where our market is. The China new R&D center, that's where we validate a lot of development work, which are being carried out in U.S. and in Europe.

Unidentified Woman #2: Ratio compared to that.

LIM: (unintelligible) validation, as she calls it, is what Elizabeth Mayo and her colleagues are doing in the test lab. (unintelligible) edge innovation is still taking place in the U.S. and Europe because of Chinese problems. That's according to Charlie McElwee, an energy and environment lawyer based in Shanghai.

Mr. CHARLIE MCELWEE (Energy And Environment Lawyer, Shanghai): There are still issues with respect to protecting your intellectual property in China. And so, those kind of things where you discover the next big thing probably will still be done in the United States for a while, simply because it's easier to protect your IP there. Companies are coming to China to do clean tech for the same reason they came 25 years ago to make shoes or T-shirts. It's simply cheaper to make things in China.

LIM: And so, American green tech companies are flocking to China. First Solar is building the world's largest solar plant in Inner Mongolia. Duke Energy is sharing solar, clean coal and smart-grid technology. Officials in the Obama administration are beginning to sound spooked. Here's Commerce Secretary Gary Locke speaking in October.

Secretary GARY LOCKE (Department of Commerce): The longer we in the United States wait, the farther ahead China will be, and it will be harder for us to catch up. If we don't get our act together, we're going to be watching the capital, the businesses and the good-paying jobs end up someplace else. And some 10, 15 years from now, we're going to be saying, how did Shanghai become the Silicon Valley of clean energy?

Unidentified Man #1: (unintelligible) we made it by ourselves. All the design is by ourselves.

LIM: One answer can be found in another cavernous warehouse outside Shanghai. Here, green tech entrepreneur Shi Jun is developing a homegrown pollution-free method for creating polysilicon, which is used in solar cells. It's early days yet for solar energy in China. There's no government subsidy for buying solar power. But Beijing is spending $3 billion on its Golden Sun initiative. This will cover half the cost of 275 solar power stations.

Shi Jun believes China will take the number one spot for installed solar capacity in just three years. American companies are ahead technologically, he admits, but they face other disadvantages.

Mr. SHI JUN (Green Tech Entrepreneur, Shanghai): The States, they have many good technologies. President Obama has give some policies. Until now, I cannot see the real impact on the companies. Also, I think the cost is a very big problem for the USA factories.

(Soundbite of machinery)

LIM: Shi Jun is delighted by China's new target, increasing energy efficiency by at least 40 percent by the year 2020. He estimates China will need 10 million tons of polysilicon to make enough solar cells to hit that target, 600 times its current output. His goal is within 10 years to produce half of China's polysilicon. Now, multiply that ambition by all of China's green technology entrepreneurs. Bear in mind that solar energy is just third on China's clean tech list, after nuclear and wind power. That's the magnitude of the challenge ahead for China's competitors.

Louisa Lim, NPR News, Shanghai.

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