Top down or bottom up alternative energy futures

The U.S. and China are now engaged in a great economic experiment, testing whether a top-down or bottom-up approach works best in growing an alternative energy industry.

The U.S. is taking the bottom-up approach.

The energy bill now being discussed in Congress is focused on creating incentives for new energy start-ups. There is a little money for insulation in the stimulus but Energy Secretary Stephen Chu (right) says he's relying on American ingenuity and a little open source to get the job done.

In China, which I visited last month, the approach is quite different. It's top-down. No one I visited with mentioned green energy at all, but it is a high government priority.

Tom Friedman of The New York Times, who famously told Iraq to suck on this earlier this decade, now fears this top-down approach will mash us flat.

"How do you say 'clean your clock' in Chinese?" he writes.

Hal Harvey of ClimateWorks told Friedman the Chinese government has set ambitious goals, demanded higher efficiency cars and industry, and has invested heavily in wind, solar and nuclear power.

Maybe. But I saw no evidence of this on the ground in Chengdu, where the middle class is absolutely mad for big American-style cars. None of those little Nissan or Subaru boxes you see on Tokyo streets. We're talking Buicks, BMWs, Mercedes. Big iron.

Never mind finding a place to park the things. Never mind that you can get through downtown faster on a bike most afternoons. The latest innovation is the "flyover," four-lane highways over crowded intersections, which are just as packed as the streets below. (But the views are nice, if you can see through the smog.)

It's easy to pick the low-hanging fruit in energy policy, simply insulating buildings and accelerating depreciation on old machines. The real trick is to increase solar cell efficiency, drive innovation in the grid so individuals can sell as well as buy power, and make power portable in some form.

These are goals that do not respond well to five-year plans. They respond to bottom-up incentives, powered by open standards so solutions are interoperable. This is the lesson of the computer industry, where China makes the gear but American software drives the profits.

Something else for Friedman to suck on down the road.

This post was originally published on Smartplanet.com