Chinese Tycoon Focuses on Green Construction

Dece mber 7, 2010Chinese Tycoon Focuses on Green ConstructionBy KEITH BRADSHERCHANGSHA, China — Zhang Yue has gro unded his three pri vate jets and perso nal helicopter. He has stored the midnight blue Rolls-Royce stretch limo usine and canary-yellow Ferrari behind the conference center he built here as a reproductio n of a French palace. This past summer, h e kept the thermostat in his office at a steamy 81 degrees.Mr. Zhang has embraced frugalities like working in heat rather than turning o n an air-conditioner not because of any financial setback. He still shows up on lists of China’s wealthiest entreprene urs, with a perso nal fo rtune estimated at $850 millio n. But Mr. Zhang, 51, has also emerged as China’s most outspo ken tycoon o n enviro nmental issues.It is a notable distinction, no w that China has passed the United States as the wo rld’s largest emitter of greenho use gases—and as Chinese officials vo w to resist any binding limits on their country’s emissions at the United Nations’ internatio nal climate talks under way in Cancún, Mexico.When a Chinese vice minister and the Hong Kong secretary of the enviro nment spoke enthusiastically at a conference in Ho ng Ko ng about their energy efficiency efforts, Mr. Zhang interrupted and disagreed in a sharp tone that Chinese entrepreneurs seldo m take with go vernment officials.“There are laws on everything, but I do not think there are enough laws on energy consumptio n,” he said. “We need mo re laws.”All this is not simply green altruism on Mr. Zhang’s part. He has a financial stake in enviro nmentalism. His co mpany, Bro ad Air Conditio ning, is a wo rld leader in the manufacture of central air-co nditioningsy stems that use diesel or natural gas instead of electricity to cool office buildings, shopping malls and facto ries.The systems, kno wn as absorption chillers, cost much mo re to install but are less expensi ve to operate, with the number of years needed to break e ven dependent o n local electricity rates. Abso rptio n chillers are particularly popular in China because many factories already have diesel generators and diesel fuel storage tanks.As electricity demand in China grew 11.5 percent a year o ver the last decade, pro vincial go vernments periodically had to impose blacko uts in industrial zo nes for up to three days a week to make sure that residential areas almost always had po wer. Facto ries buy diesel generato rs to maintain operations during blackouts.Abso rptio n chillers occupy an estimated one-fifth of China’s $2.5 billio n annual market for centralair-conditioning sy stems, according to Charles Oliver, a co-founder of GCiS, a market research co mpany based in Beijing. Broad Air Co nditioning is the abso rptio n chiller market leader by revenue in China,and expo rts to markets aro und the wo rld. The co mpany is privately held, mostly by Mr. Zhang and his family, and does no t release financial data.Abso rptio n chillers have less than 1 percent of the American market, said Karim Amrane, the vice president fo r regulato ry affairs and research at the Air-Conditio ning, Heating and Refrigeratio n Institute, a trade gro up in Arlingto n, Va. “It’s simply too expensive,” he said.The equipment tends to be mo re attractive in places with high electricity prices, and especially places with high prices during the afternoon, when power grids are alread y under stress and whenair-conditioning sy stems need to wo rk hardest. That gives Bro ad Air Conditio ning a financial incentiveto press for climate change policies that make it mo re expensive fo r electric utilities to burn coal, an inexpensive fuel in much of the wo rld but also the dirtiest in terms of greenho use gas emissions.One obstacle fo r the co mpany is that many developers build and sell co mmercial office projects, instead of holding o n to them and renting them. So minimizing initial costs may be mo re impo rtant to them than reducing long-term electricity costs.“Ho w do y o u co nvince a developer to spend mo re mo ney o n a building that he’s just going to sell?” said To m McCawley, a general manager of Evergreen Sustainable Development, a co mpany based in Shanghai that plans air-co nditioning and heating systems fo r large co mplexes.In exporting to the United States and 67 other co untries, Bro ad has marketed its products fo r co rpo rate headquarters and other buildings that tend to be held fo r a long time b y a single owner.Mr. Zhang’s co mpany is now branching o ut into the manufacture of heavily insula ted, energy-efficient segments of buildings that can be quickly bolted together at a co nstructio n site. All of Bro ad’s buildings have insulatio n with a thickness of 15 centimeters, or 6 inches, to minimize the energy needed to cool or heat them.As a demonstratio n project, Broad shipped to Cancún this autumn the co mpo nents fo r a two-sto ry building with floor space of 1,000 square meters, o r 11,400 square feet. The co mpo nents are designedfor quick assembly at a site near the climate negotiatio ns (the building was assembled in less than two days at the end of last week, and is scheduled to open on Wednesday after interior deco rations areco mpleted).The project has the suppo rt of Rajendra K. Pachauri, the chairman of the I ntergo v ernmental Panel on Climate Change, an adviso ry gro up to the United Natio ns climate talks. He said it was a way to draw attentio n to the need fo r energy-efficient constructio n around the world.Mainland Chinese tycoons are kno wn for keeping extremely lo w profiles and seldo m speaking in public, for fear of antagonizing political leaders or attracting the attentio n of tax investigators. But Mr. Zhang, who insists that his co mmitment to enviro nmentalism is genuine and separate fro m his business interests, may have mo re po litical protectio n than most Chinese tycoo ns.He is an outspoken defender of the go vernment’s unpopular o ne-child po licy, for example, saying that humanity needs to reduce its populatio n to pro tect the enviro nment. Perhaps most important, he is alongtime apostle of energy efficiency at a time when China’s leadership has beco me deeply wo rried abo ut energy security and eager to reduce the country’s e ver-rising reliance o n imported energy.And while Mr. Zhang wants China to address global warming mo re directly, he reserves so me of his bluntest criticisms fo r fo reign go vernments.“The United States is not limiting emissions,” he said, “so why sho uld y o u ask China to do so?”。