China buys GE's 'green' push

General Electric's bid to sell green products to China is working, writes Fortune's Marc Gunther.

By Marc Gunther, Fortune senior writer

(Fortune) -- In the two years since Stefano (Steve) Bertamini moved to Shanghai to become CEO of GE China, he has a sense that the days are less smoggy and more sunny.

This is more anecdotal than scientific, but it's among the reasons that Bertamini believes that, with GE's help, China will eventually go green - clean up its air and water, become more efficient and develop less-polluting sources of energy.

GE says it will deliver 300 fuel-efficient, low-emissions locomotives for use on China's mainline rail system beginning in 2008.

"The Chinese will lead the way in these technologies," Bertamini says, "just because they will have to."

We hope he's right. By most accounts, China has already become the world's biggest emitter of greenhouse gases (although on a per capita basis, it still lags way, way behind the United States).

Its air and water pollution problems are well-documented, most recently in this article in Foreign Affairs by Elizabeth Economy. People in the United States and the European Union can buy all the compact fluorescent light bulbs and hybrid cars they want, but without China's help, the climate crisis can't be solved.

A big part of Bertamini's job is selling environmentally-friendly products to China as part of GE's much-publicized "Ecomagination" strategy to become a leader in green technology.

In China, GE (Charts, Fortune 500) appears to be making headway: The country is now one of the company's largest foreign markets, with $5.4 billion in revenues last year, a nearly fourfold increase since 2001. GE has 12,000 employees in China, including about 1,200 who work in a research and development center in Shanghai. It has 23 joint ventures with Chinese firms; last year, just to pick one example, the company opened its first wind turbine assembly plant, in the city of Shenyang.

"We're looking at 15 percent-plus growth for the foreseeable future," Bertamini told me when we met for breakfast last week in Washington. China's booming economy is expected to grow another 11 percent this year, so GE is getting more than its share.

GE has been especially successful at selling Ecomagination jet engines, locomotives and wind turbines, said Bertamini. The company has sold 84 of its GEnx engines, which use less fuel, generate fewer emissions and are quieter than typical aircraft engines.

The company has sold 300 of its Evolution series locomotives, which are made in Erie, Penn., to haul heavy loads of freight. Their diesel engines produce more horsepower using less fuel and fewer emissions than their predecessors, according to GE.

As for wind turbines, the company has sold about 100, which together generate about 7,500 megawatts of power - the equivalent of eight to 10 coal plants.

Yet, for all GE's inroads in China, challenges remain. China is said to be building about one new conventional coal plant every week - and so-called clean coal is a business in which GE, so far, has yet to record a big sale.

GE has made a lot of noise about a power plant technology called IGCC (it stands for integrated gasification combined cycle), but it hasn't gotten an order for an IGCC plant from China or anywhere else. It has, however, signed a memorandum of understanding with the Chinese government to explore the issue.

Bertamini says, "We would like to be able to work jointly with them to build five or six clean coal plants, which would help us get the cost of the technology down."

Bertamini's job isn't just about Ecomagination. As CEO of GE China, he oversees GE's businesses in the country - the biggest are energy, healthcare and aircraft engines - and manages the GE brand, acquisitions, government relations and, of course, the run-up to the 2008 Beijing Olympics. GE's a global sponsor of the Olympics, which its NBC network will broadcast in the United States.

The son of a Bechtel executive, the 43 year-old Bertamini has lived all over the world. Born in Germany, his first language was Italian. He spent his childhood in Europe, North Africa, South America and the United States and then attended the University of Texas. He now lives in Shanghai with his wife and three young children.

"You become very adaptive," he says. "You can drop me off anywhere and I'll be okay," said Bertamini, who ran GE's Australia and New Zealand businesses before moving to China.

Meanwhile, how China and India will power their futures will be a key topic at Fortune's Global Forum in New Delhi, India next week. I'm scheduled to moderate a panel on the energy needs and environmental problems of the two countries. I'll be interviewing Jayarama Chalasani, who is director of Reliance Energy, India's largest privately-owned utility company; Michael Splinter, CEO of Applied Materials, which makes equipment for the solar power industry; Leena Srivastava, the executive director of Tata Energy and Resources Institute, a leading Indian NGO; and Tulsi Tanti, the chairman of Suzlon Energy, a wind turbine manufacturer.

Throughout the conference, Fortune will be posting dozens of videos, including event highlights, remarks by scheduled speakers such as U.S. Treasury Secretary Henry Paulson, and exclusive interviews with Fortune 500 CEOs. You can find them on Fortune's Global Forum siteTop of page