CHARLESTON, W.Va. — West Virginia’s newest, biggest global trading partner is partially state-owned and recently took its place as the world’s largest power company.
China Energy Investment, which signed a memorandum of understanding for $83.7 billion in West Virginia projects over 20 years, is a behemoth.
“As far as a corporate citizen, I would say beginning about a decade ago or maybe even longer, they began an effort of transparency that is really a model among partially state-owned enterprises in China,” said Brian Anderson, director of the WVU Energy Institute.
“The recent merger with China Guodian power only solidified that standing across the world because they are now the world’s largest electricity producer as well as the world’s largest coal company — so they are, in fact, a tremendous global citizen.”
The WVU Energy Institute has a longstanding relationship with Shenhua Group Corp., which was China’s top coal mining company.
Shenhua, in August, merged with China Guodian Corp., which was among the country’s largest power generators.
With assets amounting to $271 billion, the new company is considered the world’s second-biggest by revenue and largest by installed capacity.
With an estimated 326,000 staff, the combined company has a workforce almost four times bigger than the entire U.S. coal-fired power industry in 2016
The agreement with West Virginia, announced Nov. 9, was the biggest among an estimated $250 million in deals signed during President Donald Trump’s state visit to Beijing. (MORE: Why no one is talking about Trump’s game-changing deal.)
The gas and power agreement marks the first overseas investment for China Energy.
The possible projects in West Virginia include power generation, chemical manufacturing and underground storage of natural gas liquids derivatives. The size of the proposed investment is larger than West Virginia’s gross domestic product last year of $73.4 billion.
Nobody knows for sure, though, what’s ahead. The memorandum of understanding is an official document, but not as binding than a contract would be.
West Virginia leaders who are familiar with the deal say they’re comfortable with the state’s big, new corporate partner.
“Beginning a number of years ago, the Shenhua corporation had a vision of their, at that time, fully state-owned enterprise of being a global leader in the energy space,” Anderson said this past week during a news conference about the deal at the state Capitol.
“So the former CEO at the time of going partially public and having a vision of becoming a global enterprise began a lot of restructuring within the company — so they modeled themselves after companies largely in the U.S. but also global enterprises so they would have the social license to operate around the globe. Exxon Mobil is one of their aspirational peers in terms of their ability to operate across the value chain, but also in the way they operate.”
Anderson first became familiar with Shenhua as an enormous coal producer.
“As a coal company, they have some of the world’s best safety records,” he said. “Their technologies for locating miners underground — they can pinpoint the location of any one of their 12,000 miners that are underground at any one point in time to within a hundred feet across the entire country. Their safety record is absolutely impeccable. It’s better than many of the U.S. coal companies, as a matter of fact.
“I mention this just to show that they are, in fact, a true leader both in safety and environmental aspects.”
At that point, state Commerce Secretary Woody Thrasher jumped in to describe his admiration of the company’s efforts to study clean coal technology, which has been challenging for U.S. companies to produce in an economically-efficient way.
“I would elaborate on the clean coal technology and the ability that they have to really produce things vastly superior to what others are doing in terms of environmentally-friendly technology,” Thrasher said.
Anderson noted that the company has been involved with the National Institute of Clean and Low-Carbon Energy, with facilities in Beijing and Palo Alto, California.
“In short, that’s one of the reasons we at WVU have been a global partner with them for now 15 years because we do view them as a good corporate citizen,” Anderson said.
China has great promise as a trading partner — both from an economic and an environmental perspective, said Mykael Goodsell-SooTho, a clean energy fellow for Third Way, a centrist think tank in Washington D.C.
Much of Goodsell-SooTho’s focus has been on China. (MORE: China has big plans for clean energy.)
“China has been implementing progressive energy policies to move away from coal and develop cleaner resources. Unlocking their domestic natural gas reserves is a part of this transition, but China lacks some of the technical expertise we have in the United States, thanks to decades of work by American companies, the Department of Energy, and NETL,” said Goodsell-SooTho.
“Partnering with West Virginia gas firms is a way for them to build this expertise. In exchange, China is helping these firms get over one of the biggest hurdles in developing new energy projects. They’re bringing cash to the table. Lots of it.”