(FORTUNE Magazine) – BILL McDonough

As head of McDonough & Partners, a Charlottesville, Va., architecture firm, McDonough, 53, is known for designing ecologically--and economically--sound buildings for Ford, Nike, Gap, and Herman Miller. He also chairs the China-U.S. Center for Sustainable Development, an organization trying to get both countries to share profitable, clean technology.

WITH ITS ECONOMY growing at 8%, 9%, 10% a year, China is going to face orders-of-magnitude changes in its environment. It is going through the same industrialization that rich nations went through over the last century, and some argue that the West is in no position to tell China it can't develop the way we did. Indeed, powerful factions in China say the country needs to focus on growth and can't afford environmental controls. In the short term the businesses that are ignoring the environment will predominate.

But what we're seeing today is China awakening to the tragedy that is happening to its environment. A few months ago the Chinese government announced it would seek what it is calling a "circular economy," what we call "cradle to cradle." The idea is to seek indigenous natural resources and energy. It's a turn toward sustainability.

With the cooperation of China's government, the China-U.S. Center for Sustainable Development is designing and building an environmental showcase village in northeastern China, on the border with North Korea, and planning new cities throughout the country. The concept is that we can build cities based on what is possible in that region, on what the hydrology is, on what the local soils are, on what the native species are, and we will take those resources and put them in a closed loop. So, for instance, you could have a city that saw sewage as an asset instead of as a liability. This city would see sewage as nutrient flows--these are carbon flows, nitrogen and phosphates. And there are economic opportunities. So the question becomes, Who's the lucky person who gets to operate the sewage plant, because he gets to be a fertilizer company and a methane company? The amount of methane we can produce from human sewage is phenomenal--we could put enough methane out for everyone's cooking.

China will be looking for power wherever it can get it. China last year surpassed Japan as the second-largest buyer of oil in the world after the U.S. It has an active nuclear strategy. It's working on liquefied coal. China's energy policy is all about dollars: It's all based on cost. The Chinese are extreme pragmatists who want an economic payback. For example, it's much cheaper to solar-heat a liter of water than any other way. Solar water heating is becoming ubiquitous in China. One of the largest solar-collector plants in the world has just been built in China, and most new apartment buildings are putting solar collectors on the roofs for hot water.

It will take more than a generation, but China will move away from fossil fuels because it wants political and economic security. It doesn't want to be charging around the world building armies to secure energy supplies. The Chinese have a subtle understanding of the danger of a fossil-fuel economy. -- Interview by Brian Dumaine