Why other countries kick our butt on clean energy: A primer

China’s leaders are investing $12.6 million every hour to green their economy.

So writes Ben Furnas Research Associate at the Center for American Progress Action Fund in his excellent new fact- and chart-filled report, “We Must Seize the Energy Opportunity or Slip Further Behind:  A Primer on Global Competition in Green Technology Investments,” reprinted below. For more on this important subject, see “U.S. left in dust, having invented solar PV technology” and “Why Anti-wind McCain had to deliver his climate remarks at a foreign wind company” and “Why the United States REQUIRES a strong climate bill to remain competitive.”

The picture below is of wind power turbines at a wind power plant in Ulanqab, which is in north China’s Inner Mongolia Autonomous Region.  Wind and solar PV will be two of the biggest job creating industries of this century.  Yet, Furnass notes that “China is a leading manufacturer of photovoltaic (solar) cells, second only to Japan, and is set to be the world’s leading manufacturer of wind turbines by the end of 2009″ — not exactly low-tech, low-cost production.  We need to understand how we got in this mess, so we can understand how to get out.

China’s leaders are investing $12.6 million every hour to green their economy. Other countries are equally energetic in their embrace of alternative energy technologies; they are setting targets and investing billions of dollars to spur the development of entirely new markets in wind, solar, geothermal, biofuels, energy efficiency, high-speed rail, and other clean and innovative solutions to global warming.

The United States, too, is poised to transform its economy to create millions of new jobs and help create a cleaner, safer planet by investing in a green, renewable-energy based economy. The Obama administration wants to unleash the ingenuity of our private sector to rein in pollution and put millions of Americans back to work. Yet China is spending twice as much as the American Recovery and Reinvestment Act spends to lay the foundations for a green energy economy, despite the U.S. economy being 1.5 times as large as China’s. And across Europe and Asia, other governments have diversified their energy portfolios and encouraged entrepreneurs to start and expand clean and renewable energy companies.

As venture capitalist John Doerr recently pointed out in his testimony before the Senate Committee on the Environment and Public Works, “If you list today’s top 30 companies in solar, wind and advanced batteries, American companies hold only 6 spots. That fact should worry us all.”

Indeed, when it comes to preparing our country to compete in the new energy economy of the future and create millions of new jobs, we lag behind most of our competitors in the rest of the world in a four key ways.

  • We have no national energy portfolio standard that encourages clean, renewable power and shifts away from dirty and dangerous energy.
  • We have an outdated electrical grid unsuited for the task of carrying energy from regions rich in wind, solar, and geothermal potential to the people who need the energy.
  • We don’t make dirty energy companies pay for the pollution they pump into the air; in fact, we give them billions every year in tax breaks.
  • And we don’t invest enough in research, development, and deployment to inspire our entrepreneurs and leverage their discoveries by helping bring their bold new technologies to market.

As Doerr explained in his testimony, “What is at stake is whether America will be the worldwide winner in the next great global industry, green technologies.”

This analysis explores the current international terrain on which the United States is competing and asks three questions:

  • Why is America losing the “green stimulus” competition?
  • Why are we trailing Europe and Australia in renewable energy?
  • Why are we clinging to the dirty, dangerous, job-killing energies of the past?

Why is America losing the “green stimulus” competition to China?

Green portions of stimulus as percent of 2008 GDP

A February analysis by HSBC Global Research in Hong Kong projects that nearly 40 percent of China’s proposed $586 billion stimulus plan””$221 billion over two years””is going toward public investment in renewable energy, low-carbon vehicles, high-speed rail, an advanced electric grid, efficiency improvements, and other water-treatment and pollution controls. This stimulus is on top of historic levels of government spending and private investment in renewable technology, energy efficiency, and low-carbon growth all across China. The upshot: China, according to a recent analysis, is “the largest alternative energy producer in the world in terms of installed generating capacity.”

This massive stimulus plan will spend over 3 percent of China’s 2008 gross domestic product annually in 2009 and 2010 on green investments””more than six times America’s green stimulus spending as a percentage of our respective economies. This is about $12.6 million every hour over the next two years. In the United States, the American Recovery and Reinvestment Act invests $112 billion in comparable green priorities over the next two years, about half as much as China, according to HSBC. This represents less than half of one percent of our 2008 gross domestic product.

China, however, has adjusted its stimulus spending slightly since the HSBC analysis was conducted. The country’s leaders trimmed spending on water treatment and environmental cleanup, but maintained huge investments in upgrading China’s existing power infrastructure, and more than doubled investment in technical upgrading and research and development. These numbers may change again in the future, but they nonetheless are emblematic of China’s focus on using this economic crisis to position itself to be the world leader in efficiency, green transportation, and clean and renewable energy. As Zhang Lijun, a Chinese vice-environment minister told reporters in March, “It’s an opportunity to restructure, and we must use this opportunity well.”

China’s renewable energy industries are already huge and expanding rapidly. China is a leading manufacturer of photovoltaic (solar) cells, second only to Japan, and is set to be the world’s leading manufacturer of wind turbines by the end of 2009.

Unlike China’s government economic planners, who have laid out these priorities in a five-year plan, the United States should address these challenges in our uniquely American way, by harnessing and channeling the vitality of our entrepreneurs.

This would mean investing in a new 21st-century energy grid, just like President Eisenhower built the interstate highway system, in order to leverage the energy innovations of the private sector and help bring them to market. It would mean smartly investing in research and development, like President Kennedy did with the space program, to spur new innovations and discoveries to inspire entrepreneurs. And it would mean reining in dangerous pollutants by charging dirty energy companies for filling the atmosphere with global warming gasses, just like the first President Bush did when he made polluting companies pay for acid rain.

President Barack Obama has proposed additional public investment in renewable energy research of $15 billion annually, paid for by charging dirty energy corporations for their pollution. While this would amount to just one tenth of one percent of America’s 2008 GDP, it would be a good start. With this money, the United States would finally join China and dozens of other nations across the world in providing public investment for renewable energy, including Japan, Germany, Canada, France, South Korea, Denmark, and Spain.

Why are we trailing Asia, Europe, and Australia in renewable energy?

Spending that $15 billion would be an important start to helping U.S. companies regain their leading edge that they’ve lost over the last decade. As other nations set rigorous energy targets, establish common-sense regulations that spur innovation, and plow money into research and development and deployment, America lags behind. Closing this yawning gap would help create millions of new jobs in the clean and renewable energy sectors and revitalize businesses across the economy.

Take the photovoltaic (solar power) industry. In the 1990s, the United States led the world in the development of solar energy technology. From 1994 to 1998, our burgeoning solar energy industry produced more photovoltaic cells than Japan, China, or all of Europe. But then, in the early 2000s, as the Bush administration stifled global warming data and blocked a renewable energy portfolio standard, America stumbled and fell staggeringly behind.

The United States is falling behind in green regulations and investments in renewable energy

In a series of energy bills in 2001, 2003, and 2005, the Bush administration plowed billions of dollars into dirty energy””oil, coal, and nuclear””while neglecting clean renewable energy industries. The 2001 energy bill gave 80 percent of its value to tax breaks for oil, gas, nuclear, and coal companies. The 2003 energy bill, drafted in secret with Vice President Dick Cheney and members of the oil, gas, coal, and electric industries, gave $23.5 billion to dirty energy and loosened environmental regulations. Finally, while the 2005 bill contained a token level of investment in renewable energy, it also provided even more support for dirty energy, offering $27 billion in subsidies for coal, oil, and nuclear energy.

But as the Bush administration doubled down on the energy of the past, nations across the world invested in the future. Japan, China, and European countries zoomed past the United States, with a combination of dirty energy regulations, public investments, and private market incentives.

Annual solar cell production

This same pattern has repeated itself across the entire renewable energy industry. Due in no small part to our regulatory vacuum at the federal level on renewable energy portfolio standards, which would require a certain percentage of our electricity to come from renewable sources, our deployment of new clean energy has lagged. The European Union has committed to 20 percent of final energy coming from renewable sources by 2020. China is working to have 16 percent of its primary energy come from renewable sources by 2020. Sixty-six other countries worldwide have committed to nationwide standards. But in the United States, the federal government has set no national standards.

In this absence, many state governments stepped in to fill the void, but the resulting patchwork of regulation and targets hinders widespread nationwide deployment of clean and renewable energy. According to energy analyst and environmental sustainability lawyer David Petersen, a uniform national standard adopted by other countries across the world would “be good for the renewable energy industry as a whole, providing long-term predictability, attracting more investment capital and allowing manufacturing of renewable energy technologies to achieve economies of scale.”

United States lags other large developed nations in wind power capacityIndeed, renewable energy deployment in the United States lags far behind many European and Asian nations. While the United States has made great strides in recent years, in 2006 (the most recent internationally comparable data), the United States had less solar power capacity per capita than Germany, Spain, Japan, Switzerland, Australia, Austria, and the Netherlands, and less wind power capacity per capita than Denmark, Spain, Ireland, Germany, Portugal, the Netherlands, Austria, Sweden, and Greece.

In capacity per capita terms, this lag is particularly pronounced. But even in absolute terms, the public and private sectors in the United States have been strikingly slow to embrace renewable energy. As of 2006, the United States has less absolute renewable power capacity than either China or the 25 member nations of the European Union. And while America’s solar and wind capacity increased by an impressive 40 percent in 2007 (international comparison unavailable), China, Japan, and Europe are rapidly expanding their capacity as well.

United States lags other large developed nations in solar power capacityIn 2006, according to the most recent data from the Renewable Energy Policy Network, the United States, the world’s largest economy, invested less in new capacity for renewable energy than either the EU-25 or China. In fact, according to the most recent data, the entire United States invests less in renewable energy per year than the country of Germany, which boasts less than one-third the population of the United States and an economy less than one-fourth our size.

Smart climate change regulations, including a renewable portfolio standard and a carbon cap-and-trade system for greenhouse gasses like the one we have for emissions that cause acid rain would spur technological development in green sectors and help drive innovation across the U.S. energy industry. A 2009 study of inventions among developed countries by the CERNA Research Program on Technology Transfer and Climate Change found those developed nations which were signatories to the Kyoto protocol (and thus set targets to clamp down on their carbon emissions) saw their share of patents in green-tech innovation increase by over 33 percent. Those nations that weren’t initial signatories (Australia and the United States) saw no change in their share of total green tech patents.

New technologies can be developed, leveraged, and deployed with revitalized investment in federal research, development, and demonstration, as detailed in Peter Ogden, John Podesta and John Deutch’s “New Strategy to Spur Energy Innovation.” These measures include a doubling of the federal R&D budget, an interagency Energy Innovation Council to develop a multiyear National Energy RD&D strategy, and the establishment of an Energy Technology Corporation to manage demonstration projects.

Why cling to the dangerous, dirty, job-killing energies of the past?

The failed energy policies of the past decade represent an enormous job-creating potential gone to waste. A report by the Center for American Progress in conjunction with the Political Economy Research Institute shows that investments in the renewable energy industry create four times as many jobs as investments in the oil industry.

The imperative for renewable sources of energy, energy efficiency, and green transportation and power infrastructure is clear. And yet, we continue to neglect these priorities while plowing tens of billions of dollars of subsidies into polluting and wildly profitable oil and gas companies that create far fewer jobs and exacerbate global warming.

President Obama’s energy plan would eliminate $30 billion in giveaways to oil and gas companies and make polluting energy companies pay for their global warming pollution in order to invest in renewable energy infrastructure and cut taxes for 95 percent of working American families. This is the way to go.


There is no reason why the United States shouldn’t lead the world in renewable energy. Start-up companies across our country should be developing the solar panels of the future for deployment in the Southwest and on rooftops with good exposure to the sun nationwide. Wind turbines should be sprouting across our Great Plains and our coastlines. Thermal energy captured beneath our mountains and beneath our homes should be part of our alternative energy mix. And as a nation we should be developing and deploying the battery technologies needed to power the hybrid cars built in auto factories in the Midwest and elsewhere””alongside a smart electric grid capable of helping all Americans save on energy costs and combat global warming.

The rest of the world is seizing this opportunity. If we seize it with them, then together we can save the planet and develop China, the European Union, and the rest of the world as our customers.

Download the full report (pdf)

— Ben Furnas

21 Responses to Why other countries kick our butt on clean energy: A primer

  1. paulm says:

    China is not a democracy – they have no ‘Republicans’ to contended with.

  2. danl says:

    This seems like an excellent report. Kudos to CAP for putting it together. It seems like CAP has really taken the lead in the energy and environmental realms.

  3. paulm says:

    OK, so how much of a carbon foot print does switching to sustainable infrastructure have? And will it tip the tipping point?
    Why isn’t anyone looking at this seriously?…

    South Korea lights the way on carbon emissions with its £23bn green deal

    Seoul’s huge financial stimulus package pledges 81% for a swath of environmental projects. But activists fear a wave of construction may increase the country’s carbon footprint

  4. russ says:

    No Democrats either – I really don’t make a distinction between the parties when it comes to stupidity.

    The US needs a ‘cap n trade’ system like it needs another Al Gore – that is nothing but a shrine to Bernie Madoff. There is no way to prevent gross abuse. A transfer of wealth to countries with corrupt officers who certify anything you want – this is what Europe is doing.

    I would refer to the failed energy policies of the past 50 years – not the past decade.

    While Bush was a detriment, the Obama administration is not starting out with a ball of fire either. So far they have talked about removing subsidies for oil etc – no to get it past the house & senate – that is harder than the talk!

    The 100 million in ‘savings’ they are promoting right now is another bad, sad joke. The amount gives people a feeling something is happening but is piddling and not enough to bother with.

    When we have Kennedy blocking wind off Nantucket (might mess up his view) & Feinstein blocking solar in the desert (might upset some tortoise) what the hell is happening? Forget Mr. Jim NO Bunning and those fools – Obama will have his 60 senators and then he has to force the Democrats to make progress!

  5. caerbannog says:

    A bit off-topic, but Jonah Goldberg has just put up a particularly idiotic piece over at the LA Times web-site:,0,118588.column

    Comments will be accepted today only.

  6. Peter Black says:

    Great post Joe.

    I’m not sure why some don’t believe a cap and trade system can work. Why not look to the sulphur dioxide (remember acid rain?) cap and trade system that was implemented during the first Bush administration? It achieved a 100% compliance and eliminated acid rain in a staggeringly short period of time. There was so major scamming as far as I know of.

    There might even be an opportunity to force the offset market to invest locally right here in the US instead of say, Burundi. A community offsets market might be politically more feasible and folks sure love to see the tangible results. Transparency is key, and all of it can and should be publicly available information via an nifty interactive interface.


  7. SecularAnimist says:

    Not to dispute in any way the recommendations of the author, all of which I absolutely, strongly support, but with regard to how the USA compares with other countries, maybe we are not doing quite so badly as this article suggests. According to the American Wind Energy Association’s “Windpower Outlook 2009” (PDF):

    With a total of 25,369 MW in operation at the end of 2008, the U.S. pulled ahead of long-time leader Germany (23,902 MW) both in wind energy production and in cumulative wind power generating capacity. The U.S. is also the world’s largest market in terms of new installations (8,545 MW) added in 2008, ahead of China (6,300 MW).

    And not only is US wind generation capacity growing rapidly, so is US manufacturing capacity:

    Of the top ten global utility-scale wind turbine manufacturers in 2007 (Vestas, GE, Gamesa, Enercon, Suzlon, Siemens, Acciona, Goldwind, Nordex, Sinovel), six (Vestas, GE, Gamesa, Suzlon, Siemens, Acciona) now have a U.S. manufacturing presence, soon to be followed by a seventh (Nordex) . Even more dramatic is the rise in domestic wind turbine component manufacturing, the companies that make materials and components for wind turbines. More than 70 manufacturing facilities were opened, expanded or announced in the past two years (2007-2008), including over 55 in 2008 alone.

  8. It’s entirely baffling that the words “feed in tariff” are not mentioned once in this piece and in the attached PDF!! Someone either didn’t do their research or there is a campaign on here to deny, deny, deny until we turn to something like REFITs as a “last resort”.

    If you include FITs in the equation, the readers will understand why Denmark, Spain, and Germany have led the way in RE over the past decade… There is a misleading impression left by this article that Kyoto has something to do with RE installations in Europe. England, for instance is equally involved in Kyoto but has a miserable rate of investment and installation of RE generators so far. Denmark, Germany and Spain took our PURPA standard offer contracts of the 1980’s and refined them. And no, not just for rooftop solar, like some here have misconstrued feed in tariffs to mean. Ontario has just passed a comprehensive green energy bill including feed in tariffs that will mean that they too will outstrip us in RE.

    We are not talking about a metaphysical commitment to RE in these places: they simply recognize what it costs NOW and start paying for generator installations at current prices so they can achieve economies of scale and push costs down. We are still in denial about this, for some reason.

    You can read more about FITs here:

    Also the carbon price is not going to be particularly high in the next few years, which means we are going to further lag other countries in the development of RE, as FITs are much faster and more efficient.

    Rep. Jay Inslee has introduced a FIT bill into Congress.

    Yes, I am in agreement that in the area of green stimulus, that we should be emulating or exceeding China’s current infrastructure investments…

  9. hapa says:

    this is still an “everybody can be happy” program. US carbon needs to be in fast decline by 2020, but these goals are only to fill new energy demand with renewables and efficiency. yes, it’s a big economy, and thus, yes, clean energy could be one of the biggest business opportunities ever, without even coming close to solving the problem.

    if someone with a DUI conviction swears they’ll drive home drunk from only 80% of the parties they attend — or how about 50%! — do you give back their license? no. you don’t even wait to find out how many more parties they’re planning to attend. you already know they don’t understand what they did wrong.

  10. Greg says:

    Looks like that HSBC’s findings on how “green” the Chinese stimulus is is drawing some criticism…

    “How much for low-carbon power projects like renewable energy and carbon capture and sequestration ? 0, got that, “nothing.” Looks like those new railroads will be hauling a lot of coal to power plants which will send their coal generated power out on new transmission lines. Of course, China has (in contexts other than the stimulus plan) devoted significant money and efforts to encouraging the renewable energy sector, but it’s hard to find any money in the stimulus package for these efforts (as HSBC admits). ”

    This doesn’t contradict the whole article – but looks like the stimulus comparison could be wrong.

  11. DB says:

    “China is a leading manufacturer of photovoltaic (solar) cells, second only to Japan, and is set to be the world’s leading manufacturer of wind turbines by the end of 2009″

    And it is also the world’s leading consumer of coal, over three billion tonnes last year.

  12. Robert says:

    Is this about “saving the planet” or waving the US flag? China may be investing billions but there are no signs that CO2 emissions are going anywhere but up – and fast. It is already the world’s #1 polluter and is continuing a double digit CO2 growth path:

    China demonstrates the point that it is not enough to invest in clean energy, or even to set a goal based on the % clean energy in the total mix. To reduce CO2 you have to actually decide to emit less CO2. And that means digging up less coal each year than the year before.

    Pouring billions of tonnes of cement into wind turbine foundations while ALSO building 2 new coal fired power stations a week may satisfy China’s commercial aims but is a disaster environmentally.

  13. The contention that there is “no reason why the United States shouldn’t lead the world in renewable energy” is contradicted by a number of circumstances. Americans are comparatively mobile, with over 40 million citizens statistically changing their address every year. Many people won’t buy a solar installation if they are not sure of reconnecting it under the same contract terms in another part of the country, because these investments do not appropriately raise the selling price of a home. Yet every utility company employs a different set of regulations. Tax credits are useful only to people with a high tax liability to begin with. The United States did not ratify the Kyoto Protocol, so federal measures have not been enacted for reducing CO2 emissions from power generation. Finally, electricity from conventional sources costs only a fraction of what it does in Europe. Germany introduced national feed-in tariffs for renewable energies in the year 2000 to overcome these impediments. Their contribution to grid power has since risen from 5 percent (mostly hydroelectric generation installed decades ago) to over 15 percent. The renewables industry employs over a quarter of a million people. Anyone interested in background information on Germany’s energy transition may want to review the following two presentations:

  14. Cyril R. says:

    Here’s another important one:

    The USA energy policy has historically kept low cost energy at the top of the priority list. Even if it meant less clean energy, and indeed importing large amounts of it. Even from unstable regions. Who cared, as long as it was cheap. This has important implications for the way Americans use energy: that is, most use lots of it, making it difficult for new energy sources to take over because of sheer scale of consumption. Also, the low cost strategy has resulted in stagnation in new technologies that are almost always more expensive at the beginning of the learning curve, but require deployment to get learning by doing and learning by interacting.

    But now, there is a new trend. Americans tend to want it all: cheap, clean, reliable, AND made in the US of A. Well that turns out to be a conflicting list of priorities in most cases, especially the cheap part since new techs are expensive almost without exception. Fortunately, the new administration realizes there’s no free lunch, and major investment is necessary. What we need now is a carbon constraint, tax or trading, which doesn’t actually cost much when revenue is recycled in a progressive manner. Alongside that, as noted already, a large increase in promising RD&D is needed to complement the strategy.

    If we do these things, that naive wish list may actually come true after all.

  15. Robert says:

    You all seem to be ducking the real question. Adding some % of clean energy into the mix does nothing about overall CO2 emissions. The debate has to start by defining the problem (i.e. how to reduce atmospheric CO2 levels), not having a commercial battle with China as to who can build wind turbine factories faster.

  16. Cait says:

    Interesting how much the British govt at home likes to talk up its green credentials… and yet we’re nowhere in those graphs (and it’s not just a question of size – look at Denmark).

    The big difference *I would imagine* is that Denmark, and several areas of northern Europe (I note that Sweden is in the wind list… and Ireland – it’s so embarrassing, seriously) have a strong taxation system and have strong govt intervention in to its capitalist economy ie: they don’t sit around waiting for the ‘market’ to resolve everything because you know, surely if there’s customer demand then voila, it’ll all just happen, won’t it?

    To use a colloquialism: my ass it will.

  17. Robert says:

    Cait – yeah – we’re rubbish. Yesterdays budget introduced a £2000 subsidy for scrapping your 10 year old car and buying a new one. No restrictions about what car you buy, so you can trade in your clapped out Polo and buy a new Range Rover. No consideration of the embedded energy in its manufacture. This idea was first floated as green, then later became a desparate bid to save the car industry.

  18. DOE must take some blame here. Black hole money pits like hot fusion, supercolliders, string theory, CO2 sequestration, NextGen, etc. are absorbing all available research funding. National labs are not doing enough applied science in the clean tech area.

    For clean tech, a legacy of the Bush DOE is a Dec. 18, 2008, commitment for $80 billion in unfunded contracts with 16 favored contractors, which will starve any clean tech innovation for many years.

    The US has no shortage of well-funded pure science, but very little funding for mission-driven applied science and engineering. That is especially true for clean tech challenges. Other countries are more focused on making things that work. Applied science is considered inferior to pure science, and the academic caste system and its appurtenant grant system stands in the way of technological progress.

  19. Tilman says:

    One big mistake:
    When citing Germanys or Spains success, you always refer to portfoliot standards. That’s not correct. The driving machine behind most of the success of renewable energy in Europe is the feed-in-tariff. It’s a lot more efficient in driving investment than portfolio standards, and it’s also more democratic. Go study it – if you implement it in America, installation rates will explode.

  20. Ed says:

    Tilman, you are spot on. I’m Dutch and especially ashamed of my countries environmental trackrecord since Balkenende took office. We are technology leaders (for instance a team from Delft university has won the Solar challenge 4 times in a row) but we have a set of politicians in place that agree on the problem (and state so regulary) but promote coal burning power plants (4 of them in fact) as a solution (using CSS as a greenwashing agent, while in fact the first CSS experiment run by Shell just tanked due to local opposition).

    I live near the border and when I cycle to Germany I’m envyous of the achievements, massive numbers of rotors dotting the farmscape, harming no on (except the odd migratory bird), solar collectors and solar panels on rooftops are found in almost every street. Just a little courage from German politicians and when you see Balkenende and Merkel are basically from the same confescional party (CDA/CDU) then it makes you wonder. Should green thinking Dutch ask political asylum in Germany :-) ?

    Greetings, Ed Kuipers

  21. Graham says:

    The south of the USA (Texas, New Mexico) has major potential for high usage of solar energy. Obama should seriously look into more ways of making use of natural resources.