When it comes to winning the clean energy race, is the US already ‘out of the running?’

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"When it comes to winning the clean energy race, is the US already ‘out of the running?’"

In a new report, “Out of the Running?” America Progress’s Kate Gordon , Julian L. Wong, and JT McLain explain how Germany, Spain, and China are seizing the clean energy opportunity and why the United States risks getting left behind. The below video and memo summarize their findings, but you can download the full report here (pdf).

A clean-energy call to arms

As the United States debates comprehensive clean-energy legislation, it is confronted with a simple choice: come to the table and feast on the enormous economic opportunity that comes with reducing global warming pollution or be an item on the menu as our economic competitors forge ahead to build prosperity.

By 2020, clean energy will be one of the world’s biggest industries, totaling as much as $2.3 trillion. Over the past year, other countries made huge investments to seize the economic opportunity provided by the historic shift from fossil-based energy to renewable, low-waste electricity and fuel. These investments weren’t made out of thin air, but were a result of intentional public policies, which in turn provided a strong stimulus for new public and private investment in new clean-energy markets, infrastructure, and human resources.

China, a country that in some ways is only now experiencing an industrial revolution, has made a serious commitment to building that revolution with low-carbon, low-waste technologies and infrastructure. Several European Union countries””notably Germany and Spain””have also turned from old energy policies to embrace the new. These three countries understand that the transformation to a low-carbon economy brings a range of strategic benefits, from climate stability to energy security to economic prosperity.

With that understanding, these countries are moving forward decisively. The United States came in second just behind Germany in absolute sales in a recent global country ranking of 2008 clean-energy technology product sales. But when product sales were expressed as a proportion of respective gross domestic product, the United States was far down the list at 19th, compared to Germany at third, Spain at fourth, and China at sixth. The United States also lags on installed renewable energy per capita as well as per unit of gross domestic product (see Figure 1).

These countries invested in clean energy for short-term benefits and laid a solid foundation for future sustainable economic growth by either setting a price on carbon or implementing strong national energy performance standards or both, thus spurring innovation in new technologies that lower carbon emissions. A 2009 study by the CERNA Research Program on Technology Transfer and Climate Change found clear evidence that developed countries that ratified the Kyoto Protocol””each of which set a legally binding target to reduce its carbon emissions””saw a rise in green-tech innovation patents of more than 33 percent (see Figure 2). Developed nations that didn’t initially ratify Kyoto””the United States and Australia””saw no noticeable change in their share of total green tech patents over the same time period.

Comparison of renewable electric power capacity in Germany, Spain, China, and the United States

China, as a developing country, was not obligated to adopt mandatory carbon emission reductions targets under the Kyoto Protocol, but the country did embrace the treaty’s clean development mechanism, or CDM. The CDM allows developed countries to offset their emissions at home by investing in clean-energy projects in developing countries, and China greatly benefitted from the resulting technology transfer, particularly in its wind industry.

Today’s clean-tech innovations represent tomorrow’s jobs and GDP growth. China, Germany, and Spain are well on their way to global competitiveness in the clean energy economy. Besides the clear advantage of having signed onto or directly benefitted from the Kyoto Protocol, these three countries have also benefitted from their early adoption of a truly comprehensive approach to energy and climate policy.

In a September 2009 report, “The Clean-Energy Investment Agenda,” the Center for American Progress identified the need for a long-term, comprehensive approach to clean-energy policy that includes three core policy pillars:

Innovation trends, by number of inventions, among Annex I developed countries under the Kyoto Protocol

  • Markets: Expanding markets and driving demand for new clean and efficient energy products and services
  • Financing: Investing across the full value chain of clean-energy solutions””research, development, commercialization, production, and deployment””needed to meet demand
  • Infrastructure: Revitalizing and reinvesting in the physical and human capital infrastructure upon which the clean-energy transformation”” like all major industrial transformations in the past””will ultimately be built

When we researched Germany, Spain, and China’s approach to the emerging clean energy economy, we found that all three countries have taken just such an approach. In this report, we will take a close look at the policies and programs that make up each country’s approach to building a clean energy economy. We will examine how these policies are creating jobs, boosting industries, and spurring innovation in these three countries.

In addition we will use CAP’s three-pillar framework to demonstrate the specific ways these countries are pursuing a broad range of smart policies to create new markets for clean-energy solutions, strategically channeling finances across the entire innovation and commercialization cycle, and building the necessary support infrastructure for new technologies and fuels.

Our purpose here is not to provide an exhaustive survey of the clean-energy policies of each of these countries. Rather, it is to show how they have become top competitors in the emerging global marketplace of clean energy by adopting a strategic policy approach””and to demonstrate what is at stake for the United States if we fail to learn from their example.

China, Germany, and Spain are early winners in the next great technological and industrial revolution. Many other countries such as Denmark, Japan, and South Korea that we do not discuss in this report are also forging ahead with ambitious clean energy economic strategies. The United States, which has yet to fully embrace a truly sustainable growth strategy for the low-carbon future, is not.

The United States has a clear moral imperative to join the worldwide effort to reverse climate change. But it also has an urgent economic imperative to become a clean-energy leader. The clean-energy achievements of China, Germany, and Spain represent a significant step in the fight against global warming pollution, but their driving motivation has been their own economic self-interest, through creating vibrant new industries, sustainable jobs, and international markets for clean-energy technologies.

We can do the same and we can do better, but not if we use the excuse””as opponents of passing comprehensive energy and climate legislation frequently do””of temporarily weak economic conditions to delay the transformation to a clean energy economy. It is through a failure to act that the United States will suffer economically.

American workers, business leaders, and policymakers struggling under the weight of a historic economic downturn may question the relevance of policies in European and Asian nations. But they should consider just one concrete result of the United States not having a similar policy focus: Less than two years after building a solar manufacturing plant in Devens, Massachusetts, Evergreen Solar””an early U.S. pioneer in solar photovoltaic technology””announced plans to move part of that operation to Wuhan, China.

The race toward a clean-energy future is underway, and those nations that lead will reap enormous economic benefits. With the right investments and smart policies, the United States can be among them, a top player in the emerging global low-carbon economy.

Kate Gordon is the Vice President for Energy Policy at American Progress, Julian L. Wong is a Senior Policy Analyst with the Energy Opportunity team at American Progress, and JT McLain is a contributing author for the Energy Oportunity team at American Progress.

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11 Responses to When it comes to winning the clean energy race, is the US already ‘out of the running?’

  1. paulm says:

    Its doesnt have to be out of the race. But it ain’t going to be the winner. And probably not on the podium.

  2. Harrier says:

    You know, if you want the United States to develop its own clean energy industries, it might be helpful to keep other countries’ products out, at least at the beginning. A tariff on ‘energy products’ could be useful in this regard.

  3. jack cadogan says:

    I’ve never heard that China is the leading renewables electric deployer in the world. Reference 75 shows that of the almost 80 GW of renewables electric deployed in China at the end 0f 2008, about 60 GW were small hydro.

    If true, this statistic is almost irrelevant to the points the authors are trying to make.

    Uncritical use of this figure tends to udercut the rest of the report, unfortunately.

    Overall, the three pillars make a lot of sense, and if the US does not get its deployment activities in gear, we will fall behind. Given wind power, I do not think it has happened yet.

    Jack Cadogan

  4. Roger says:

    How ironic!

    It seems that the folks who would have Americans believe that climate change is a “hoax,” are the same ones who are holding us back from claiming the new jobs, technologies and other rewards of action. Shame on them (and us)!

    Leadership is lacking. It’s Obama time. Call and tell Obama to inform misinformed Americans and lead on climate. I just did. If most Americans knew the score on climate change, action would be easy.

    Call 202-456-1414. If it’s busy, call back later, or comment at http://www.whitehouse.gov (the comment button is on the upper part of the screen). You can also write: President B. Obama, The White House, 1600 Pennsylvania Ave., Washington, DC 20500.

    ASK FOR LEADERSHIP! Our collective futures depend on it.

  5. Dan Galpern says:

    Very useful report. Thank you Kate, Julian and JT at American Progress.

    The discussion of feed-in-tariffs is especially noteworthy, as the mechanism is “the most successful policy tool in stimulating the deployment of clean energy infrastructure across Europe.”

    In a recent letter to the Senate, we urged, among other things, wider adoption of this approach, albeit with a twist — namely funding from carbon fees (and not solely from ratepayers).

    See http://westernlaw.org/our-work/climate/welcome-to-our-climate-change-center

    Dan Galpern
    Western Environmental Law Center
    Eugene, Oregon

  6. J.A. Turner says:

    Harrier: Addressing climate change is far too urgent for the protectionist approach. I would rather see subsidies, pricing carbon, and slanting regulations in favor of clean energy. It would be counter-productive to hinder the roll-out of energy-efficiency products, solar PV and wind by making it more expensive for consumers and business to obtain these products. Protectionism would simply prolong the dominance of the fossil-fuel interests, and we don’t have any time to spare in race to reduce our carbon emissions.

  7. joe1347 says:

    As another measure, why not look at which companies are currently hiring scientists and engineers in the USA? Of course this is a trick question, since most of the job openings (for scientist and engineers) are at the US Defense contractors. For example, Defense contractor Northrop Grumman has over 2000 openings, and Lockheed Martin has over 4000 openings – while the National Renewable Energy Lab (NREL) has only a couple of job openings for solar energy scientists/engineers. It’s pretty clear where our national priorities still are. Until the annual budget for renewable energy technolgy goes from the hundreds of millions to at least the ten’s or better yet the hundreds of billions – we’re not a serious player.

  8. _Flin_ says:

    I live near a town in Germany near Munich called Unterhaching. They actually decided to go forward and make a serious effort to become as energy efficient, self sufficient and climate neutral as affordable. So they started to make an Energy Map, figuring out how much warmth each house needs and how the potential is for solar energy. The village supports insulation, solar panels, wood pellet heating. They build a geothermal plant (U.S. oil drilling tools btw.), which will amortize after 15 years (invest 80 Mio Euros).

    Overall they plan to reduce their CO2 emissions by 80%. The geothermal plant alone manages 60%. Unterhaching is a village with 22.000 people.

    Lots of things happening in Germany. Lots of jobs, too.

  9. I applaud Kate, Julian, and JT for including feed in tariffs in their analysis of what worked and is working in other countries, an approach that has been missing here on these pages.

    However, I have to take issue with their recommendations for the US which exclude feed in tariffs which are a cost-based means of pushing renewable energy down the cost curve. It would seem that reading the analysis of what is happening in other countries would seem to indicate that feed in tariffs are the common thread in the relative success of Germany, Spain and China, along with other factors in each case. Why is it that we wouldn’t benefit from feed in tariff laws here? The suggestions for US policy do not offer the investment security that feed in tariffs enable: they are simply extensions of existing policies.

    We need to take the next step here in the US to enable investors and private citizens to put their money in renewable energy project development by offering feed in tariffs, with finance mechanisms for community participation in the investment process. If we leave in place a regime that is dependent on tax incentives alone, the process is self-limiting at a low level and captive to special interests.

    I also want to warn of various non-cost based feed in tariff proposals that are being circulated in the US. These are “faux” feed in tariffs that do not open the market to a wide range of investors and project developers.

    It would require CAP to take a stand both in the Democratic Party and generally to point out that investment in clean energy costs money and it is well worth it.

  10. doubting Thomas says:

    TMK, we already block (ie, “protect”, not place tariffs on) Chinese PV sells (pun intended) in the US and the same is largely done thoughout the EU, as I recently saw complaints to that effect on CCTV. Well-established companies First Solar (FSLR) Suntech Power (STP) and JA Solar (JASO) (all Chinese) are thus forced to use their low-cost cells in China. No wonder they will soon be, if not already are, the leaders in installed solar capacity. As POGO said, “We have met the enemy, and he is us!”

  11. Hyperventing says:

    The report points to Germany and Spain as two countries in the EU that have invested massively in alternative energy and are going to reap the benefits of it in the short and longer term. Yet the EU as a whole is still locked in the same kind of thinking that is holding back the US. Although the EU promised to reduce emissions by 20% in 2020, it could have gone further. For a while it proposed in Copenhagen to reduce by 30% if other countries or blocks would follow with similar reductions. For not wanting to go on its own it reneged by the time the summit drew to a conclusion. And even those members of the EU that do have ambitious plans (including Germany) have to fight ingrained believes and vested economic interests. As a result the progress on other fronts is slow at best and often non-existing. We need more studies like this and in an easily digestible format to reach as broad an audience as possible.