Tumblr Icon RSS Icon

Secretary Chu: America Faces a Choice to “Compete in the Clean Energy Race” or “Wave the White Flag”

By Joe Romm  

"Secretary Chu: America Faces a Choice to “Compete in the Clean Energy Race” or “Wave the White Flag”"

Share:

google plus icon

Our Nobel-Prize-winning Secretary of Energy, Steven Chu, gave a blunt speech to the Washington Post Live Smart Energy Conference today.

Of course the WashPost event is sponsored in part by Shell Oil.

And you can watch it here through about 2 pm (DC time).

Here are some highlights of Chu’s remarks:

Secretary ChuOnce again, there is a huge opportunity before us – a global clean energy market that is already worth an estimated $240 billion and is growing rapidly.  In fact, a very reasonable estimate is that solar photovoltaic systems alone represent a global market worth more than $80 billion this year.

China – like many countries – has learned from the U.S. how government can support critical emerging industries.  Last year, China offered roughly $30 billion in government financing to its solar companies, including $7 billion to Suntech.  At least 10 countries have adopted renewable electricity standards, and more than 50 countries offer some type of public financing for clean energy projects.  For example, Germany and Canada operate government-backed clean energy lending programs, and in the last several months, the UK, Australia, and India have announced plans to do the same.

America faces a choice today: Are we going to recognize the opportunity and compete in the clean energy race or will we wave the white flag and watch all of these jobs go to China, Korea, Germany and other countries?

The global competition is fierce, and support for innovative technologies comes with inherent risk. Not every company or every product will succeed, but that is no reason to sit on the sidelines and concede leadership in clean energy. Some in Washington are ready to throw in the towel and write off the clean energy industry.  They don’t think America can compete or they don’t think it’s worth trying. Others think that the best thing we can do is for the government to get out of the way and let the free market work.

To those in Washington who say we cannot or should not compete, I say: that’s not who we are.  In America, when we fall behind, we don’t give up. We dig in and come back. Why should we concede one of the biggest growing markets in the world that is in our sweet spot: technological and manufacturing innovation? America has the opportunity to lead the world in clean energy technologies and provide the foundation for our prosperity. We remain the most innovative country in the world … but “Invented in America” is not good enough. We need to ensure that these technologies are invented in America, made in America and sold around the world.  That’s how we’ll prosper in the 21st century.

Chu used a different metaphor than “white flag” last year — see Video: Chu on why China’s bid for clean energy leadership should be our “Sputnik Moment.” Either way, it’s great to see a scientist use metaphors, a cornerstone of persuasive messaging — see “The greatest thing by far is to be a master of metaphor”: How to be as persuasive as Lincoln.

The speech only disappoints because Chu never once mentions global warming, which is clearly a major reason why other countries are putting so much money in renewables and why clean energy is ensured of staggering market growth in the coming decades.  Chu used to be blunt on this, too, back in early 2009 — see Chu on climate change: “Wake up,” America, “we’re looking at a scenario where there’s no more agriculture in California.”

I suspect the White House communications shop has, subtly or not, told Chu they (idiotically) believe climate change is not a winning political issue, which is the exact opposite of the truth — see Bombshell: Democrats Taking “Green” Positions on Climate Change “Won Much More Often” Than Those Remaining Silent.

Here are Chu’s full remarks (with links to sources):

CLICK HERE TO READ MORE OR COMMENT

Thank you, Mary [Jordan], for that kind introduction.  While the focus of this conference is on the future of energy, I want to start with some lessons from America’s past.

On a windy day at Kitty Hawk on December 17, 1903, the Wright Brothers launched the world’s first powered airplane to achieve human flight – and with it, a whole new industry. For the next several years, they led the world. What is less appreciated is that the United States lost the technology lead in airplanes by the beginning of World War I. Although the U.S. military was the first customer of the Wright Brothers and of a competitor, Glenn Curtiss, between 1908 and 1913, the United States ranked 12th in government investment in aviation. When we entered the war in 1917, we were so far behind that our allies convinced us to produce European designed aircraft.

After the war, the United States did not say, “We can’t compete with Europe.” We saw leadership in this industry as a national security imperative and an economic opportunity – and we launched an agency to support research and development and passed legislation to allow private aviation companies to carry mail. Demand from the military and the postal service kept the industry alive during its early years, and laid the foundation for today’s domestic commercial aviation industry.

The second lesson involves the history of the automobile.  In 1885, the modern gasoline-powered internal combustion engine was invented in Germany by Gottlieb Daimler and Karl Benz.  Henry Ford didn’t invent the automobile; he invented the assembly line, which greatly increased worker productivity.  America became the dominant automobile manufacturing force in the world by becoming the low-cost, high-quality mass producer. As the price of cars came down, the market exploded.  More factories were built and more workers were hired – and America dominated the auto industry.

My final lesson is about information technologies.  American ingenuity created the technologies upon which modern electronics were born, but federal support helped usher in the telecommunications era.  The U.S. saw the potential of this emerging industry and took action to help foster its growth. The military was an early adopter of computers. The Defense Department backed research that helped lead to the development of Internet technology. The purchasing power of the Air Force, NASA and other federal agencies guaranteed a market and drove down costs for microchips, making them affordable and widely available for use in a range of technologies.

The lesson from these examples is clear: the U.S. government recognized an economic opportunity, made a choice to compete, and took the necessary actions to promote these industries.

This brings me to today.  Once again, there is a huge opportunity before us – a global clean energy market that is already worth an estimated $240 billion and is growing rapidly.[i] In fact, a very reasonable estimate is that solar photovoltaic systems alone represent a global market worth more than $80 billion this year. To put that $80 billion in perspective, that’s nearly as much as Americans spend every year on beer.

The United States built an early lead in the clean energy race. Solar cells, wind turbines, and lithium ion batteries were all invented here.  But we are no longer the leading manufacturer of any of those technologies. In keeping with the comparison with beer, in 2009, we spent $7.1 billion on potato chips – $2 billion more than our federal investments in energy research.[ii]

History is repeating itself – just like we took the lead in automobiles from Germany, other countries have studied the U.S. playbook and are using it to take the lead from us.  While some people in Washington are debating whether the clean energy economy is real or whether we should try to compete, other countries are seizing the opportunity.

Nowhere is this more evident than in China.  Last year in Shanghai, I visited Suntech, currently the leading photovoltaic manufacturer in the world. They import their silicon wafer material from the United States, because the electrical energy required to refine the silicon is much less in the U.S. They add the high technology processing steps in a highly automated facility in China. Suntech is not only a low-cost leader, at the time of my visit they held the record for the highest efficiency poly-silicon solar cells in the world. Suntech is trying to do to us what Henry Ford did to Daimler and Benz.

Another secret to Suntech’s success is that China – like many countries – has learned from the U.S. how government can support critical emerging industries.  Last year, China offered roughly $30 billion in government financing to its solar companies, including $7 billion to Suntech[iii].  At least 10 countries have adopted renewable electricity standards[iv], and more than 50 countries offer some type of public financing for clean energy projects.[v] For example, Germany and Canada operate government-backed clean energy lending programs, and in the last several months, the UK, Australia, and India have announced plans to do the same.

Since his first day in office, President Obama has been working to strengthen U.S. competitiveness in clean energy. The Energy Department has stimulated the innovation chain by using grants to support cutting-edge R&D projects and advanced battery factories, tax incentives like the 1603 program, which has supported nearly 20,000 renewable energy projects,[vi] and loan programs to finance innovative manufacturing and deployment of renewable energy.

While we’ve made progress, the United States is at a crossroads.  Many clean energy tax incentives are expiring.  The 1705 loan guarantee program closed on September 30th, and we’ve obligated virtually all of our Recovery Act money.

America faces a choice today: Are we going to recognize the opportunity and compete in the clean energy race or will we wave the white flag and watch all of these jobs go to China, Korea, Germany and other countries?

The global competition is fierce, and support for innovative technologies comes with inherent risk. Not every company or every product will succeed, but that is no reason to sit on the sidelines and concede leadership in clean energy. Some in Washington are ready to throw in the towel and write off the clean energy industry.  They don’t think America can compete or they don’t think it’s worth trying. Others think that the best thing we can do is for the government to get out of the way and let the free market work.

We had this same debate in 2008 and 2009 about the auto industry.  A lot of people in this town we’re ready to give up on U.S. auto manufacturing. President Obama refused to let the U.S. auto industry collapse. Today, Ford, GM and Chrysler are profitable and are creating jobs and quality products. After seven straight years of decline, America’s auto manufacturers expanded their output by 35 percent last year.

The President took action because auto manufacturing is a lifeblood of our economy.  A Center for Automotive Research report[vii] found that nearly 8 million jobs are impacted by U.S. auto manufacturers, suppliers and dealers. This includes jobs directly connected to manufacturing and other jobs that benefit when workers spend their paychecks. The critics were wrong about the auto industry. I believe they are just as wrong today when they say we shouldn’t bother investing in efficient vehicles or clean energy.

I recently read a paper that Michael Spence, the 2001 Nobel Laureate in Economics, wrote on job trends in the United States from 1990 to 2008. [viii] He divided employment into two sectors.  One sector is called tradable jobs – jobs where you make stuff like airplanes, cars, food and electronics that can be shipped and sold around the world.  The second sector is called non-tradable jobs, which are jobs that can’t be traded, like real estate, hotel and restaurant workers, health care professionals and government jobs.

The good news is that we added 27 million jobs in the United States during this period.  The bad news is that the job growth was almost all in the non-tradable sector. In other words, our job growth was in the sector of our economy where we don’t compete internationally. You don’t have to be a Nobel Laureate to conclude that if our economy is not competitive internationally, our prosperity will decline.

Some people say it doesn’t matter where products are manufactured as long as we invent them in America. The simple fact is that the continual improvements in productivity are due to the interplay between engineering and manufacturing. In the long run, production engineering follows manufacturing and research and development follows engineering.

China and many countries in Asia and Europe regard clean energy and other high technology products as critical to their future prosperity. Other countries whose economies are largely fueled by extractive industries such as oil, gas and minerals don’t say, “Our future is secure because we are blessed with oil or gas.” The leaders of these countries know that these supplies will eventually run out and they have a finite window of time to develop a knowledge-based economy.

To those in Washington who say we cannot or should not compete, I say: that’s not who we are.  In America, when we fall behind, we don’t give up. We dig in and come back. Why should we concede one of the biggest growing markets in the world that is in our sweet spot: technological and manufacturing innovation? America has the opportunity to lead the world in clean energy technologies and provide the foundation for our prosperity. We remain the most innovative country in the world … but “Invented in America” is not good enough. We need to ensure that these technologies are invented in America, made in America and sold around the world.  That’s how we’ll prosper in the 21st century.

Thank you.


[i]
Pew Charitable Trusts, “Who’s Winning the Clean Energy Race? 2010 Edition,” http://www.pewenvironment.org/uploadedFiles/PEG/Publications/Report/G-20Report-LOWRes-FINAL.pdf

[ii] Rising Above the Gathering Storm, Revisited: Rapidly Approaching Category 5

[iii] Greentech Media, http://www.greentechmedia.com/articles/read/chart-of-the-day-solyndra-edition/

[iv] Pew Charitable Trusts, “Who’s Winning the Clean Energy Race? 2010 Edition,” http://www.pewenvironment.org/uploadedFiles/PEG/Publications/Report/G-20Report-LOWRes-FINAL.pdf

[v] REN21, “Renewables 2011 Status Report,” http://www.ren21.net/Portals/97/documents/GSR/REN21_GSR2011.pdf

[vi] That figure is as of September 11, 2011

[vii] Center for Automotive Research, “Contribution of the Automotive Industry to the Economies of All Fifty States and the United States,” April 2010  http://www.cargroup.org/pdfs/association_paper.pdf

[viii] “The Evolving Structure of the American Economy and the Employment Challenge,” Michael Spence, Council on Foreign Relations, http://www.cfr.org/industrial-policy/evolving-structure-american-economy-employment-challenge/p24366

‹ Will Congress Cut Off Key Clean Energy Incentives?

Getting Clean Energy Economy Facts ›

8 Responses to Secretary Chu: America Faces a Choice to “Compete in the Clean Energy Race” or “Wave the White Flag”

  1. Jim Groom says:

    The ‘white-flag’ is the new banner of todays GOP. I hold out little hope that in the short term the GOP controlled house of representatives will allow movement away from the status quo. After all, they are paid to protect those who bought and paid for them. Maybe by November of 2012 the sleeping giant of American voters will rise up and replace these shills with representatives of the people…I can dream can’t I?

  2. We need to ensure that these technologies are invented in America, made in America and sold around the world. That’s how we’ll prosper in the 21st century.

    Duh. This is the sort of language that the 1% types will love.

    People’s homes are being illegally foreclosed by criminal banks, and we have Steven Chu talking about how America can rule the world?

    It seems as if Chu’s address was aimed at pleasing the 1% while throwing out a few scraps of meat to the 99%. I think this is a testament to how utterly disconnected the Obama administration has become from the needs and wants of the common people.

    – frank

  3. Jeff Huggins says:

    What?

    “huge opportunity”; “$240 billion”; “emerging industries”; “clean energy race”; “biggest growing markets” —

    These phrases (and about a dozen others like them) could be coming from the lips of any corporate leader, any business school prof, any finance minister, any rah rah go-getter, or whatever.

    My goodness, you don’t need to be a Nobel Prize-winning scientist to shout “go team!” and reduce what is a scientific and ethical issue down to a commercial race.

    This type of talk should illustrate something profoundly disturbing to us: what entering the government-commercial sector (after all, apparently it’s just one big sector) apparently does to a person who started out being a scientist who was deeply concerned about the influences of climate change on humans, on the entire biotic community, and on the future.

    Does it take a Nobel Prize-winning scientist to become a commercial cheerleader? Are we putting Chu’s skills to good use by making him — reducing him to — a commercial cheerleader? My goodness!

    And Joe, you say that Chu’s speech “only” disappoints because he never once mentions climate change? I’d give the speech an F-minus for that reason. If he’s speaking to folks from Shell, from the oil and coal industries, and from others in the energy industries, he should be taking them to task for not being honest and not squarely facing climate change.

    I am deeply, deeply disappointed in Chu and Obama. And I’m increasingly disappointed in us. Yes, us! Here we have a person — Dr. Chu — who is a Nobel Prize-winning scientist who, less than four years ago, was talking about the deep reality of climate change from a scientific standpoint, and urging us to address it because of the issue — both a scientific and ethical issue — that it is. Now he has become some sort of commercial/finance rah-rah who uses such phrases as those listed above and who can’t even bring himself to utter the words ‘climate change’. And he’s working for who? — a President that many people want to reelect, and many here want to reelect even if he approves Keystone XL?

    My goodness.

    Jeff

  4. M Tucker says:

    But “those in Washington,” the Republicans in congress, have repeatedly indicated they do not want to create jobs; clean or otherwise. They would have been happy to see our auto manufacturers go bankrupt. They do not care about American jobs or American competitiveness. They are happy to watch our bridges collapse and our highways disintegrate. They want Americans to suffer polluted water and filthy air. The only industries Republicans really support ARE the “extractive industries.” Republicans have no positive vision for America’s future but they have wet dreams every night imagining the wealth those “extractive industries” will shovel their way; nothing but greedy, selfish, sycophants to the fossil fuel industry.

  5. prokaryotes says:

    Pave the way for the new industrial energy revolution 2.0, only this time it will be “clean” or relay later on imports.

    Resitance is futile, because old resources become less and less reliable. This weeks North-easter was such an example and the likely hood of these kind of events is increasing.

    If you become a pinoneer in the emerging energy sector and markets, you can be part of this improtant new industry.

    The technology can be delpoyed and is reliable, grid parity has been shown to met the economic requirements for large scale deployments.

    No matter what your intentions are, this is now “the state of the art” indsutry to drive and accelerate, said industry and ultimately the next econimic growth.

    Fossil energy is no longer reliable in a world, rattled by more and more climate disruption or can be no longer adopted because of the dangers which are posed by fossil fuel combustion.

  6. mike Roddy says:

    Chu is a loser here, sorry. Celebrations and “opportunity” won’t get er done in the face of a massive global crisis. We don’t need more focus group language to reassure corporations and the public.

    It’s time to tell the scientific truth, and stop bullshitting around.

  7. G. Couzin says:

    Hi Joe,

    Thank you for the interesting post as usual.

    Can I offer a bit of advice as a search engine marketer? When you link to oil companies’ websites, you might want to mark the link with a rel=”nofollow” tag (within the tag). This will prevent search engines such as Google from following the link to the destination page. Every link is like a “vote” in the eyes of the search engine. Presumably you don’t want to cause these companies to have even more media power than they already possess.

    thanks for your work,

    Gradiva

  8. Dr.A.Jagadeesh says:

    Timely advice on Clean Energy by Secretary of Energy, Steven Chu.

    Dr.A.Jagadeesh Nellore(AP),India
    Wind Energy Expert
    E-mail: anumakonda.jagadeesh@gmail.com