In the Race for Clean Tech Leadership?
Michael Shellenberger, President and Ted Nordhaus, Chairman of Breakthrough Institute are co-authors of this piece. The Statesman published a shortened version.
A race is on to lead by example in the burgeoning clean energy sector. While the United States may be behind for now, we are far from the finish line.America once led the global solar business, but manufacturing scale is shifting to Asia. In Japan, strong, targeted government incentives supported markets for solar technology in a country almost completely dependent upon imported energy. At the same time, public investment in research and innovation helped build the technical prowess needed to establish solid manufacturing capabilities. The Chinese government, along with numerous entrepreneurs, is now developing manufacturing and technical capabilities for solar and other clean energy technologies that will combine economies of scale with a growing market, which many expect can be the largest in the world in the next five years.
Asia’s current momentum is not exclusive to solar power. A recent Breakthrough Institute report, "Rising Tigers, Sleeping Giant," found that America lags behind Asia’s rising “clean tech tigers” – China, South Korea and Japan – in producing virtually all clean energy technologies, from wind to nuclear power, from high-speed rail to plug-in hybrid cars and the advanced batteries that power them.
The governments of these three nations are expected to invest over $500 billion over the next five years to extend their lead in clean technology products and applications. That is enough to out-invest the United States by a three-to-one margin, unless the U.S. establishes an urgently needed national clean energy competitiveness strategy.
Devising such a strategy and fulfilling the vision is certainly feasible, and there is historical precedent to prove it.
When the United States faced global competitors willing to invest enormous sums to dominate defense and information technologies during the Cold War, the nation’s response was bold and proactive.
Our government introduced procurement programs, policies and incentives that provided strong demand for emerging IT, semiconductor and computing technologies while smartly coupled U.S. investments in research and education provided the high-caliber human capital needed to block the threat. These investments sparked the information technology revolution and helped create economic clusters, such as Silicon Valley, that have given the U.S. an enduring competitive edge.
Today, government investment is again determining the location of the new “Silicon Valleys” of clean technology – in China. One Chinese city, Baoding, is already home to more than 200 renewable energy companies. Dubbed “Electricity Valley,” the city serves as a national clean energy hub, linking clean tech manufacturing to research institutions and the national public policy apparatus. Once established, these economic clusters confer a competitive advantage that will be difficult to reverse.
In contrast to the major investments made by the U.S. government during the Cold War era, the United States’ response to today’s clean energy race has not been mobilized, threatening the promise of a new wave of American prosperity fueled by emerging clean energy industries and jobs.
That situation may be seeing a new balance as the Obama Administration begins to redirect its focus from international issues such as terrorism and the war in Afghanistan to domestic concerns linked to the economy and health care. On January 8, President Obama announced that he would devote $2.3 billion of funding from the economic stimulus towards the “domestic manufacturing of advanced clean energy technologies,” according to an administration official.
While these steps towards a clean energy economy are potentially consequential, energy and climate legislation now working its way through Congress is more focused on limiting global warming pollution than continuing the investments needed to secure our nation’s clean tech manufacturing competitiveness.
Establishing a price on carbon is important, but far from sufficient to spur the growth of large-scale markets for clean energy technologies or support competitive domestic manufacturing. Carbon prices established by the Waxman-Markey climate bill, for example, are expected to be relatively modest over the next decade, providing little near-term boost to domestic clean tech industries. Moreover, the House bill does not close the investment gap with Asia’s clean tech tigers, leaving U.S. clean energy industries undersupported, especially once stimulus-funded clean energy investments expire over the next two years. What’s missing—and needed—are the innovative solutions and bold policies that were so effective during Cold War times. We need an integrated strategy, combining the insights and vision of industry, government, academia, utilities and consumers. This approach will facilitate the favorable investment climate required to ensure stability and long-term demand for renewable energy.
There is still room for another “Silicon Valley” of clean technology outside of China. The United States can close the investment gap with Asia and provide direct support for U.S. clean tech research and innovation, manufacturing capacity and domestic markets if it resolutely pursues a long-term national clean energy competitiveness strategy. Robust and targeted public investments such as the ones committed recently by President Obama can once again pave the way to a new era of U.S. technology leadership and economic prosperity – but only if we act now. Asia’s clean tech tigers are waiting for no one.
Image courtesy of the Breakthrough Institute.