August 31, 2010
To Boost Clean Tech Exports, U.S. Must Make Clean Energy Cheap
A new report by the World Wildlife Fund outlines the enormous potential economic gains associated with clean energy export market share. The report, however, misses a critical opportunity to advance the most effective solution to declining U.S. clean energy competitiveness -- major public investment in clean technology innovation and deployment to make clean energy cheap.
Three-quarters of additional energy demand between now and 2050 is expected to occur in developing countries, according to the new report, suggesting that any national strategy to capitalize on the economic benefits of the growing clean energy industry must also focus on boosting clean energy exports.
"If US businesses capture 14% market share (which reflects current US exports in environmental goods and services in developing countries) in just a subset of this new clean technology market, it would result in up to 850,000 new American jobs"
But the policies that WWF recommends--putting a rising price on carbon and subsidizing clean energy in the developing world--will fail on their own to deliver on the promise of securing U.S. market share both domestically and abroad.
As Breakthrough Institute has long argued, political considerations will ensure than any established carbon price will be low, an therefore largely ineffectual for encouraging the development and deployment of most clean energy technologies, which remain are still too expensive to be deployed at scale around the world. Similarly, subsidizing the deployment of higher-cost clean energy technologies will become prohibitively expensive as they gain a larger share of the domestic market, particularly in the developing world.
In the long term, relying on either high carbon prices or permanent ongoing subsidies to make clean energy competitive will effectively close off export opportunities to developing nation markets that will be unable to impose either high carbon fees or sustain large ongoing subsidies for clean energy sources.
If the United States wants to tap the multi-trillion dollar export opportunity that lies in meeting the rapidly growing demand for energy in the developing world, we much therefore focus on making clean energy technologies cheaper in unsubsidized terms. The overarching goal that should permeate all aspects of a new clean energy competitiveness strategy should be to make clean energy cheap. This will also make the costs of a transition to clean energy in the developing world more bearable.
As we've outlined, a comprehensive strategy to make clean energy cheap must prioritize major public investments in clean energy R&D, manufacturing, deployment, infrastructure, and education--areas where all Congressional climate bills to date have fallen far short.
Unfortunately, as the WWF report suggests, falling short could mean ceding greater market share, and the million of jobs that go with it, to foreign competitors.