The global market for clean energy products grew to $243 billion in 2010, a year in which China and Germany both captured a greater share of this global investment than the United States. That has led many (myself included) to worry about the erosion of US competitiveness in a set of clean energy technology products--from solar and wind to nuclear and advanced batteries--originally invented in America.
Yet this growing market for clean tech is almost entirely dependent upon public subsidy and policy support. To be blunt: today's clean energy markets are artificial, and without perpetual policy support, conventional clean energy products could not compete in most global energy markets.
Across the globe, cash-strapped governments and recession-hit publics are pulling back clean energy subsidies, revealing the ephemeral nature of today's clean tech markets. In the last year, Spain, Italy, and the United Kingdom have all slashed feed-in tariffs for solar and certain other clean energy technologies. In America, expiring tax credits and fading stimulus investments are set to send federal clean tech expenditures plunging 75 percent from 2009 to 2014, according to our research.
There are a hostof reasons why targeted policies and smart public investments in emerging clean tech sectors are justified. But clean tech business leaders and policymakers alike must be crystal clear: the true economic rewards in clean energy industries will not come from producing technology for subsidy-created markets that vacillate wildly with the public mood and the business cycle.
Without substantial innovation to improve the performance and reduce the cost of clean energy technologies, the promise that the clean energy sector might become economically viable, much less a cornerstone of American economic revival, will never be realized. The real clean energy race is thus to invent, commercialize, progressively improve, and mass-produce cheap and reliable clean energy technologies that can compete on cost not just with international competitors but also with fossil fuels.
In short, the race is to make clean energy cheap and subsidy-independent.
A new report provides detailed evidence that the clean economy is here. Keeping it here will require a national and regional policy framework for driving innovation.
This morning the Brookings Institution's Metropolitan Policy Program released a comprehensive new report, "Sizing the Clean Economy," which takes a detailed look at the United States' ongoing transformation toward a low-carbon future. The report, co-produced with Battelle Technology Partnership, presents the most detailed data available on jobs and establishments in the clean economy, and finds that the clean economy accounts for 2.7 million jobs, more than both the biosciences and fossil fuel sectors, and a little over half the size of the IT sector. (Also check out the new interactive map that accompanies the report)
However, "clean energy" jobs account for only a fraction of the 2.7 million clean economy jobs calculated by Brookings/Battelle. Indeed, the majority of jobs are in more traditional "environmental" sectors like waste management and treatment, mass transit, and conservation. The jobs we usually think of as clean energy jobs--those in renewables, nuclear, smart grid, fuel cells, batteries, energy efficiency and electric vehicle technology--account for just 20 percent of this 2.7 million. While the rest of the clean economy has generally lagged the overall economy in terms of job growth, these newer clean energy industries have experienced explosive job growth, albeit from small bases.
The Advanced Research Projects Agency for Energy has drawn bipartisan praise for it's forward looking investments in advanced energy technologies. But can it survive budget cutting mania in Congress?
As both Republicans and Democrats in Congress appear willing to cut funding for key energy innovation programs, a bipartisan group of Senators have spoken out in support of maintaining funding for an innovative energy technology agency that invests in game-changing research.
Senators Lamar Alexander (R-TN), Lisa Murkowski (R-AK), and Jeff Bingaman (D-NM), have all rallied around the Advanced Research Projects Agency for Energy (ARPA-E), hoping to shield it from major budget cuts in the following months.
Speaking at ARPA-E's recent Washington D.C. summit, Senator Alexander, one of most respected Republican Senators on energy issues, discussed the importance of maintaining investments in energy research:
"Obviously we're going to have to work to reduce spending, but we have to be smart, not cheap. We need to make certain we leave room for the basic research that drives our high standard of living. Most of the focus is on reducing spending, but sooner or later we're going to have to set priorities. One of my priorities is research and development...It is my belief that ARPA-E is one of the bright stars in innovation in the world today, and certainly for our country."
Alexander advocates ending energy subsidies for mature energy technologies--including both oil and some older renewable energy technologies--in order to free up funding for expanded investments in energy research and advanced technologies--a concept broadly consistent with the advanced energy strategy that the Breakthrough Institute and our colleagues at Brookings and AEI called for in Post-Partisan Power.
With last night's State of the Union address, President Obama has shifted the debate from the partisan climate wars to an expansive energy innovation policy which has the potential to draw support from across the political spectrum.
With last night's State of the Union address, President Obama has shifted the debate from the partisan climate wars to an expansive energy innovation policy which has the potential to draw support from across the political spectrum.
"In embracing breakthrough innovation for solar and nuclear power alike -- for economic competitiveness rather than climate reasons -- President Obama took a bold first step toward a national commitment to energy innovation that is in the long tradition of bi-partisan support for science and technology," wrote Breakthrough Institute co-founders Michael Shellenberger and Ted Nordhaus in a statement. "While the road forward will not be easy, at least it is one America has traveled before."
In a State of the Union speech framed centrally around restoring America's global economic leadership, President Obama argued forcefully for increasing federal investment in energy innovation, declaring that "breakthrough" technologies have driven decades of innovation that "created new industries and millions of new jobs."
Obama's speech was a rejection of proposals to cut federal spending across the board, as he finally made the case before the American people about why public support for innovation is critical for the country's long-term prosperity:
Earlier this month, China surpassed Japan as the world's second largest economy and since, has snared a flurry of clean tech headlines that collectively tell a very clear story: China is rapidly and effectively securing its position as a global clean technology leader as the U.S. watches in stagnated wonder.
Below we've aggregated some of the most important updates coming out of China over recent weeks as it surges to the front of the global clean technology sector:
A clean energy stimulus program has come under criticism for funding projects that had started construction before the stimulus bill was passed. These criticisms miss the point. The projects would have received an equivalent benefit in a better economy, and the program has been a successful job creator in an industry that was once near collapse.
A stimulus program to boost the deployment of clean energy technology has come under criticism for contributing funds to projects that had started construction before the stimulus bill was passed. A long and in depth Greenwire story notes that 64 percent of the 50 highest dollar grants went to such projects.
While the hastily-constructed stimulus programs for clean energy could have been better optimized, those arguing that the Section 1603 clean energy grant program somehow created a boondoggle are completely off base. Any projects already under construction would have received an equivalent benefit in a better economy, and the stimulus-funded clean energy grant program has been a successful job creator in an industry that was once near collapse.
Cap and trade is not the same as a proactive clean economy strategy, and it won't drive the level of private investment in clean energy we are seeing in other countries. Private investment is moving to countries like China as a result of their major public investments in clean energy R&D, manufacturing, and deployment. It's time to recognize that cap and trade would not have kept the U.S. competitive.
In a new article at the Washington Independent, Andrew Restuccia falls into the trap of equating the failed cap and trade bill with a proactive clean economy strategy that would drive considerable private investment in clean energy.
We warned about this last Friday, when we argued that cap and trade advocates would use recent news that Deutsche Bank is moving clean energy investment overseas as evidence that cap and trade would have kept investment in the United States.
According to Restuccia:
"It turns out that an economy-wide cap on carbon emissions really is necessary to spur investment in what President Obama likes to call the "clean energy economy." At least for Deutsche Bank."
Actually, according to Deutsche Bank's own reports, a carbon cap would have done little:
"While emissions targets express an intention and carbon markets might deliver a price signal in the long-term, governments must strengthen underlying mandates and incentives immediately if capital is to be deployed to cover the gap, creating more investment and jobs."
With support from short-term federal stimulus funds, state and local governments aren't waiting for the academic and political debate over whether the U.S. should pursue an industrial policy to spur a clean energy economy. Instead, they are implementing targeted investments, tax breaks, and loans to help expand home grown clean tech companies and entice foreign firms to expand U.S. operations.
A vigorous debate about whether the U.S. government should invest in and help manage clean energy industries to spur economic growth is unfolding among academics, policy makers and business leaders. Curiously, a handful of federal, state, and local government officials are forging ahead in spite of the national discussion and formulating targeted industrial policies to create vibrant clean energy innovation ecosystems that include manufacturing, material suppliers, customers, and R&D. Cases like Rioglass Solar, a Spanish glass manufacturer expanding operations in Arizona, as well as the considerable growth of the wind industry across the US show how the public and private sector can collaborate and, more importantly, how effective industrial policy can create well-paying, long-term jobs.
This past week Rioglass Solar, which provides curved glass sheets used in solar panels, decided to build a $50 million headquarters and a 130,000 square foot manufacturing plant in Surprise, Arizona. The project will create 100 new jobs at the headquarters alone and many more in the manufacturing plant - a welcome economic boost for the town.
The chief incentive for the American operations expansion? Local, state, and federal officials provided almost $12 million in tax credits and fee reductions to (successfully) lure Rioglass to the area.
A recent collection of nuclear news over at the Energy Collective suggests that Japan and South Korea are taking major steps to sign lucrative nuclear deals - with relatively little competition from Westinghouse or Areva. And China is planning to increase nuclear capacity nearly eight-fold by 2020 by building reactors locally using Westinghouse AP1000 technology.
Arising out of the debates surrounding clean technology and the economic recession, is the nagging question: can the U.S. continue to lead in high tech innovation without domestic manufacturing? Increasingly, it seems, the answer is "NO" -- a response that carries serious implications for clean tech innovation and economic growth in the U.S.
Political confusion surrounding "green" jobs, clean tech, and outsourced manufacturing (largely to Asia) has caused those looking to clean energy as the next U.S. growth sector and those seeking to raise the U.S. out of a growth-numbing recession to lose sight of what has fueled U.S. technological and economic leadership in the past - public support for innovation and large scale high tech manufacturing. Recently, Alexis Madrigal posed the critical question arising from this confusion to the readers of the Atlantic: "Can the US Innovate Without Manufacturing?"
As Breakthrough and numerous high tech leaders argue, the answer is "NO."
Eight universities and think tanks have all converged on four policy principles to enhance technology innovation in the effort to mitigate climate change, says a new report released earlier this week by the Clean Air Task Force and the Consortium for Science, Policy, and Outcomes (CSPO) at Arizona State University.
The report, "Four Policy Principles for Energy Innovation & Climate Change: A Synthesis" (PDF) combined the recommendations made in eight studies conducted by universities like Harvard and MIT as well as think tanks like the Brookings Institution and the National Commission on Energy Policy to create the following four policy principles:
1. Recognize that innovation policy is more than R&D policy
2. Pursue multiple innovation pathways
3. Recognize CO2 reduction as a public good, and pursue energy innovation through a public works model.
4. Encourage collaboration on energy innovation with rapidly industrializing countries.
Despite the independence of the teams, we found remarkable convergence on some very basic principles that should guide the design of workable, comprehensive clean energy innovation policies. Key among them is that we are going to have to deploy lots of real stuff at a large scale in the field - and not just in the lab - to innovate our way toward a solution. That's not going to be cheap, but it is going to be worth it. We need to start yesterday.
The report is one of four reports released this month calling for a strengthened, robust commitment to U.S. clean tech innovation policy. The Breakthrough Institute co-released two of those reports -- one arguing that Congress must support legislation to improve U.S. clean tech competitiveness and the other demonstrating that the Kerry-Lieberman American Power Act would increase energy R&D funding by as little as $2.2 billion per year. The third, a report released by the new American Energy Innovation Council, called for a tripling of public investment in clean energy R&D.
By re-thinking how the federal government can foster innovation and competitiveness in clean energy, from education and research to commercialization and production, the United States can once again become a global leader in clean energy technology.
By Jesse Jenkins, Mark Muro, and Rob Atkinson, originally at the New Republic
Having passed the U.S. House of Representatives on May 28th, the America COMPETES Act, America's flagship competitiveness legislation, will soon be debated in the U.S. Senate. The Act was originally passed in 2007 in response to mounting concern that the United States was failing to effectively compete economically with other nations, imperiling the nation's future prosperity.
Now, a new outbreak of anxiety has engulfed the nation's competitive standing particularly as regards the nation's fledgling clean energy industry. Presently, the United States lacks an effective strategy to compete in this high-growth industry, which is expected to surpass $600 billion globally by 2020. Fortunately, the America COMPETES reauthorization offers a key opportunity for Congress to strengthen U.S. clean energy competitiveness.
In a new policy report, the Breakthrough Institute, Information Technology and Innovation Foundation and Brookings Institution Metropolitan Policy Program call on Congress to strengthen clean energy competitiveness through the America COMPETES reauthorization.
Congress first passed this flagship competitiveness legislation in 2007 in response to concerns that the United States was losing its ability to compete economically with other nations. On May 28, 2010, the U.S. House of Representatives passed the COMPETES reauthorization by a vote of 262-150 and the bill is set to be debated in the Senate. The reauthorization comes at a time when the United States seeks new sources of growth in a fiscally constrained environment. The clean energy market is one such growth industry--expected to surpass $600 billion by 2020--but the U.S. faces unprecedented global competition.
In "Rising Tigers, Sleeping Giant," an authoritative report on international clean energy competitiveness, the Breakthrough Institute and ITIF recently demonstrated how U.S. leadership on a number of clean energy competitiveness metrics has declined in the last decade. The United States' historic lead in energy innovation is slipping as other countries implement national innovation strategies. America now lags economic competitors in Asia and Europe in the manufacture of virtually all clean energy technologies. And the U.S. lags its economic rivals in preparing its future workforce with critical science, technology, engineering and math education (STEM).
The new report argues that to regain leadership in the global clean energy market, the United States must prioritize major investments in clean energy technology and embrace bold new paradigms in clean energy education, innovation, and production and manufacturing policy.
"Meeting the aggressive challenges to U.S. clean energy leadership will require both increased funding for critical education and technology programs as well as new ideas for how the federal government can foster innovation in the clean energy industry, from basic research to full-scale commercialization," said Mark Muro, Director of Policy at the Brookings Institution Metropolitan Policy Project.
The Brookings Institution is out with a new policy brief today building on their prior calls for energy discovery innovation institutes (e-DIIs). These regionally-based, collaborative research centers are designed to "serve as the hubs of a distributed research network linking the nation's best scientists, engineers, and facilities." The newest report assesses the potential for e-DII's in the Great Lakes region.
Through such a network, the nation could at once increase its current inadequate energy R&D effort and complement existing resources with a new research paradigm that would join the unique capabilities of America's research universities to those of corporate R&D and federal laboratories.
Brookings' vision for creating an energy innovation network is consonant with a similar concept put forward by the Breakthrough Institute and Third Way in "Jumpstarting a Clean Energy Revolution with a National Institutes of Energy" which called for a national commitment to energy innovation modeled on the National Institutes of Health.
A group of more than 100 university and college student government presidents submitted a letter urging Congress to launch a national program for clean energy science and engineering education.
WASHINGTON, DC, APRIL 2010 -- A group of more than 100 university and college student government presidents submitted a letter (PDF download) today urging Congress to launch a national program for clean energy science and engineering education. The presidents - representing more than one million American students -warned Congress that advanced energy education is critical for U.S. leadership in the global clean energy industry.
"The United States is rapidly falling behind in the burgeoning clean energy industry - especially in comparison to China - and our educational system and workforce is not prepared to compete," declared the 107 presidents, including dozens of the country's top universities. "American students are ready and willing to rise to this national challenge, and we need the federal government to support our education and training."
The letter, organized by Americans for Energy Leadership and the Associated Students of Stanford University, calls on Congress to support the RE-ENERGYSE ("Regaining our Energy Science & Engineering Edge") proposal, which would invest tens of millions of dollars annually in energy science and engineering education programs at universities, technical and community colleges, and K-12 schools. It was originally proposed by President Obama in April 2009 and is currently under consideration in Congress as part of the Department of Energy's 2011 budget request.
It is simply not true that the government should not or cannot pick technological winners and losers. That was ITIF President Rob Atkinson's message in a piece today at Huffington Post. Indeed, as Atkinson writes, the government has always picked winners and in the process, has developed entire new industries, like IT, that have formed the foundation of economic prosperity and the basis of our modern way of life. What would our lives be like if we had left everything to the "free market"?
From Huffington Post:
"But the free market opponents will say how can Washington outsmart the market? Is this the same market that through its infinite wisdom invested hundreds of billions of subprime mortgages? In fact, the government has a pretty good track record of picking winners. Just look at the technologies that the government had a key role in developing: the Internet, the web browser, the search engine, computer graphics, semiconductors, and a host of others. There are many other examples of success stories made possible not because government anointed a particular young entrepreneur but because the government made a conscious choice to open new pathways into which young innovators could embark."
A few weeks ago, at an event on the same subject, Atkinson and former-Reaganite Clyde Prestowitz took the neoliberal free market ideologues including former Clintonite, Robert Lawrence (ironic?) to task for their ahistorical views. Amidst all the anti-government fervor lies the true but unconventional wisdom: the government can and should pick technological winners. Our economic prosperity depends on it.
Two new posts for Earth Day argue that we need to move from nature protection to tech innovation. Ted Nordhaus and Michael Shellenberger are in Slate and Mother Jones arguing that the focus on technology transfer as part of a global climate agreement is a distraction: clean tech IP has already been rapidly transferred to China -- soon it will be transferred back here.
The following was originally submitted to the National Journal discussion "
