China overtook the United States for the first time last year in the race to invest in wind, solar and other sources of so-called "clean energy," according to a comprehensive new report that raises questions of American competitiveness in a booming global market.
U.S. clean-energy investments approached $19 billion last year, according to report from the Pew Charitable Trusts, a little more than half the Chinese total of nearly $35 billion. Five years ago, China's investment in clean energy was just $2.5 billion.
The United States also slipped behind 10 other countries, including Canada and Mexico, in clean energy investments as a share of its national economy. Although part of the American investment decline last year can be attributed to the recession, the Pew report pointed to another factor constraining U.S. competitiveness: a lack of national mandates for renewable energy production or a surcharge on greenhouse gas emissions that would make fossil fuels more expensive.
The report warned that the current U.S. approach, in which states make varied efforts and the federal government's efforts have been sporadic, has produced a "comparatively weak clean energy economy" -- and risks losing out on economic growth and job creation.
"It's certainly the case that the countries and areas with higher investment in clean energy will be able to produce more jobs," said Chris Lafakis, an economist at Moody's Economy.com,which is working with Pew in tracking the green economy and jobs. Lafakis said investment is the No. 1 factor in green job growth. Worldwide, the report found clean-energy investment surging overall, more than doubling since 2005. Investment levels have already rebounded from the global financial crisis and are projected to grow 25 per cent this year, as nations increasingly seek energy sources that do not emit the heat-trapping gases produced by burning fossil fuels.
The study tallied public and private spending for cleanenergy equipment and generating capacity, as well as venture capital funding of companies involved in green industries and related areas. The figures are derived from Bloomberg New Energy Finance's database, and do not include investments in basic research and development in clean energy.
U.S. President Barack Obama has called for federal limits on carbon emissions and renewable power mandates, promising they will unleash investment and create jobs.
But the faster pace of such investments in other countries is already producing jobs that might otherwise have been created on American soil.
Spain, Germany and Italy have leveraged private cleanenergy investment, in part, by supporting wind and solar power with sustained financial incentives. Nowhere is the competition as strong as in China, with its globally dominant manufacturing base and wide-ranging government policies promoting clean-energy technology.
That reality already has lured significant American corporate investment into China.
Applied Materials Inc., the Silicon Valley equipment maker for semiconductor and other industries, last fall opened a huge solar research and development centre in the western Chinese city of Xian. Mark Pinto, Applied's corporate technology officer who recently moved to Beijing, said China's fast-growing solar-energy market was the main draw.
Pew reported that the United States still leads the world in clean-energy innovation and dominates venture capital funding in the sector. Some analysts say that's just as important as investment -- particularly for the question of how to avert catastrophic climate change.
"The global marathon to reduce greenhouse gas emissions requires a three-legged stool of policy, technology and capital," said Tracy Wolstencroft, global head of Environmental Markets at Goldman Sachs.
"This isn't just a competition against each other. We're in a global race to solve the problem."
Tribune Newspapers
If we ever want to be a manufacturing nation, now is the time to invest in it. Invest in our people, our universities and our future. Green tech is coming whether people are ready or not. China has the edge right now, but we can make it back up. Just think Detroit could once again be the hub of manufacturing in this country but instead of a rust belt, we have a green belt. 25% growth this year, lets get on this train NOW!
