Wednesday, July 22, 2009

40th Anniversary of the Moon Landing - Lessons for the Clean Energy Race

By Leigh Ewbank, originally posted at the Breakthrough Institute

This week marks the 40th anniversary of Neil Armstrong's moonwalk, the event which made the US the first and only nation to accomplish one of the greatest technological feats in human history. While space-race aficionados will argue that US-Soviet competition continued beyond the 1969 moon landing, for the layperson, Armstrong's 'small step' marked the end of the space race.

In 2009, the United States faces a new global competition, one that will have far greater implications for the future of our nation and the world: the clean energy race

The dual challenges of climate change and increased economic competitiveness are driving nations to develop new energy technologies that harness earth's abundant renewable resources. This technology is increasingly viewed as central to our economic fortunes with renewable energy and other clean technologies poised to be the next big growth sector. On several occasions President Obama has acknowledged that:

'The nation that leads the world in creating new sources of clean energy will be the nation that leads the 21st century global economy.'
We've heard calls for a New Apollo project for renewable energy before, and I will not discuss the merits of such a scheme here. Instead, on this historic anniversary, I will compare the space race
of the Cold War era and the clean energy race of today--both similarities and differences are apparent, and both offer insights into America's current standing in today's clean energy race.


Differences

Unlike the space race, which was a competition between the world's two superpowers, the renewable energy race features several nations who quietly compete for the renewable energy technology edge. While it was arguably the US started the energy race in the 1970s when President Jimmy Carter implemented renewable energy research programs to deal with the oil shocks of the 1970s, nations with foresight have managed to position themselves at the head of the pack--and the US.

The US faces stiff competition from multiple nations, including:

China - In recent years China has established a strong foothold in manufacturing solar PV cells and wind turbines. The nation is set to strengthen this position with a multi-billion dollar investment package for renewable energy. Estimated at $440-660 billion over the next ten years, the investment will be unprecedented, and has the potential to secure a dominant position in renewable energy markets for years, if not decades.

South Korea - South Korea is starting from a low level of installed renewable energy capacity, but this formidable Asian tiger seeks to change this with its recently announced $84 billion investment in green technologies, including renewable energy, over five years. South Korea's 'Green New Deal' aims to catapult the nation into the top seven 'green powers' by 2020, and top five by 2050. The nation has set the international benchmark for public investment as a proportion of GDP--investing 2 percent of its national wealth annually for the next five years.

Japan - Japan was one of the leading nations for solar PV production but has rapidly lost market share over the last five years. To address this decline Japan has announced the goal to double its solar energy capacity by 2020 and become world's number one solar nation. To achieve their ambitious targets, Japan is redoubling the direct incentives offered for solar energy and financing the deployment of solar energy on thousands of schools across the island nation.

The European Union - Europe's renewable energy powerhouse Germany is a market leader in both wind turbine and solar PV technology. A combination of highly skilled workforce and successful feed-in-tariff policies has allowed the German renewable energy industry take root and provide a platform for clean energy exports. Denmark leadership in wind reinforces the European Union's clean energy capabilities, while Spain is a world leader in solar thermal electricity technologies. Denmark's Vestas Corporation is currently the world leader in wind energy with 20 percent market share, and Spain is home to numerous solar energy companies and the world's leading wind power developer, Iberdrola Renewables.


Similarities

The obvious parallel between the space race and clean energy race is the type of national focus and investment required to achieve ambitious technological goals. US investment in renewable energy R&D peaked in the late 1970s under the Carter Administration and has steadily declined since. As the Federation of American Scientists noted last week:
'Federal energy research in new energy technologies declined from 1980 to 2007 by more than 50 percent in real dollars, and corporate energy research has also declined significantly.'
Like the space race, the renewable energy race will require comparable national focus and effort, and a substantial sustained investment.

The Breakthrough Institute and President Obama have called for annual investment of $15 billion in clean energy R&D, sustained over at least a decade. The Brookings Institution, and top energy scientists recommend public investment of between $20-30 billion per year to ensure the development of breakthrough energy technology in the US. Even larger investments are needed to spur the deployment of clean energy, creating the strong demand that drives further innovation and price reductions.

Unfortunately, the United States will likely invest about $1 billion annually in clean energy R&D and roughly $10 billion in the clean energy sector as a whole, if the Waxman-Markey climate and energy bill passed by the House of Representatives in June becomes law. That level of clean energy investment simply does not measure up next to the $44-66 billion per year the Chinese are expected to commit to the clean energy race, nor the investments energy experts recommend. That level of clean energy spending is even dwarfed by NASA's $18.6 billion 2010 budget - forty years after the peak of the space race.

Some will cite the green stimulus measures of the Recovery and Reinvestment Act 2009 as enough to jump-start the domestic renewable energy industry. While the clean energy investments in the stimulus do indeed represent a great starting point, the stimulus must be followed by sustained public investment in clean energy, not the cuts in spending Waxman-Markey would codify. JFK didn't just put down a one-off payment on the mission to the moon and follow it up with market-based incentives to spur private sector lunar missions. The Kennedy and Johnson Administrations directly invested billions of dollars each year, and sustained these investments until the job was done. Around $200 billion (in 2007 dollars)--$20 billion per year--was invested in the national space program during the 1960s. To win today's clean energy race, the U.S. must respond with the same vigorous commitment to technology and innovation that won the space race four decades ago.


Waxman-Markey

In recent opinion pieces, co-sponsors of the ACES bill Rep. Henry Waxman (D-CA) and Rep. Ed Markey (D-MA) used the anniversary of the moon landing to rally support for their bill. They claim that the provisions contained in ACES present the best way for the US to win the clean energy race. While both Waxman and Markey correctly acknowledge the efforts of China and South Korea as clean energy competitors and note America's laggard position, they overstate the amount of revenue ACES will direct to clean energy. And both fail to mention that the bulk of the revenue generated will be directed to incumbent energy sources, not to winning the clean energy race. Furthermore, by associating ACES with the Apollo model of public investment, Waxman and Markey conceal the fact that the ability of market-based cap-and-trade schemes to deliver the type of technology innovation required is without historical precedent.


Will the US rise to the challenge?

So, will the US rise to the clean energy challenge? Some analysts like Michael Lind and TNR's Franklin Foer and Noam Scheiber would lead us to believe that President Obama is unlikely to act as boldly as JFK and LBJ. However, I think it's too early to tell whether he will or not. One thing is clear: Obama, with his remarkable communications skills and network of progressive Americans, has a great platform for launching an Apollo-like initiative for the 21st century. Putting America back on track with clean energy will start with a 'giant leap' in public investment.

2 comments:

Mike Anderson said...

Interesting commentary on the parallels of the space race and the "clean energy" race. Thankfully the space race didn't cause anyone's net income to decrease.

Unffortunately, the ACES legislation is now understood by USDA analysts to have a long-term decrease on US Farmer's net income by 7.2% That's a decrease of 7.2%.

If you're not a farmer think for a minute. Would you be ok with a "minimal" decrease of 7.2% of your income.

We have to find a way to promote clean energy that doesn't destroy the American farm industry.

My Farm Journal

Jesse Jenkins said...

Hi Mike, thanks for commenting. Actually, USDA released a report today, which Secretary Vilsack testified about in Congress today as well, highlighting the net benefits for American farmers of a cap and trade system. Actually, given all the concessions that have weakened the bill to date (and the more likely to come), and the potential benefits to farmers of a big new offsets market, I wouldn't worry about ACES destroying the American farm industry. I simply worry about it failing to actually promote clean energy!