By Teryn Norris & Daniel Goldfarb
Originally published at Americans for Energy Leadership
As China continues advancing in the clean energy race, a growing number of policymakers and commentators are decrying the lack of U.S. federal policies to scale the nation’s clean energy industry to secure jobs, manufacturing capacity, and even private research and development.
Senator Jeff Bingaman (D-NM), Chairman of the Senate Energy & Natural Resource Committee, made a rare entry into Politico’s op-ed page today calling for the establishment of a Clean Energy Deployment Administration. The United Sates cannot compete solely on the basis of R&D and technological breakthroughs, he argues, and must adopt stronger policies to scale its clean energy industry through direct deployment and manufacturing – which in the long-run will attract the private R&D:
“The United States may still have the world’s strongest R&D pipeline for new technologies and an extremely robust entrepreneurial culture to support new ventures. Yet the fact that leading U.S. clean technology companies are building manufacturing and R&D centers in China, rather than in the United States, is a troubling sign that we could lose our lead. Other nations are seeing the benefit of this new paradigm, in which development of leading manufacturing capabilities results in pulling more R&D operations to their shores as well. The result is not positive for the United States.”Thomas Friedman identified a similar problem in his Sunday NYT op-ed, arguing that China is securing clean energy jobs much more successfully than the United States due to stronger domestic market demand from government policies. He highlights Mike Biddle, founder of MBA Polymers, as an example of how federal R&D without broader industry-scaling strategy can produce unintended consequences:
“Biddle’s seed money was provided mostly by U.S. taxpayers through federal research grants, yet today only his tiny headquarters are in the U.S. His factories are in Austria, China and Britain. “I employ 25 people in California and 250 overseas,” he says. His dream is to have a factory in America that would repay all those research grants, but that would require a smart U.S. energy bill… So we educated him, we paid for his tech breakthroughs — and now Chinese and European workers will harvest his fruit. Aren’t we clever?”China’s commitment to clean energy deployment and manufacturing, however, is also beginning to attract private R&D centers. Friedman cites Peggy Liu, chairwoman of the Joint U.S.-China Collaboration on Clean Energy, who said:
“China is changing from the factory of the world to the clean-tech laboratory of the world. China has the unique ability to pit low-cost capital with large-scale experiments to find models that work. They’re able to quickly throw spaghetti on the wall to see what clean-tech models stick, and then have the political will to scale them quickly across the country. This allows China to create jobs and learn quickly.”These observations build on recent commentary from technology industry experts like Andy Grove, co-founder of Intel. According to Grove, high-tech domestic job creation depends on supportive public policy mechanisms, including targeted public investment, to achieve scaling and economic cluster formation. Unfortunately, the U.S. has lost large numbers of high-tech jobs because it has failed to implement a broader industrial development strategy, including investment in manufacturing capacity:
“The scaling process is no longer happening in the U.S. And as long as that's the case, plowing capital into young companies that build their factories elsewhere will continue to yield a bad return in terms of American jobs… [Asian] countries seem to understand that job creation must be the No. 1 objective of state economic policy. The government plays a strategic role in setting the priorities and arraying the forces and organization necessary to achieve this goal. The rapid development of the Asian economies provides numerous illustrations.”Of course, market demand is only one part of the equation and must be matched by a broader clean energy competitiveness strategy along each stage of the innovation pipeline. Yet unless the federal government can stimulate a robust market for clean-energy technologies in the United States, American innovations will continue failing to create American jobs. If U.S. policymakers want to address the jobs crisis, they should heed Senator Bingaman’s call and pass a Clean Energy Deployment Administration, along with other policies to create robust deployment of clean energy in America.