After working tirelessly to push federal politicians to be accountable to the will of the people through Powershift regional summits, 350.org’s day of action, local events and direct actions, you’d think exhaustion would be setting in on the ranks of the US youth climate movement. Especially after the demoralizing blow that was delivered last weekend with the Obama administration’s official declaration that there will be no binding agreement at COP15. On the contrary, these young visionaries are just getting started!
With the chips stacked against meaningful action by the Senate and our administration, there is something contagiously spreading from campus to campus and community to community. Something political movements of the past that faced less dismal realities have lacked- unwavering hope. Not the kind of hope a charismatic politician espouses during campaign season to generate warm fuzzy feelings, or the kind that surges in the dark hours of prayer for a divine force to alter your circumstances.
This hope is wedded to action and commitment. A hope that if we push hard enough, continue to innovate, and remain fiercely inclusive and creative we will succeed. A hope that stands guard against the disenchanting forces of political compromise, or the covert attacks of apathy that arise when tangible progress cannot be seen. This is the hope that continues to inspire young people in communities across the country, even as the Senate bill crawls forward and President Obama refuses to commit to attending the most important international negotiations of our lifetime. This hope is inspiring the action of young organizers across the nation as they finish one last push by coordinating Clean Energy Forums in the run-up to Copenhagen.
“The students I work with everyday are not discouraged by the Senate’s snail pace or weakening attempts, and they still believe that they can persuade the president they elected to take a position of leadership on the international stage,” said Alicia Eimer, National Organizer at Focus the Nation (FTN). “Failure is not an option for these young folks,” Trell Thomas, another National Organizer at FTN added. “If the Senator doesn’t show up, well so be it. They are still going to build systems of political accountability in their community. And we’ll bring the forum to them.” The exact systems of accountability that will make our federal politicians regret failing our generation in this moment of supreme opportunity.
Thursday, November 19, 2009
COP15 and Beyond- The Climate Movement Fights On!
Wednesday, November 18, 2009
Rising Tigers, Sleeping Giant - Overview
Asian Nations Set to Dominate Clean Energy Race by Out-Investing the United States - New Breakthrough Institute and the Information Technology and Innovation Institute report.
"Rising Tigers, Sleeping Giant: Asian Nations Set to Dominate Clean Energy Race by Out-Investing the United States," a major new report released today by the Breakthrough Institute and the Information Technology and Innovation Foundation, is the first to comprehensively benchmark the competitiveness positions of the United States and key Asian challengers - China, Japan and South Korea - in the global clean energy race.
The new report examines the competitive position of each nation in core clean energy technologies, including solar, wind, and nuclear power, carbon capture and storage, advanced vehicles and batteries, and high-speed rail, as well as the government strategies each nation hopes will strengthen their position in the competitive global clean technology sector.
To view the full report, click here (pdf).
An abridged, summary version can be found here (pdf).
Core findings of "Rising Tigers, Sleeping Giant" include:
- Asia's rising "clean technology tigers" - China, Japan, and South Korea - have already passed the United States in the production of virtually all clean energy technologies, and over the next five years, the government's of these nations will out-invest the United States three-to-one in these sectors. This public investment gap will allow these Asian nations to attract a significant share of private sector investments in clean energy technology, estimated to total in the trillions of dollars over the next decade. While some U.S. firms will benefit from the establishment of joint ventures overseas, the jobs, tax revenues, and other benefits of clean tech growth will overwhelmingly accrue to Asia's clean tech tigers.
- Large, direct and sustained public investments will solidify the competitive advantage of China, Japan, and South Korea. Government investments in research and development, clean energy manufacturing capacity, the deployment of clean energy technologies, and the establishment of enabling infrastructure, will allow these Asian nations to capture economies of scale, learning-by-doing, and innovation advantages before the United States, where public investments are smaller, less direct, and less targeted.
- Should the investment gap persist, the United States will import the overwhelming majority of clean energy technologies it deploys. Current U.S. energy and climate policies focus on stimulating domestic demand primarily through indirect demand-side incentives and regulations. Should these policies succeed in creating demand without providing robust support for U.S. clean energy technology manufacturing and innovation, the United States will rely on foreign-manufactured clean technology products. This could jeopardize America's economic recovery and its long-term competitiveness while making it even more difficult to reduce the U.S. trade deficit.
- Proposed U.S. climate and energy legislation, as currently formulated, is not yet sufficient to close the clean tech investment gap. In contrast to more direct investments by Asia's clean tech tigers, current U.S. policies rely overwhelmingly on modest market incentives that are viewed by the private sector as more indirect, create more risks for private market investors, and do less to overcome the many barriers to clean energy adoption. The American Clean Energy and Security Act, passed by the U.S. House of Representative in June 2009, includes too few proactive policy initiatives and allocates relatively little funding to support research and development, commercialization and production of clean energy technologies within the United States. Including investments in clean energy R&D, demonstration, manufacturing and deployment in both U.S. economic recovery packages and the House-passed climate and energy bill, the United States is poised to invest $172 billion over the next five years, which compares to investments of $397 billion in China alone, a more than four-to-one ratio on a per-GDP basis.
- If the United States hopes to compete for new clean energy industries it must close the widening gap between government investments in the United States and Asia's clean tech tigers and provide more robust support for U.S. clean tech research and innovation, manufacturing, and domestic market demand. Small, indirect and uncoordinated incentives are not sufficient to outcompete China, Japan, and South Korea. To regain economic leadership in the global clean energy industry, U.S. energy policy must include large, direct and coordinated investments in clean technology R&D, manufacturing, deployment, and infrastructure.
See also: "Asia Beats U.S. 3-1: Major New Report on US vs. Asian Competitiveness in Clean Energy Technology"
Media coverage of "Rising Tigers, Sleeping Giant"
- Financial Times: "Asia set to overtake US in green technology"
- Wall Street Journal, Environmental Capital: "Flying Tigers: More Reasons to Worry About Asia's Clean-Tech Push"
- New York Times, Green Inc: "Study: Asia Surging in Clean-Tech Manufacturing"
- E&E News, ClimateWire: "Report warns of 'Asian Tigers' surging ahead"
- Stanford Review: "Winning the Clean Energy Race: A New Strategy for American Leadership"
- SolveClimate.com: "Made in America by China: New Turbine Factory Offers Glimpse into the Future"
Asia Beats U.S. 3-1: Major New Report on US vs. Asian Competitiveness in Clean Energy Technology
By Michael Shellenberger, originally at the Breakthrough Institute
Asia is poised to dominate the fast-growing clean energy industry by outspending the United States by at least three-to-one on infrastructure and technology, according to a new report, Rising Tigers, Sleeping Giant, which was released today by the Breakthrough Institute and Information Technology and Innovation Foundation at an event hosted by the Senate Energy & Natural Resources Committee.
The summary and full report, "Rising Tigers, Sleeping Giant: Asian Nations Set to Dominate the Clean Energy Race By Out-Investing the United States," can be downloaded here:
Full Report (pdf)
Summary Version (pdf)
The report comes at a time of rising anxieties in the U.S. about a jobless economic recovery, and new reports showing that over 85 percent of President Obama's economic stimulus clean tech grant program went to foreign firms. Recently Senator Chuck Schumer (D-NY) wrote to Department of Energy Secretary Steven Chu opposing a $1.5 billion Texas wind farm to be built with Chinese turbines. In response, China's A-Power Generation Systems wind manufacturer announced plans to open a factory in the U.S.
"Should the investment gap persist," the report warns, "the United States will import the overwhelming majority of clean energy technologies it deploys."
"Rising Tigers, Sleeping Giant" is the first report to comprehensively benchmark clean energy competitiveness and government investments in cleantech by China, Japan, South Korea, and the United States. These Asian governments will invest $519 billion in clean technology between 2009 and 2013, compared to $172 billion by the U.S. government. Climate and energy legislation, which passed the House in June, would contribute $28.7 billion of the $172 billion five year total. China alone will spend $440 billion to $660 billion over the next ten years on clean tech.
The direct, immediate, and coordinated nature of Asian government investments stands in contrast to the sporadic regulatory approach pursed in the United States. The report suggests that government investments will allow Asian nations to create innovation "clusters" of manufacturers, universities, R&D labs, suppliers and other firms, much as the Pentagon helped create Silicon Valley in the fifties and sixties. These clusters will be attractive to U.S. firms, the report argues, which are already making large investments in China.
Indeed, the United States' traditional prowess in attracting venture capital and other private funding could soon be eclipsed by Asia. China and other Asian nations, the report concludes, are offering a better business and investment climate than the United States. And China's share of private sector clean tech funding is growing rapidly. Between 2000 and 2008, the United States attracted $52 billion in private capital for renewable energy technologies, but China alone attracted $41 billion. China secured more private investment in renewables and efficiency technologies than the U.S. for the first time in 2008.
Investment bank giant Deutsche Bank recently concluded that "generous and well-targeted [clean energy] incentives" in China and Japan will create a low-risk environment for investors and stimulate high levels of private investment in clean energy because those nations rely on a "comprehensive and integrated government plan, supported by strong incentives." In contrast, Deutsche Bank says, the United States is a "moderate-risk" country since it relies on "a more volatile market incentive approach and has suffered from a start-stop approach in some areas."
"While some U.S. firms will benefit from the establishment of joint ventures overseas," the report warns, "the jobs, tax revenues, and other benefits of clean tech growth will overwhelmingly accrue to Asian nations."
New pollution regulations, a national renewable energy standard, and efficiency regulations in the U.S. will not, the report finds, be sufficient to close the technology investment gap between the US and Asia. New climate pollution regulations will not be strict enough to send much private investment to clean technologies, and large infrastructure barriers such as the need for new transmission lines stand in the way of greatly expanding solar and wind.
"Small, indirect and uncoordinated incentives are not sufficient to outcompete Asia's clean tech tigers," the report says. "To regain economic leadership in the global clean energy industry, U.S. energy policy must include large, direct and coordinated investments in clean technology R&D, manufacturing, deployment, and infrastructure."
Michael Shellenberger is the President and co-founder of the Breakthrough Institute and a co-author of "Rising Tigers, Sleeping Giant."
Winning the Clean Energy Race: A New Strategy for American Leadership
By Teryn Norris & Devon Swezey
Originally published by The Stanford Review
You know the world is changing when the president's first trip to Asia is defined by a new U.S. foreign policy dubbed "strategic reassurance" - convincing China that the United States has no intention of containing its growing power or endangering its foreign investments. As the New York Times put it, "When President Obama visits China for the first time on Sunday, he will, in many ways, be assuming the role of profligate spender coming to pay respects to his banker."
You also know times are changing when China, the world's greatest polluter, and other Asian nations are poised to dominate the burgeoning global clean-tech industry by out-investing the United States. That's the conclusion of a large new report we co-authored called "Rising Tigers, Sleeping Giant," released this week by the Breakthrough Institute and Information Technology & Innovation Foundation. The report is the first to thoroughly benchmark clean energy competitiveness in four nations - China, Japan, South Korea, and the United States - and finds the following:
"Asia's rising 'clean technology tigers' - China, Japan, and South Korea - have already passed the United States in the production of virtually all clean energy technologies and over the next five years will out-invest the U.S. three-to-one in these sectors... While some U.S. firms will benefit from the establishment of joint ventures overseas, the jobs, tax revenues, and other benefits of clean tech growth will overwhelmingly accrue to Asian nations... Should the investment gap persist, the U.S. will import the overwhelming majority of clean energy technologies it deploys."
What do these two changes have in common? They both reflect the accelerating shift of global power from America to Asia, caused in large part by the serious mismanagement of U.S. economic policy.
The Pacific power shift is not a new phenomenon, and the Obama administration is wise to seek stronger ties with the region. The U.S. should applaud Asia's growth, which is partly an outcome of our own success at promoting economic liberalism and international development. This shift in power is not a zero-sum game, nor should it be: the U.S. and Asia should avoid trade wars at all costs, and we should seize opportunities for partnership on a range of issues, from climate change to nuclear proliferation.
But the growing pace of this power shift should be a cause of major concern for Americans, and it should raise serious questions about our economic policies at the highest level. While the U.S. economy has suffered greatly from a crisis produced by its own financial sector - losing millions of jobs, trillions in economic output, and demanding huge spending packages financed by borrowed money - China has shrugged off the global recession with high levels of growth and self-financed stimulus, all while purchasing billions of Treasury bills to fund a U.S. deficit that has reached historic highs.
Last November, addressing the nation on the evening of his election, President Obama declared that "a new era of American leadership is at hand." And indeed, his new administration has taken significant steps to remake U.S. foreign policy. But unless the U.S. quickly improves its economic competitiveness, our global leadership will be severely damaged. What is demanded now is a major, coordinated national project to regain our economic competitiveness in strategic sectors while permanently correcting the imbalances that led to the Great Recession.
Correcting Imbalances & Fixing Finance
Speaking at the San Francisco Fed last month, Federal Reserve chairman Ben Bernanke declared it "extraordinarily urgent" that the U.S. and Asia take steps to prevent a revival of global economic imbalances. There is now broad consensus on how these imbalances - the huge gaps in trade deficits and surpluses, and the associated gaps in national savings, consumption, and investment rates - helped caused the housing bubble and the Great Recession. Alan Greenspan offered a concise explanation in a widely-read column this spring:
"The presumptive cause of the world-wide decline in long-term [mortgage] rates was the tectonic shift in the early 1990s by much of the developing world from heavy emphasis on central planning to increasingly dynamic, export-led market competition. The result was a surge in growth in China and a large number of other emerging market economies that led to an excess of global intended savings relative to intended capital investment."
In other words, the U.S. housing bubble was caused in large part by the buildup of savings in emerging market economies, especially China, accumulated from their large trade surpluses. As this large "pool of money" was invested internationally, it drove down the costs of borrowing, drove up subprime lending, and created large demand for mortgage-backed securities. This era of easy credit - combined with the use of "innovative" financial instruments, which relaxed mortgage standards, concealed risk, and enabled the mass packaging and sale of these securities - gave rise to the U.S. housing bubble.
This "global pool of money" wouldn't have existed without the U.S. running an enormous trade deficit, relying on imports and debt to support a high consumption rate - hence the global "imbalance" of high-saving versus high-consuming countries. The U.S. deficit in the trade of goods and services in 2008 was $695 billion, according to the Department of Commerce, compared to China's surplus of $297 billion.
Speaking in Tokyo last week, President Obama extended this problem to its logical conclusion, calling for rebalanced growth and a new U.S. economic strategy based on exports: "One of the important lessons this recession has taught us is the limits of depending primarily on American consumers and Asian exports to drive growth... [our] new strategy will mean that we save more and spend less, reform our financial systems, reduce our long-term deficit and borrowing. It will also mean a greater emphasis on exports that we can build, produce, and sell all over the world."
The implication is clear: the United States must shift away from a "financial" economy to an "innovation" economy, one that focuses on creating industries that produce real innovative products to sell around the world. After years of creating imaginary wealth on the pile of sand that was the U.S. financial sector, America must once again get into the business of producing real goods and services. This means reducing the size of the financial sector and the Wall Street "brain drain" - which has distracted the nation's best and brightest minds from the work of real innovation and entrepreneurship - and refocusing on productive, export-oriented industries. And it means adopting a new era of innovation policies to ensure the U.S. economy is the most competitive in the world, directing targeted public investments into strategic technologies, infrastructure, and high-tech education programs.
This new economic strategy is necessary not just for short-term recovery, but for avoiding future credit bubbles and financial crises, slashing our trade and budget deficit, producing more innovative technologies to improve our everyday lives, and regaining our international leadership.
The Clean Energy Race
What's the biggest new industry that can boost America's exports, grow the economy, create better jobs, and tap our innovative potential? In a word, clean-tech.
Here's why: Reducing global greenhouse gas emissions, while simultaneously meeting the surging demand for energy in developing countries, requires the development and deployment of clean energy technologies on a massive scale. Indeed, while global energy demand is expected to double or even triple by 2050, emissions must fall by at least 80 percent over the same period to avoid the worst consequences of climate change.
Meeting this challenge requires nothing short of a revolutionary shift toward clean energy and a dramatically increased level of investment in these technologies. The International Energy Agency estimates that achieving a 50 percent reduction in emissions by 2050 will require total additional global investments of $45 trillion. "Rising Tigers, Sleeping Giant" notes that "global private investment in renewable energy and energy efficient technologies alone is estimated to reach $450 billion annually by 2012 and $600 billion by 2020, and much larger if recent market opportunity estimates are realized." Recognizing these trends, an increasing number of analysts are calling the clean-tech industry a "guaranteed-growth" sector.
No wonder President Obama has made this his signature statement: "The nation that leads in the creation of a clean energy economy will be the nation that leads the 21st century global economy."
Make no mistake: healthy international competition in the clean-tech industry will not hinder the global transition to clean energy, but rather will act as one of the most powerful accelerators for clean energy development and deployment in the world. International collaboration, such as technology partnerships, will be important to promote clean energy development in China and other developing countries, but we also need to think about how to leverage competitive forces. International competition in the clean energy industry can improve technologies and reduce their price at a rapid pace, and governments can play a more active role in promoting these activities. For example, we should consider establishing an official "U.S.-China Clean Tech Competition" - jointly funded by each country - to promote competition between U.S. and Chinese firms in developing the most innovative technologies and business models.
Unfortunately, the United States is already falling behind its competitors in this critical industry. Just for starters, we rely on foreign companies for the majority of our wind turbines, produce less than 10 percent of the world's solar cells, and we're losing ground on hybrid and electric vehicle technology and manufacturing. China leads the global production of solar cells and wind turbines, and it is expected to become the number one solar market within five years. By 2012, China, Japan, and South Korea are expected to produce 1.6 million hybrid gas-electric or electric vehicles annually compared to North America, which is projected to produce 267,000, less than a fifth as many, according to industry forecasts.
China, Japan, and South Korea plan to gain even greater "first-mover" advantages and solidify this lead with coordinated and comprehensive policies based largely on direct government investment. These governments are expected to invest a total of $509 billion in clean technology over the next five years, compared to $172 billion in the United States, assuming passage of the proposed American Clean Energy and Security Act and including current budget appropriations and recently enacted stimulus measures. According to a recent Deutsche Bank report, "generous and well-targeted [clean-tech] incentives" backed by "comprehensive and integrated government plans" in China and Japan will create a low-risk environment for investors and stimulate high levels of private investment.
As John Doerr and Jeff Immelt, two of the country's top business leaders, recently wrote in the Washington Post, "We are clearly not in the lead today. That position is held by China, which understands the importance of controlling its energy future. China's commitment to developing clean energy technologies and markets is breathtaking."
A New Project for Energy Competitiveness
Without a large national project to regain competitiveness in the clean-tech sector, the United States will miss a major opportunity to grow our economy, correct our trade imbalance, and reduce our national deficit. Indeed, even if we transition to clean sources of energy, we risk trading our dependence on foreign oil for dependence on foreign clean energy.
Fortunately, the United States has a history of regaining competitiveness in strategic industries. Decades ago, after trailing Europe in aviation and aerospace, we raced ahead through sustained federal support for aviation technology development. After the Soviet Union launched Sputnik, we invested heavily in education, science, and technology, enabling us to put the first man on the moon and achieve breakthroughs in information-age technology. When the Japanese took the lead in the semiconductor industry in the 1980s, we formed SEMATECH, a public-private partnership that successfully repositioned the U.S. as the global market leader.
What each of these stories has in common is direct public investment in technology innovation and deployment, education, and infrastructure, aimed at generating competitive private industries. Fareed Zakaria explains the primary reasons for America's previous innovation leadership in the current cover story of Newsweek: "The third tidal wave was massive government funding... After World War II, the Cold War drove this funding to new highs, so that by the 1950s, the United States was spending 3 percent of GDP on R&D, which amounted to a majority of the total spending on science on the planet. Government funding of basic research has been astonishingly productive." (Zakaria cites a report that one of us co-authored called "Case Studies in American Innovation.")
Indeed, the United States did not invent the Internet by enforcing a cap and trade system on fax machines, nor did we create the personal computer by taxing typewriters. Those who suggest we can simply rely on indirect, market-based mechanisms to achieve a clean energy revolution fail to understand the history of technology innovation and competitiveness, and they risk relegating our clean-tech industry to second-class status or worse. Indeed, the same Deutsche Bank report above noted that the U.S. is a "moderate-risk" country compared to the lower-risk environment of China and Japan, because we rely on "a more volatile market incentive approach and has suffered from a start-stop approach in some areas."
What is demanded today is a national energy competitiveness project based on the success of past U.S. innovation policy, including targeted support for technology research, development, demonstration, deployment, education, infrastructure, and manufacturing. A large and growing group of energy experts, think tanks, and companies - including Google, Brookings Institution, dozens of Nobel Laureates, Association of American Universities, Breakthrough Institute, and Third Way - has united behind a target for federal clean energy R&D at $15 billion per year. Unfortunately, the climate bill under consideration in the Senate would only invest around $1.4 billion per year in energy R&D. Similarly, the bill would only offer a one-time capitalization of $10 billion for a Clean Energy Deployment Administration. Another good provision is the IMPACT Act, focused on clean technology manufacturing, but here again it is unclear whether it will be adequately funded.
As we conclude in "Rising Tigers, Sleeping Giant": "If the United States hopes to compete for new clean energy industries it must close the widening gap between U.S. and Asian government investments in research and innovation, manufacturing, and domestic market demand. Small, indirect and uncoordinated incentives are not sufficient to outcompete Asia's clean tech tigers. To regain economic leadership in the global clean energy industry, U.S. energy policy must include large, direct and coordinated investments in clean technology R&D, manufacturing, deployment, and infrastructure."
The Energy Generation
The remaining piece is clean energy education. It is well known that America is falling behind in high-tech education. What's less well understood is that nearly half the U.S. energy workforce is expected to retire over the next decade. Federal investment in education, from the G.I. Bill to the National Defense Education Act, was vital for U.S. competitiveness in the post-war era, and it will be vital for competing in the burgeoning clean energy industry. As Nobel Laureate Paul Krugman recently put it, "If you had to explain America's economic success with one word, that word would be 'education.'"
In April, President Obama proposed an important initiative to inspire the next generation of clean energy innovators. The program, called RE-ENERGYSE (Regaining our Energy Science and Engineering Edge), would prepare thousands of highly skilled scientists and engineers to enter clean-energy fields by supporting energy education programs at universities, technical colleges, and K-12 schools. According to the Department of Energy, the program would educate between 5,000 and 8,500 energy scientists, engineers, and other professionals by 2015, rising to 10,000 to 17,000 professionals by 2020.
RE-ENERGYSE is critical for reclaiming U.S. leadership in the clean energy sector. As a group of over 100 universities, professional associations, and student groups stated in a recent letter to the Senate, "RE-ENERGYSE is an innovative program that will train America's future energy workforce, accelerate our transition to a prosperous clean energy economy, and ensure that we lead the world's burgeoning clean technology industries."
Unfortunately, Congress failed to provide any funding for RE-ENERGYSE for 2010. But the administration is not giving up, and it intends to pursue funding for RE-ENERGYSE in its 2011 budget proposal. College students have a unique role to play in advancing this initiative and the broader energy competitiveness agenda. RE-ENERGYSE needs a much stronger base of support to pass Congress next year, and as the primary stakeholders in the program, students can be uniquely influential in organizing a coalition of supporters and directly voicing their concerns to members of Congress. That's why students at Stanford University are currently launching a national effort called Americans for Energy Leadership, aimed at advancing RE-ENERGYSE and inspiring the next generation of energy innovators.
Fifty years ago, in the wake of the launch of Sputnik, the United States launched a massive national effort to lead the space race and win the Cold War. Today, the clean energy race represents one of the greatest opportunities and challenges for American leadership in a generation. If we do not take immediate action to launch a national energy competitiveness project based on large, direct, and coordinated innovation policies, we will effectively cede the clean-energy industry to Asia and other competitors. The mass majority of exports, jobs, tax revenues, and other economic benefits will accrue to foreign countries, and we will miss a historic opportunity to achieve a new era of American leadership. The choice should be clear.
--
Teryn Norris is a Senior Advisor at the Breakthrough Institute, Public Policy major at Stanford University, and Director of Americans for Energy Leadership. Devon Swezey is Project Director at the Breakthrough Institute and graduated from Stanford University in 2008. They are co-authors of the new report, "Rising Tigers, Sleeping Giant: Asian Nations Set to Dominate the Clean Energy Race by Out-Investing the United States."
Winning the Clean Energy Race: A New Strategy for American Leadership
By Teryn Norris & Devon Swezey
Originally published by The Stanford Review
You know the world is changing when the president’s first trip to Asia is defined by a new U.S. foreign policy dubbed “strategic reassurance” – convincing China that the United States has no intention of containing its growing power or endangering its foreign investments. As the New York Times put it, “When President Obama visits China for the first time on Sunday, he will, in many ways, be assuming the role of profligate spender coming to pay respects to his banker.”
You also know times are changing when China, the world’s greatest polluter, and other Asian nations are poised to dominate the burgeoning global clean-tech industry by out-investing the United States. That’s the conclusion of a major new report we co-authored called “Rising Tigers, Sleeping Giant (PDF),” released this week by the Breakthrough Institute and Information Technology & Innovation Foundation. The report is the first to thoroughly benchmark clean energy competitiveness in four nations – China, Japan, South Korea, and the United States – and finds the following:
“Asia’s rising ‘clean technology tigers’ – China, Japan, and South Korea – have already passed the United States in the production of virtually all clean energy technologies and over the next five years will out-invest the U.S. three-to-one in these sectors… While some U.S. firms will benefit from the establishment of joint ventures overseas, the jobs, tax revenues, and other benefits of clean tech growth will overwhelmingly accrue to Asian nations… Should the investment gap persist, the U.S. will import the overwhelming majority of clean energy technologies it deploys.”
What do these two changes have in common? They both reflect the accelerating shift of global power from America to Asia, caused in large part by the serious mismanagement of U.S. economic policy.
The Pacific power shift is not a new phenomenon, and the Obama administration is wise to seek stronger ties with the region. The U.S. should applaud Asia’s growth, which is partly an outcome of our own success at promoting economic liberalism and international development. This shift in power is not a zero-sum game, nor should it be: the U.S. and Asia should avoid trade wars at all costs, and we should seize opportunities for partnership on a range of issues, from climate change to nuclear proliferation.
But the growing pace of this power shift should be a cause of major concern for Americans, and it should raise serious questions about our economic policies at the highest level. While the U.S. economy has suffered greatly from a crisis produced by its own financial sector – losing millions of jobs, trillions in economic output, and demanding huge spending packages financed by borrowed money – China has shrugged off the global recession with high levels of growth and self-financed stimulus, all while purchasing billions of Treasury bills to fund a U.S. deficit that has reached historic highs.
Last November, addressing the nation on the evening of his election, President Obama declared that “a new era of American leadership is at hand.” And indeed, his new administration has taken significant steps to remake U.S. foreign policy. But unless the U.S. quickly improves its economic competitiveness, our global leadership will be severely damaged. What is demanded now is a major, coordinated national project to regain our economic competitiveness in strategic sectors while permanently correcting the imbalances that led to the Great Recession.
Correcting Imbalances & Fixing Finance
Speaking at the San Francisco Fed last month, Federal Reserve chairman Ben Bernanke declared it “extraordinarily urgent” that the U.S. and Asia take steps to prevent a revival of global economic imbalances. There is now broad consensus on how these imbalances – the huge gaps in trade deficits and surpluses, and the associated gaps in national savings, consumption, and investment rates – helped caused the housing bubble and the Great Recession. Alan Greenspan offered a concise explanation in a widely-read column this spring:
“The presumptive cause of the world-wide decline in long-term [mortgage] rates was the tectonic shift in the early 1990s by much of the developing world from heavy emphasis on central planning to increasingly dynamic, export-led market competition. The result was a surge in growth in China and a large number of other emerging market economies that led to an excess of global intended savings relative to intended capital investment.”
In other words, the U.S. housing bubble was caused in large part by the buildup of savings in emerging market economies, especially China, accumulated from their large trade surpluses. As this large “pool of money” was invested internationally, it drove down the costs of borrowing, drove up subprime lending, and created large demand for mortgage-backed securities. This era of easy credit – combined with the use of “innovative” financial instruments, which relaxed mortgage standards, concealed risk, and enabled the mass packaging and sale of these securities – gave rise to the U.S. housing bubble.
This “global pool of money” wouldn’t have existed without the U.S. running an enormous trade deficit, relying on imports and debt to support a high consumption rate – hence the global “imbalance” of high-saving versus high-consuming countries. The U.S. deficit in the trade of goods and services in 2008 was $695 billion, according to the Department of Commerce, compared to China’s surplus of $297 billion.
Speaking in Tokyo last week, President Obama extended this problem to its logical conclusion, calling for rebalanced growth and a new U.S. economic strategy based on exports: “One of the important lessons this recession has taught us is the limits of depending primarily on American consumers and Asian exports to drive growth… [our] new strategy will mean that we save more and spend less, reform our financial systems, reduce our long-term deficit and borrowing. It will also mean a greater emphasis on exports that we can build, produce, and sell all over the world.”
The implication is clear: the United States must shift away from a “financial” economy to an “innovation” economy, one that focuses on creating industries that produce real innovative products to sell around the world. After years of creating imaginary wealth on the pile of sand that was the U.S. financial sector, America must once again get into the business of producing real goods and services. This means reducing the size of the financial sector and the Wall Street “brain drain” – which has distracted the nation’s best and brightest minds from the work of real innovation and entrepreneurship – and refocusing on productive, export-oriented industries. And it means adopting a new era of innovation policies to ensure the U.S. economy is the most competitive in the world, directing targeted public investments into strategic technologies, infrastructure, and high-tech education programs.
This new economic strategy is necessary not just for short-term recovery, but for avoiding future credit bubbles and financial crises, slashing our trade and budget deficit, producing more innovative technologies to improve our everyday lives, and regaining our international leadership.
The Clean Energy Race
What’s the biggest new industry that can boost America’s exports, grow the economy, create better jobs, and tap our innovative potential? In a word, clean-tech.
Here’s why: Reducing global greenhouse gas emissions, while simultaneously meeting the surging demand for energy in developing countries, requires the development and deployment of clean energy technologies on a massive scale. Indeed, while global energy demand is expected to double or even triple by 2050, emissions must fall by at least 80 percent over the same period to avoid the worst consequences of climate change.
Meeting this challenge requires nothing short of a revolutionary shift toward clean energy and a dramatically increased level of investment in these technologies. The International Energy Agency estimates that achieving a 50 percent reduction in emissions by 2050 will require total additional global investments of $45 trillion. "Rising Tigers, Sleeping Giant" notes that “global private investment in renewable energy and energy efficient technologies alone is estimated to reach $450 billion annually by 2012 and $600 billion by 2020, and much larger if recent market opportunity estimates are realized.” Recognizing these trends, an increasing number of analysts are calling the clean-tech industry a “guaranteed-growth” sector.
No wonder President Obama has made this his signature statement: “The nation that leads in the creation of a clean energy economy will be the nation that leads the 21st century global economy.”
Make no mistake: healthy international competition in the clean-tech industry will not hinder the global transition to clean energy, but rather will act as one of the most powerful accelerators for clean energy development and deployment in the world. International collaboration, such as technology partnerships, will be important to promote clean energy development in China and other developing countries, but we also need to think about how to leverage competitive forces. International competition in the clean energy industry can improve technologies and reduce their price at a rapid pace, and governments can play a more active role in promoting these activities. For example, we should consider establishing an official “U.S.-China Clean Tech Competition” – jointly funded by each country – to promote competition between U.S. and Chinese firms in developing the most innovative technologies and business models.
Unfortunately, the United States is already falling behind its competitors in this critical industry. Just for starters, we rely on foreign companies for the majority of our wind turbines, produce less than 10 percent of the world’s solar cells, and we’re losing ground on hybrid and electric vehicle technology and manufacturing. China leads the global production of solar cells and wind turbines, and it is expected to become the number one solar market within five years. By 2012, China, Japan, and South Korea are expected to produce 1.6 million hybrid gas-electric or electric vehicles annually compared to North America, which is projected to produce 267,000, less than a fifth as many, according to industry forecasts.
China, Japan, and South Korea plan to gain even greater “first-mover” advantages and solidify this lead with coordinated and comprehensive policies based largely on direct government investment. These governments are expected to invest a total of $509 billion in clean technology over the next five years, compared to $172 billion in the United States, assuming passage of the proposed American Clean Energy and Security Act and including current budget appropriations and recently enacted stimulus measures. According to a recent Deutsche Bank report, “generous and well-targeted [clean-tech] incentives” backed by “comprehensive and integrated government plans” in China and Japan will create a low-risk environment for investors and stimulate high levels of private investment.
As John Doerr and Jeff Immelt, two of the country’s top business leaders, recently wrote in the Washington Post, “We are clearly not in the lead today. That position is held by China, which understands the importance of controlling its energy future. China's commitment to developing clean energy technologies and markets is breathtaking.”
A New Project for Energy Competitiveness
Without a large national project to regain competitiveness in the clean-tech sector, the United States will miss a major opportunity to grow our economy, correct our trade imbalance, and reduce our national deficit. Indeed, even if we transition to clean sources of energy, we risk trading our dependence on foreign oil for dependence on foreign clean energy.
Fortunately, the United States has a history of regaining competitiveness in strategic industries. Decades ago, after trailing Europe in aviation and aerospace, we raced ahead through sustained federal support for aviation technology development. After the Soviet Union launched Sputnik, we invested heavily in education, science, and technology, enabling us to put the first man on the moon and achieve breakthroughs in information-age technology. When the Japanese took the lead in the semiconductor industry in the 1980s, we formed SEMATECH, a public-private partnership that successfully repositioned the U.S. as the global market leader.
What each of these stories has in common is direct public investment in technology innovation and deployment, education, and infrastructure, aimed at generating competitive private industries. Fareed Zakaria explains the primary reasons for America’s previous innovation leadership in the current cover story of Newsweek: “The third tidal wave was massive government funding… After World War II, the Cold War drove this funding to new highs, so that by the 1950s, the United States was spending 3 percent of GDP on R&D, which amounted to a majority of the total spending on science on the planet. Government funding of basic research has been astonishingly productive.” (Zakaria cites a report that one of us co-authored called “Case Studies in American Innovation.”)
Indeed, the United States did not invent the Internet by enforcing a cap and trade system on fax machines, nor did we create the personal computer by taxing typewriters. Those who suggest we can simply rely on indirect, market-based mechanisms to achieve a clean energy revolution fail to understand the history of technology innovation and competitiveness, and they risk relegating our clean-tech industry to second-class status or worse. Indeed, the same Deutsche Bank report above noted that the U.S. is a “moderate-risk” country compared to the lower-risk environment of China and Japan, because we rely on “a more volatile market incentive approach and has suffered from a start-stop approach in some areas.”
What is demanded today is a national energy competitiveness project based on the success of past U.S. innovation policy, including targeted support for technology research, development, demonstration, deployment, education, infrastructure, and manufacturing. A large and growing group of energy experts, think tanks, and companies – including Google, Brookings Institution, dozens of Nobel Laureates, Association of American Universities, Breakthrough Institute, and Third Way – has united behind a target for federal clean energy R&D at $15 billion per year. Unfortunately, the climate bill under consideration in the Senate would only invest around $1.4 billion per year in energy R&D. Similarly, the bill would only offer a one-time capitalization of $10 billion for a Clean Energy Deployment Administration. Another good provision is the IMPACT Act, focused on clean technology manufacturing, but here again it is unclear whether it will be adequately funded.
As we conclude in “Rising Tigers, Sleeping Giant”: “If the United States hopes to compete for new clean energy industries it must close the widening gap between U.S. and Asian government investments in research and innovation, manufacturing, and domestic market demand. Small, indirect and uncoordinated incentives are not sufficient to outcompete Asia’s clean tech tigers. To regain economic leadership in the global clean energy industry, U.S. energy policy must include large, direct and coordinated investments in clean technology R&D, manufacturing, deployment, and infrastructure.”
The Energy Generation
The remaining piece is clean energy education. It is well known that America is falling behind in high-tech education. What’s less well understood is that nearly half the U.S. energy workforce is expected to retire over the next decade. Federal investment in education, from the G.I. Bill to the National Defense Education Act, was vital for U.S. competitiveness in the post-war era, and it will be vital for competing in the burgeoning clean energy industry. As Nobel Laureate Paul Krugman recently put it, “If you had to explain America’s economic success with one word, that word would be ‘education.’”
In April, President Obama proposed an important initiative to inspire the next generation of clean energy innovators. The program, called RE-ENERGYSE (Regaining our Energy Science and Engineering Edge), would prepare thousands of highly skilled scientists and engineers to enter clean-energy fields by supporting energy education programs at universities, technical colleges, and K-12 schools. According to the Department of Energy, the program would educate between 5,000 and 8,500 energy scientists, engineers, and other professionals by 2015, rising to 10,000 to 17,000 professionals by 2020.
RE-ENERGYSE is critical for reclaiming U.S. leadership in the clean energy sector. As a group of over 100 universities, professional associations, and student groups stated in a recent letter to the Senate, “RE-ENERGYSE is an innovative program that will train America’s future energy workforce, accelerate our transition to a prosperous clean energy economy, and ensure that we lead the world’s burgeoning clean technology industries.”
Unfortunately, Congress failed to provide any funding for RE-ENERGYSE for 2010. But the administration is not giving up, and it intends to pursue funding for RE-ENERGYSE in its 2011 budget proposal. College students have a unique role to play in advancing this initiative and the broader energy competitiveness agenda. RE-ENERGYSE needs a much stronger base of support to pass Congress next year, and as the primary stakeholders in the program, students can be uniquely influential in organizing a coalition of supporters and directly voicing their concerns to members of Congress. That’s why students at Stanford University are currently launching a national effort called Americans for Energy Leadership, aimed at advancing RE-ENERGYSE and inspiring the next generation of energy innovators.
Fifty years ago, in the wake of the launch of Sputnik, the United States launched a massive national effort to lead the space race and win the Cold War. Today, the clean energy race represents one of the greatest opportunities and challenges for American leadership in a generation. If we do not take immediate action to launch a national energy competitiveness project based on large, direct, and coordinated innovation policies, we will effectively cede the clean-energy industry to Asia and other competitors. The mass majority of exports, jobs, tax revenues, and other economic benefits will accrue to foreign countries, and we will miss a historic opportunity to achieve a new era of American leadership. The choice should be clear.
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Teryn Norris is a Senior Advisor at the Breakthrough Institute, Public Policy major at Stanford University, and Director of Americans for Energy Leadership. Devon Swezey is Project Director at the Breakthrough Institute and graduated from Stanford University in 2008. They are co-authors of the new report, “Rising Tigers, Sleeping Giant: Asian Nations Set to Dominate the Clean Energy Race by Out-Investing the United States.”
Tuesday, November 17, 2009
DIY Solar Part 5: Tools For Installing a System
So, now its down to the fun part. You've designed a system, found the kit, its here, its ready to be put up. Now what? Let me start by saying that installing a solar power system is WAY too big a subject to cover in a couple blog posts. In fact its something most people should leave to a professional. But, since we're all about empowering people with do it yourself knowledge, we'll cover the basics and offer suggestions for finding more details for your specific situation. In this example remember we're talking about a 2000 Watt roof mounted grid tied system, one of the most popular.
Safety Equipment
As always safety comes first. For starters makes sure you have a really good, solid ladder. Make sure it doesn't have broken or loose rungs and it should extend at least 3 feet PAST the top of your roof when leaned against it at a safe angle. Don't scrimp here, you'll be going up and down that thing a lot and most accidents occur falling off ladders, not falling off roofs. Technically you are supposed to have a rope and harness system at all times as well. These systems can attach to ridges and will save your life if used properly. Many equipment rental stores will rent large ladders and harnesses.
As always a good set of gloves, safety glasses, and work boots are indispensable. That roof surface can be more slippery than you think, especially in cold weather. For 10:12 roofs and above you may want to install a temporary walkway system with 2 x 4's running perpendicular to the slope. This will take some extra time but can actually speed up the actual installation process. If you've got the budget, or the fear of hospital bills, a boom lift (sometimes called a JLG or a cherry picker) can lift you into hard to reach places safely and quickly. These too can be rented easily.
The roof is steep, there is little room to work, and plenty of room on the
ground for the machine.
Hand Tools
If you are buying a prepackaged kit, your tool requirements are pretty basic. The kits these days come connectors, often multi-contact type, that are very simple to connect. There are many projects though that bits and pieces of wire that must be cut to fit, so a standard electrician's list of pliers (small and heavy duty), wire strippers, utility knife, and diagonal cutters will be helpful. You'll also need a small torpedo level, multimeter voltage/amperage tester, chalk line, and a set of sockets for assembling rail hardware. If you are building your own system from scratch you'll need heavy duty cutters for large gauge wire and crimpers for attaching connectors, check with your local equipment rental shop for these (they are very expensive!).
Power Tools
For 90% of solar installations all you'll need is a power drill. Depending on your roof anchoring system and your roof makeup you may want an impact drill, but usually not. For standard residential roofs with asphalt shingles and wood rafters, a simple battery pack drill will do just fine. You'll want a nice long bit (refer to your roof anchor instructions for bit sizing) and some socket inserts to tighten rail hardware.
Next we'll get into the laying out the system and putting up panels. Kriss Bergethon lives off the grid with his wife in Colorado. For more information visit his website at Thin Film Solar. Read more!
Friday, November 13, 2009
EVENT: Rising Tigers, Sleeping Giant: Major New Report on US vs. Asian Competitiveness in Clean Energy Technology
A new report by the Breakthrough Institute and the Information Technology and Innovation Foundation, "Rising Tigers, Sleeping Giant," is the first to thoroughly benchmark clean energy competitiveness in four nations: China, Japan, South Korea and the United States.
Developing better and cheaper clean energy technologies will be central to addressing climate change, securing U.S. energy independence, and creating new clean energy jobs. Increasingly, nations are seeking to gain competitive advantage in this rapidly growing, high-technology sector and the stakes for the United States are significant: will the United States largely be an importer of these clean technologies and lose the jobs related to them, or can America emerge as a global leader, driving exports and high-wage jobs?
The report analyzes clean energy investments and public policy support for research and innovation, manufacturing, and domestic demand, with a particular focus on six key technologies: wind, solar, nuclear, carbon capture and storage, hybrid and electric vehicles and advanced batteries, and high-speed rail.
Please join the Breakthrough Institute and ITIF for a discussion of the report's findings.
Date: Wednesday, November 18, 2009
Time: 10:30 AM - 11:30 AM
Location: Washington, D.C. - Senate Energy Committee Room, Dirksen Senate Office Building (SD-366)
Moderator and Presenter
Robert Atkinson (bio)
President, The Information Technology and Innovation Foundation
Guests
Congressman Rush Holt (D-NJ, bio)
Congressman Ron Klein (D-FL, bio)
Presenters
Jesse Jenkins (bio)
Director of Energy and Climate Policy, The Breakthrough Institute
Michael Shellenberger (bio)
President, The Breakthrough Institute
Gary Fazzino, Vice President of Government Affairs, Applied Materials (Invited) Read more!
Tuesday, November 10, 2009
The Real Policy Lesson From the Chinese Wind Turbine "Scare"
Originally posted at the Breakthrough Institute
By Yael Borofsky and Jesse Jenkins
Outcry over a planned Texas wind farm, which will be the first project to import wind turbines from a Chinese manufacturer, has resulted in calls to prevent government stimulus money from funding the project. As Bloomberg reported, in a letter to U.S. Energy Secretary Steven Chu, Senator Charles Schumer insisted that funding only be granted to U.S. manufactured turbines.
"I urge you to reject any request for stimulus money unless the high-value components, including the wind turbines, are manufactured in the United States...China is fast emerging as one of our main rivals in the race to build the technology that can help us achieve energy independence. We should not be giving China a head start in this race at our own country's expense."
But those expressing alarm that money from the stimulus package will accrue to China are forgetting that importing wind turbine components is actually nothing new in the United States. In fact, this story broke at almost that same time that a new investigative report by the American University School of Communication revealed that 84% of the U.S. stimulus money for renewable projects has been given to overseas companies.
It is certainly symbolic that this project, which is being carried out by a consortium of Chinese and American companies, will be built with the first wind turbines imported from China. Yet, imported wind turbine components made up about 50% of installed capacity this year, with parts largely being exported from Europe. General Electric (GE) is the only American company represented among the top five wind component manufacturers in the world. As long as the U.S. lags in domestic turbine manufacturing, and as long as wind projects need turbines, it is inevitable that the parts for these efforts will be sourced from the foreign market.
According to Bloomberg, the lack of domestic manufacturing in wind turbine components prompted the Alliance for American Manufacturing to ask:
"Why aren't American firms building this clean-energy project?
The reason for the lack of American presence in wind turbine manufacturing is clear: inconsistent government investment and public policy support. Prior to 2006, the U.S. production tax credit (PTC) for wind installations expired on an almost annual-basis before eventual reinstatement, leading to a boom-bust domestic market that created crippling investor uncertainty and prevented major investments in U.S. manufacturing capacity.
In contrast, Denmark's Vestas became the world leader in wind turbine manufacturing with the crucial support of consistent, long-term public investment from the Danish government. The same situation is true for Germany's Siemens and Spain's Gamesa, where feed-in tariff policies provide strong and consistent support for domestic markets as well as investor certainty for manufacturing and technology companies. The same story is now taking shape in China, where new guaranteed wind tariff prices have been launched and the Chinese government has provided direct support for China's turbine manufacturers.
The good news for the U.S. is this: the share of foreign-manufactured turbine components used in U.S. wind farms has been falling - we imported 70% of components in 2005, compared to the 50% today. This improvement is due to the instatement in 2006 of a long-term production tax credit (PTC) that, thanks to subsequent extensions, will now remain in force through the end of 2012. And as our European competitors have shown, leadership in wind turbine manufacturing has far less to do with the price of labor than it does with sustained and effective public policy support. After all, EU labor prices hardly offer an inherent comparative advantage over the U.S., let alone over Chinese or Indian wind competitors.
Now, with relatively consistent public policy support finally in place - at least for the next few years - there has been a subsequent increase in investment in U.S. manufacturing capacity. Still, with U.S. wind companies long lagging behind their foreign competitors, much of this new investment comes as leading foreign companies like Vestas, Siemens, and Gamesa all open U.S. manufacturing sites. To be certain, that means more U.S. jobs and foreign investment - both good for the faltering U.S. economy. But ensuring American leadership in the burgeoning global wind market will clearly require significant, long-term public investment and support for both domestic markets and U.S. manufacturing. After years of negligence, getting ahead in the clean energy race won't be easy.
Senator Schumer and others who seek to bar Chinese manufacturers from stimulus funds are missing the point. Keeping foreign companies from stimulus funding is a misplaced effort to treat the symptom not the problem.
If the U.S. policy environment continues to focus on short-term measures to spur demand, we will consistently see investment accrue to foreign imports. If we want domestic manufacturers to supply the technology to meet our clean energy needs, the U.S. needs both long-term support for manufacturing capacity as well as consistent, targeted deployment incentives to create a stable domestic market. Equally important in the long-run will be large investments in research and innovation that can secure U.S. technological leadership and ensure the next generation of clean energy technologies are invented and commercialized here in the U.S.
Until the U.S. gets serious about a coordinated, consistent, and aggressive package of policies supporting U.S. clean energy innovation, manufacturing and markets, we will continue to see short-term bursts of funding, like the stimulus-funded cash grant program, end up invested in foreign innovation and technology. Read more!
