While the United States pioneered clean energy technologies such as solar power, it is Germany and China that now lead the world in renewable energy investments.
China led the pack in cleantech private financing in 2010; Germany ranked a close second, doubling its level of 2009 investment levels; and the United States came in third—down from its second-place ranking in 2009 and its first-place ranking in 2008.
Specifically, China attracted $54.4 billion in private financing in 2010, while Germany reaped $41.2 billion, and the United States attracted $34 billion, according to a recent report, Who's Winning the Clean Energy Race by the Washington, D.C.-based Pew (News - Alert) Charitable Trusts, an independent, nonprofit group.
Why is America lagging? Experts in the field are unanimous: The United States offers potential green investors uncertainty while countries like Germany and China have sent clear signals that they support such technology. “Given uncertainties surrounding key policies and incentives, the United States’ competitive position in the clean energy sector is at risk,” the Pew report concluded.
In the United States, a comprehensive energy bill died in the Senate in July 2010. The U.S. Congress also has failed to pass national mandates for utilities to produce minimum amounts of clean power, which environmentalists and some analysts say would boost confidence for alternative energy companies to invest in the country.
The Chinese government, by comparison, has issued clearly stated directives from the very top to increase green technology. “We will actively promote changes in the way energy is produced and used and raise energy efficiency,” Premier Wen Jiabao said in his annual address to the National People’s Congress in March. “We will give impetus to the clean use of traditional energy sources, intensify the construction of smart power grids, and vigorously develop clean energy.”
Or as Deborah Seligsohn, an energy specialist from the Washington, D.C.-based World Resources Institute, told the U.S. House Subcommittee on Energy and Power in early April, “Chinese economic strategists recognize that China was late to the industrial revolution and even late to the IT revolution, but it believes it can be a leader in a green revolution.”
Similarly, the German government’s clear support for renewable energy through “feed-in tariffs” has made it a safe bet for investors, said Claudia Kemfert, an energy expert from the German Institute for Economic Research in Berlin.
German Chancellor Angela Merkel made a controversial move after the nuclear disaster in Fukushima, Japan, by reversing her nuclear energy stance and, instead, supporting wind and solar power. The "alarming vents" in Japan had "changed a few things," she said in March. She referred to nuclear energy as a "bridge technology" that would lead the way to the "age of renewable energy" and talked about "taking precautions." The former coalition government of German’s center-left Social Democratic Party and the Green Party "wanted a phase-out by 2020," Merkel noted. "If we can reach this goal sooner, all the better."
Her government is now scrambling to develop a policy to focus on clean technology — a political imperative that will only strengthen the sector. In their “six-point plan for an accelerated energy turnaround,” released in April, Environment Minister Norbert Roettgen and Economy Minister Rainer Bruederle suggest Germany should exit nuclear power faster than planned; spend some $7.2 billion in a program to increase offshore wind power; boost a program to make buildings more energy efficient to the tune of $2.8 billion; and boost an energy and climate fund to help renewables at a further cost of $1.4 billion.
Quite apart from the environmental, let alone the political, considerations, clean energy advocates argue this plan makes plain business sense. “The renewable energy sector is very important to Germany …. In order to install a windmill, you need steel production. In total, an additional 360,000 jobs have been created in the renewable energy sector alone,” the German Institute’s Claudia Kemfert said.
Giving the corporate point of view, Toni Weiss, the general manager Augsburg, Germany-based Renk—a 130-year-old engineering company that makes the gear boxes used in wind turbine systems—commented that, “If you look back to the past, you will see you have a direct correlation between tax benefits and investment," he said. "The United States doesn’t have many tax benefits for wind energy and they don’t make much investment.”
Michael Liebreich, CEO of Bloomberg New Energy Finance, added, “The United States remains the global leader in clean energy innovation … but America has not been creating demand for deployment of clean energy. As a result it is losing out on opportunities to attract investment, create manufacturing capabilities, and spur job growth.”
He will get no arguments from U.S. President Barack Obama, who urged the nation in his January 2011 State of the Union address, "I know there are those who disagree with the overwhelming scientific evidence on climate change. But even if you doubt the evidence, providing incentives for energy efficiency and clean energy are the right thing to do for our future."
Cheryl Kaften is an accomplished communicator who has written for consumer and corporate audiences. She has worked extensively for MasterCard (News - Alert) Worldwide, Philip Morris USA (Altria), and KPMG, and has consulted for Estee Lauder and the Philadelphia Inquirer Newspapers. To read more of her articles, please visit her columnist page.
