“If the U.S. fails to adopt an economy-wide carbon abatement program, we will continue to cede leadership in energy technology to other nations. The U.S. is now home to only two of the ten largest solar Photo-Voltaic producers in the world, two of the top ten wind turbine producers and one of the top ten advanced battery manufacturers. That is, only one-sixth of the top renewable energy manufacturers are based in the United States. To lose our advantage in technologies that were pioneered in the U.S. may cost us dearly if not reversed”
Memorandum dated May 20, 2009, The President’s Economic Recovery Advisory Board
Or as NY Times columnist Thomas Friedman puts it: “imagine how poor the US would be today if U.S. firms did not dominate the top 10 Internet companies.”
China is emerging as a leader in renewable energy technology through extensive financial investment and focus on green technology as a new economic powerhouse industry. At the same time as China is striving to dominant the industry and required its utilities to generate a significant portion of their power from renewable sources several years ago, the US Congress is dithering about passage of the American Clean Energy and Security Act of 2009 (the “Waxman-Markey” bill) and weakening the provisions that would likewise require US utilities to incorporate renewable energy in their power sources. The disparity in China’s efforts compared to that of the US led Friedman to worry in a recent NY Times column that China will “clean our clock” in environmental technology.
According to Business Week, China has emerged has an incubator of clean technology because of the need to solve its own environmental problems. Two-thirds of China’s rivers and lakes are too polluted for industrial use, much less agriculture or drinking. Just one in 100 of China’s nearly 600 million city residents breathe air that would be considered safe in Europe. Poisoned floodwaters have ruined productive fields and last year China passed the US to become the world’s largest source of greenhouse gases. The World Bank has estimated that damage from pollution saps nearly 6% of China’s gross domestic product each year. However, Friedman points out that China sees green technology as the next great global industry and wants to be on board. And China has experienced significant success:
• China plans to increase the share of electricity from renewable sources to 23% by 2020, from 16 % currently, which is on target with Europe. The US has no standards at this time.
• China is currently the second-largest market for wind turbines and is on track to pass the US as the world’s largest market for wind turbines this year after doubling wind-power facilities in each of the past four years. Wind turbines are being constructed at such a rapid pace that it is anticipated that it will have 30,000 megawatts of wind energy by the end of this year, which had been its target for 2020
• China is already the largest producer of photovoltaic solar panels, but historically has exported 95% of the panels produced. However, a glut in PV panels have pushed prices down by more than 30% and domestic installation is expected to increase. Chinese energy policy agency recently proposed a new program to provide huge financial incentives for more solar farms and rooftop panels.
• China’s BYD Auto has already launched the first mass-produced hybrid that plugs into electrical outlets and is priced at $22,000 US. They plan to roll out a version in the US in 2011. The Chevy Volt is expect to cost twice as much and won’t be out until 2010. Beijing recently hiked China’s auto mileage standards to a level the US is not expected to reach until 2020.
Meanwhile, back in the USA, the Waxman-Markey bill is being battered by that dysfunctional body known as Congress until it remains a mere shadow of its original self. The legislation originally included a requirement that utilities deliver 25% renewable-derived power by 2025. However, a tentative agreement with the Blue Dog Democrats has reduced this target to 15% by 2020 and other provisions would reduce this percentage even further in certain circumstances. According to a leading scientist with the Union of Concerned Scientist, the revised legislation is “pitiful.” Republicans oppose the legislation with their usual litany of horribles. According to a recent op-ed piece in the Wall Street Journal, the legislation would be “without question the biggest expansion of federal government control over our economy since the 1930s” and it would “reduce America’s real gross domestic product by $400 billion each year….leading to almost 2.5 million job losses, and raise adjusted electricity rates by 90%.” (Which raises the question why, if renewable energy is so uneconomical, that paragon of capitalism, Wal-Mart, has set a goal of obtaining 100% of its power supply from renewable energy!)
With China’s proven ability to produce products at rock-bottom prices, economists worry that clean tech ventures in the US will not be able to compete. This seems a distinct possibility given the tendency of too many of our Congressional representatives to elevate their own re-election and party politics over the needs of the American people. And if China does become the dominate leader in renewable energy, what will that do to the US economy? To again quote Friedman: “imagine how poor the US would be today if U.S. firms did not dominate the top 10 Internet companies.”