Getting it Right for the US and China in the Clean Energy Race

The world is finally beginning to grasp the importance of the global race for clean energy – but it’s easy to lose sight of how interconnected the United States and China are in this race. Last week, an excellent market report and an encouraging new business deal illustrated precisely this reality.

Bloomberg New Energy Finance released a new report examining the crucial roles of the United States and China in developing the world’s clean energy future. Relying on a thorough market and policy analysis, the experts at New Energy Finance found that:

The relationship between the nations defies simplistic assumptions defined by economic nationalism. […] China and the US are mutually dependent; each must rely at least in part on the other to achieve its clean energy and carbon reduction objectives.

The report also strongly warns against what is known as “clean energy protectionism”, when a country implements laws to block foreign competition with border tariffs, domestic production requirements and other policies, in order to protect its own industry.

Protectionism could deny market opportunities and has the potential to drive up clean generation costs in both countries. This would slow clean energy adoption and make it more difficult to achieve meaningful reductions in harmful greenhouse gas emissions.

Although New Energy Finance’s report contains many important insights, the key takeaway is that when talking about clean energy, we should not simply focus on who will win and who will lose. The real question is how the U.S. and China can continue to move forward and benefit the entire world by reducing costs and increasing quality of clean energy technology.

Also of note is the recent business deal announced between American Superconductor and Sinovel, two companies I have written about previously. American Superconductor (AMSC), a technology firm based in Massachusetts, received a new order worth approximately $445 million for wind turbine core electrical components from Sinovel Wind, China’s largest wind turbine manufacturer.

Last month, I pointed to American Superconductor as an example of precisely what we need in the United States: more companies that can profit in the Chinese market by offering cutting-edge technologies to fight climate change. 

By developing cutting-edge electrical component technologies and by actively engaging with Chinese partners, American Superconductor has been able to seize huge economic opportunities in the clean energy market. In the last few years, American Superconductor has received more than $1 billion in orders from Sinovel, according to the Economic Observer.

This new deal with Sinovel is a tangible reflection of many of the conclusions in the New Energy Finance report, and it should remind us that the United States can work with China to benefit its companies and citizens, and contribute positively in the global fight against climate change.

This can only happen if the U.S. continues to develop higher quality, more advanced, and more competitive products than the rest of the world. The United States will only be able to lead with the most advanced clean energy technologies if we pass climate change and energy legislation at home and make clear that the U.S. is serious about growing its clean energy industry and competing in the global market for clean energy.  Moreover, if we want to maximize the environmental benefits of clean energy, we need to ensure that the entire world has access to the highest quality, lowest cost technology.  This can only happen in a competitive free market.  Thus, we should focus our efforts on innovation rather than protectionism.  Only then can we most efficiently bring the best technology to the greatest global market.