Installing Solar Panels Is A Start, But What Comes Next?

The White House became the latest to announce the installation of an on-site solar system, adding to a now-constant stream of announcements from universities, sports teams, other government agencies and too many companies to link to.  The news followed a weekly address from the President covering solar power and clean energy and got a good deal of press – 945 related articles in the most recent Google News search.  While much of the coverage seemed obsessed with a certain “symbolism” in this action (ignoring the fact that a more recent president had already installed solar), a different symbolism seems more relevant to me.

Installing solar panels is just one aspect of building a clean energy economy in the U.S.  Manufacturing and assembling these clean energy technologies is a key component of our new economy as well.  Unfortunately, as congressional hearings, and a number of recent reports have documented, the U.S. is quickly falling behind other countries in the drive to become the world’s leading clean energy manufacturer.  One data point seems especially relevant given this week’s announcement – the United States, which originally invented photovoltaic technology, has seen its share of solar manufacturing drop from half of all solar manufacturing in the 1990s to around 5% now.  Instead other countries such as Germany, Spain and China have taken the lead in producing this (and many other) important clean technologies.  At risk of sounding too much like a certain mustachioed svengali, this fact would seem a bigger concern than the political symbolism of the President's solar announcement.

This doesn’t have to be the case.  Concerns that advanced countries can’t compete in the clean energy race due to having higher wages than developing countries are misplaced. While a factor in cost calculations, wages are by no means the most important determinant in building a domestic clean energy industry.  Tens of thousands of U.S. firms are capable of manufacturing components for the domestic clean energy market, although anywhere from 50% to 70% of components for clean energy systems are still imported. 

A range of policies have been proposed to rapidly increase scale-up of energy efficiency and renewable generation (including cap-and-trade legislation, a national renewable electricity standard, deployment incentives and innovation funding).  Successful passage of these policies will significantly boost investment in and demand for these technologies.  But to ensure this increased demand isn’t met by other countries operating in the now well-established global cleantech manufacturing industry (such as China, Germany, Japan or South Korea), complementary and manufacturing-specific measures will be needed to support domestic manufacturing and drive American green jobs.  To ensure we get at the root of our manufacturing challenges, design of these additional policies must be both holistic – focusing on both short and long-term needs in innovation, infrastructure, technology deployment and worker-retraining – and wide-ranging, in order to overcome decades of reduced investment and industry neglect. 

Legislation already exists or can be enhanced to address many of these issues and allow us to join our competitors in developing a targeted clean-energy manufacturing strategy.  Among the many options under consideration are: extension and expansion of existing manufacturing tax credits, with an option to convert those credits to cash grants for SMEs; loan guarantee programs and other credit mechanisms for manufacturing facility conversion/expansion; expansion of the Hollings Manufacturing Extension Partnership program; regional and local investment in manufacturing and the development of Clean Energy Economic Zones; and investments in job training and education, and infrastructure build-out (e.g., clean energy economic zones).

A strong domestic clean energy manufacturing sector is vital to the U.S. economy, American workers and the environment.  We must work together to continue pushing for comprehensive energy and climate legislation in the U.S that ensures our manufacturing sector’s strength.