The final sentence in Tom Friedman’s piece from last Sunday’s New York Times has stuck with me this week. Friedman was traveling in Denmark, and he wrote about meeting Ditlev Engel, the president of Vestas, the world’s largest wind turbine manufacturer.
Engel told him: “We’ve had 35 new competitors coming out of China in the last 18 months, and not one out of the U.S.”
That’s right; no American company is chasing down the leader of one of the fastest growing markets of the 21st Century: renewable energy systems.
- Morgan Stanley estimates the global renewable energy sector has a market cap of around $170 billion.
But America isn’t cashing in as much as we could be. Not only are we failing to develop a clean energy infrastructure here at home, we are also missing out on a global market opportunity. China, meanwhile, is not making the same mistake.
Why are we? I think there are two reasons.
1. A Failure of Imagination.
Americans don’t have much experience with seeing clean energy in action. Most of us have seen oil drills; all of us have visited the gas station. But how many of us have seen wind farms, solar panels, and efficiency investments powering a sophisticated economy?
I have seen it. Like Friedman, I have seen it in Denmark. Denmark gets 20 percent of is electricity from wind and is 100 percent independent of foreign energy sources. Renewable energy, public transit, and efficiency investments are the norm there, not a think-tank projection or computer model.
Two summers ago, I saw the wind miracle for myself. I sailed beneath sculptural wind turbines in the Baltic Sea, and I spoke to residents of nearby tourist towns who said the wind farms did not hurt the local economy at all. In Copenhagen, I asked a taxi driver if he thought of the wind farms in the city’s harbor interrupted his view, and he said, “It’s better than pollution.”
2. A Failure of Policy.
Denmark—like Germany, Japan, Norway, and others--has a suite of policies that have nurtured renewable energy for decades. What does America have? We really only have one comprehensive tool for promoting green energy and energy efficiency: the renewable energy production tax credit:
- Congress has to reauthorize it every 1 to 2 years.
- It has been allowed to lapse three different times since 2000.
- It was up for reauthorization this summer, but Congress went out on recess without voting on it.
With a policy atmosphere like this, it is no wonder that Vestas has few American competitors in the wind market.
If you were a private equity firm considering investing $100 million in a turbine manufacturing company, would you take the chance that the tax credits will be there in America or would you take your money some place else? Like China, for instance.