Clean Energy Jobs: the Real China Syndrome

It must have come as a surprise to a lot of people who read earlier this week about the new Pew Charitable Trusts study showing that China “invested $34.6 billion in a clean energy economy, nearly twice the United States’ total of $18.6 billion.”

At first, I'm sure people were puzzled when they scanned the appropriately harsh headlines, such as this one at CNN Money:  China trouncing US in clean energy investing.

Why is China running ahead in the clean energy race? It turns out that a critical factor is that China is sending the right signals to investors who are looking to profit from in the clean energy sector.  As the Los Angeles Times explains:

Although part of the U.S. investment decline last year can be attributed to the deep recession, the Pew report pointed to another factor constraining U.S. competitiveness: a lack of national mandates for renewable energy production or a surcharge on greenhouse gas emissions that would make fossil fuels more expensive.

The report warned that the current U.S. approach, in which states make varied efforts and the federal government's efforts have been sporadic, has produced a "comparatively weak clean energy economy" -- and that the nation risks losing out on economic growth and job creation.

So, just how good are the signals that China is sending on clean energy investing?   As the Los Angeles Times article goes on to state:

Nowhere is the competition as strong as in China, with its globally dominant manufacturing base and wide-ranging government policies promoting clean energy technology.

That reality has drawn significant American corporate investment in China. Applied Materials Inc., the Silicon Valley equipment maker for industries including semiconductor firms, last fall opened a huge solar research and development center in the western Chinese city of Xian. Mark Pinto, the company's chief technology officer who recently relocated to Beijing, said China's fast-growing solar energy market was the main draw.

China's advantages include hard-to-beat government incentives such as low-interest loans and subsidized land, but also a clear policy and strong demand from state-owned utilities that control energy capacity.

"We haven't seen this in high-tech manufacturing before," Pinto said in a recent interview.

Another home-grown company that is looking to take advantage of China's growing manufacturing capabilities in clean energy is Evergreen Solar Inc., a publicly traded company in Marlboro, Mass., that is shifting its final assembly of solar panels from its factory in Devens, Mass., to Wuhan in central China.

"We're going to China as quickly as we can," Rick Feldt, Evergreen's chief executive, told analysts last month. (emphasis added)

You didn’t need to read the Pew study to know that the U.S. is getting its clean-energy lunch eaten by China and other nations.  A few weeks ago, I listened to a phone-based news conference sponsored by American Businesses for Clean Energy (ABCE), a robust group that has grown to more than 2,500 members in less than half a year.   

One of the ABCE news event speakers was Kevin Parker, the global head of asset management for Deutsche Bank Asset Management, now one of the world’s largest climate-related investors.  In his remarks, Parker noted: 

US business knows that legislation on climate change must come sooner or later; it is inevitable because government will have to take action to both minimize further climate change and protect our economic interests.

Organizations like American Businesses for Clean Energy show the growing groundswell of support for legislation from big medium sized and small businesses across America. But, as long government is gridlocked on the issue, businesses cannot plan appropriately for the future. Until businesses know exactly what the new rules of the game will be they cannot make rational decisions about expansion and development.

At the same time, investors are not putting their money to work [because] it’s impossible to quantify regulatory risk. The uncertainty is choking investment in the US clean power industry …

As long as legislative uncertainty prevails, a large part of the US economy is reaching its own form of gridlock. A carbon price is the single most important element in the solution to this problem. By making clear what the cost of pollution from fossil fuels is, a system for pricing carbon and a cap will ensure that everyone in the vast US energy industry and beyond will know what rules they must play by going forward. The removal of uncertainty will enable businesses to begin building of the future again.

It will mean more jobs, more investment, more prosperity, right across our economy. Putting a price on carbon will of course also level the economic playing field between fossil fuel and clean energy as investment floods into the clean energy sector as a result of the price on the externality, new industries will certainly grow, creating tens of thousands of jobs, new technologies and new wealth.

We know this will happen because it’s already happening in places like Germany and China. Germany, the country that has the most sophisticated clean energy legislation today. It is happening in China as well, and growing amongst other nations that have the courage to pass key legislation. Both Germany and China are now far ahead of the US in the number of jobs created, and in the amount of investment in clean energy industries.  (emphasis added)

You don’t have to be Thomas Friedman to figure out what Parker is saying to the United States.  We have to either put a clear limit on carbon … or just accept that the clean-energy revolution will largely pass us by. 

What about all of those stimulus funds?  Didn’t they get the job done in terms of jump-starting the clean energy economy?   As NRDC President Frances Beinecke pointed out last month long before the current flap over foreign wind jobs blew into town: 

U.S. wind, solar, and geothermal resources actually grew during the recession of 2009, due in part to the federal stimulus package, which set aside $37 billion for clean energy and has already created roughly 18,000 clean energy jobs in the solar industry alone--even though most of the stimulus money has yet to hit the economy.

The stimulus was an incredible first step for the United States, but as China knows, the key to realizing the full potential is making a long-term commitment to clean energy--the kind of commitment that pays off in steady investment, jobs, and production.  

America can build on the momentum of the stimulus--and keep pace with China--by passing clean energy and climate legislation. Economists have determined that it will create nearly 2 million jobs here in the United States.

If two million new American jobs sound good to you, it’s time to speak up about the need for action.  

As my colleague Jake Schmidt put it earlier this week,

Time for the US to get seriously in the race for the clean energy economy and jobs of this century by passing a comprehensive clean energy and climate bill.  We don’t have time to wait as the race is on (and while the US was fast out of the starting blocks it is lagging in the mid-course).

So, tell Congress to put a firm limit on global warming pollution now … before China gets all the benefits that we are now so dangerously slow to claim for our own.

You can do so by signing the Earth Day Revolution declaration, a campaign NRDC and other groups are collaborating on to make sure Congress gets the message.