New Report Reveals Asian Nations to Dominate Clean Energy Race.
By Brigid Darragh | Friday, November 27th, 2009
The Breakthrough Institute and the Information Technology and Innovation Foundation released a new report that details energy competitiveness and government investments in four nations: China, Japan, South Korea, and the United States.

The report, entitled “Rising Tigers, Sleeping Giant,” examines how each of the four nations is positioned in core clean energy technologies: wind, solar, nuclear, carbon capture and storage, electric-hybrid vehicles, batteries, and high-speed rail. It also takes into account each government’s plans to strengthen their position in the increasingly competitive global cleantech sector.

This report is the first to comprehensively benchmark clean energy technology in these countries and compare them to one another. According to its findings, the Asian nations have already surpassed the United States in the production of nearly all clean technologies, and their governments will out-invest the States three-to-one over the next five years.

In terms of investment strategy, Asia shadows the United States literally by billions of dollars. The governments of China, Japan, and South Korea will invest $519 billion in cleantech between 2009 and 2013, compared to $172 billion by the U.S. government. China alone will spend $440 billion to $660 billion over the next ten years on cleantech.

Climate and energy legislation, which passed the House in June, would contribute $28.7 billion of the $172 billion five year total.

The Breakthrough Institute and the Information Technology and Innovation Foundation (both American policy institutes) explained the nature of the United States approach to clean energy technology strategy as “sporadic and regulatory,” versus the “direct, immediate, and coordinated nature of Asian government investments.”

And more than investment dollars, the three Asian nations profiled in the report seem to offer a better business and investment climate for the cleantech sector than Uncle Sam — both for private and public investors.

The United States captured $52 billion in private capital for renewables between 2000 and 2008, while China fetched $41 billion. But just last year, China secured more private capital dollars in renewables and energy efficiency investments than the U.S. This was the first time the Red Dragon surpassed the U.S. in private capital for this sector… but it certainly won’t be the last…

In fact, Deutsche Bank summed up why investors see Asia as a friendlier climate in which to invest dollars for green technology by pointing out the following: The incentives offered by China and Japan create a low-risk environment for investors, stimulating high levels of private investment in clean energy because those nations rely on a “comprehensive and integrated government plan, supported by strong incentives.” In contrast, Deutsche Bank says, the United States is a “moderate-risk” country. America relies on “a more volatile market incentive approach and has suffered from a start-stop approach in some areas.”

The report elaborates, “While some U.S. firms will benefit from the establishment of joint ventures overseas, the jobs, tax revenues, and other benefits of clean tech growth will overwhelmingly accrue to Asian nations.”

And the report goes on to warn that the investment gap’s persistence could eventually lead to the U.S. importing the overwhelming majority of clean energy technologies it deploys.

China already sits atop the solar throne, home to one-third of global solar manufacturing capacity. Just two years ago, Japan ranked first in solar photovoltaic cell manufacturing, but has since been shadowed by China.

China’s wind capacity has gone from zero to 70 turbine manufactures in just five years’ time, and Chinese battery and automobile companies are surging in the world of electric and hybrids as we speak.

By 2012, China, Japan, and South Korea are expected to produce 1.6 million hybrid gas-electric or electric vehicles per year, compared to North America’s projected production of less than 300,000.

South Korea also boasts fast-growing solar and wind manufacturing sectors.

So where does this leave the “Sleeping Giant?”

Obviously, the report comes at a time where tensions and anxiety over the rising unemployment rate and about the way stimulus dollars are being spent are running high. The U.S. already faces a growing debt to China and even our efficiency regulations and climate pollution regulations will not be enough to close the increasing investment gap with our Eastern counterparts.

The report outlines the need for new transmission lines in solar and wind, smart grid infrastructure, and corporate responsibility for carbon emissions, if the U.S. plans to tread water in the global clean technology competition. According to the report:

Small, indirect and uncoordinated incentives are not sufficient to outcompete Asia’s clean tech tigers…to regain economic leadership in the global clean energy industry, U.S. energy policy must include large, direct, and coordinated investments in clean technology R&D, manufacturing, deployment, and infrastructure.

The full report can be downloaded here.

The Stanford Review sees the report as illustrating “the accelerating shift of global power from American to Asia, caused in large part by the serious mismanagement of U.S. economic policy…this shift in power is not a zero-sum game, nor should it be: the U.S. and Asia should avoid trade wars at all costs, and we should seize opportunities for partnership on a range of issues, from climate change to nuclear proliferation.”

I think this is an attitude we must adopt in order to combine realism and optimism and revamp our efforts in an all-too-easy-to-be-down-about-things climate. Rather than look at this report as a doom-and-gloom example of figures and facts that show our country — a leader in technology and economic strategy since its inception — as being outpaced by nations that some deem our biggest threats… why not see it as motivation by competition, with the ultimate goal being partnership?

We are not too far gone. We have the ability, the brain power, resources, and track record to surge ahead in the competition for global clean energy technology and policy.

I think we need to refocus our lenses in terms of what we are trying to achieve. The United States and the countries of Asia and Europe, for that matter, are of course interested in leading the others in prowess — in economy, technology, and environmental policy.

But those are not necessarily mutually exclusive entities, nor do they have to be. Seizing ‘opportunities for partnership on a range of issues’ and resources and technology, as well, will be the best way to ensure environmental and economic stability, world-wide.

A [global] chain is only as strong as its weakest link, after all.

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Editor’s Note: Our country’s current administration is aware of the preparation needed in the present to dominate the fields of energy science and engineering in the soon-coming Energy Generation, in which jobs, education, and social sectors will be defined by energy use, innovation, technology, and efficiency.

This program and others like it will be critical for reclaiming American leadership in clean energy technology. Congress denied funding for RE-ENERGYSE for 2010, but the Obama Administration is steadfast in its efforts for this flagship program, and is hoping to drum up more support, especially among college students nationwide, for the program’s passing by Congress in 2011.