[Editor’s Note: Today’s column comes to us via a cross post from the Natural Resources Defense Council staff blog. The authors of this post, entitled “China and Germany race ahead of the U.S. in clean energy investments: Alarm bell is ringing” are Jake Schmidt, international climate policy director, and Michael Davidson, NRDC’s China Climate Fellow.]
China invested $54.4 billion on clean energy in 2010, $20 billion more than the U.S., according to the latest report from Pew Charitable Trusts and Bloomberg New Energy Finance released today. This is one-fifth of a global market that is growing at a record 30% pace. The competitive position of the U.S. has “deteriorated” so much that it slipped down to number three in private investment, as small-scale solar installations launched Germany into the number two spot. Pew and Bloomberg New Energy Finance’s take-away: policies matter as China and Germany had strong ones and US policies stagnated.
The report – Who’s Winning the Clean Energy Race? 2010 edition – is the second annual compilation of clean energy investments (which includes renewables and energy efficiency). Last year’s report (pdf) made big waves when it announced that China had taken over the lead from the U.S. Now, the gap has widened and the US is falling even lower down the rankings.
China is world leader in installed renewable energy capacity. While it is no surprise to anybody following this issue closely, this new data makes it official: China has the most installed renewable energy capacity in the world at 103GW, achieving an unbelievable 106% increase over the last five years. Wind grew the most, adding 17GW in 2010; solar saw continued gains with 800MW added; and small hydro added 56GW. Asset financing – the installation of clean energy equipment and major jobs creator – took the lion’s share of its investment ($47.3 billion) in 2010. These put China on a path to meet ambitious 2020 targets in wind (150GW proposed), solar (20GW proposed) and increasing the share of non-fossil fuels in the final energy mix (15%).
China just finished drafting its 12th Five-Year Plan. In it, clean energy and low-carbon technologies are part of a select group of “strategic emerging industries”, lining them up for government incentives to innovate and manufacture. China’s policies include fixed feed-in-tariffs, mandatory purchase requirements for renewables by utilities, and solar incentives for rooftop and building-integrated applications. China now accounts for 50% of all wind turbine and solar module manufacturing shipments globally, and given the robust demand targets over the next decade, much of these will be installed in China.
U.S. still leads in venture capital/private equity – accounting for 73% of G-20 total – showing the U.S. still has an innovation advantage in the sector. But the long-term forecast is ominous according to the report:
Absent adoption of predictable, ambitious, long-term clean energy policies, the United States will have substantial difficulty keeping pace with China and other rapidly growing clean energy economies.
Germany’s household solar installations were larger than the entire U.S. clean energy economy, attracting $34.4 billion in new investments in 2010. These small-scale projects – less than 1MW – were part of a $56.4 billion global market, and contributed toGermany’s world record 8GW of added solar installations. Feed-in-tariffs and mandatory purchase agreements drove this deployment. Some US states are already taking the lead in creating long-term market certainty and competitive pressures for their solar industries to thrive. But in the U.S., enacting these types of incentives may still not be enough: unnecessary permitting processes add from 5-10% to a 5kW solar home system’s cost in the U.S.
Will this be a wake-up call to policymakers in the US? Luckily, many in the U.S. understand the benefits of innovating and manufacturing the clean energy technologies of the future. But proposed cuts to the federal budget, efforts to block EPA from enforcing Clean Air Act safeguards against carbon pollution, and cuts to US investments in clean energy deployment programs in developing countries show that many in Congress don’t get it. Will the US have to be in last place in new clean energy investments before Congress changes direction? I sure hope not.
It’s high-time the US gets into the clean energy race in a serious manner. This will create jobs and re-invent our innovative potential. And reduce the carbon pollution causing global warming.