Should the Feds Prod Clean Energy Investment
The United States is quickly losing its international posture with respect to investments in clean energy. That’s the finding of the Pew Center, which says that China and Germany have surpassed this country when it comes to pursuing such things as wind and solar energy.
While the tenor of the study draws the forlorn conclusion that such a ranking is the result of failed government actions, others are noting that a laissez faire policy creates stronger economies. Regardless of one’s philosophical position, Pew’s report says that globally in 2010 clean energy investments rose by 30 percent to $243 billion because of a vastly improved economy.
“The United States’ position as a leading destination for clean energy investment is declining because its policy framework is weak and uncertain,” says Phyllis Cuttino, director of Pew’s Clean Energy Program. “We are at risk of losing even more financing to countries like China, Germany and India, which have adopted strong policies such as renewable energy standards, carbon reduction targets and/or incentives for investment and production.”
Of the $243 billion invested in clean energy, the United States received $34 billion. That’s still a 51 percent jump from 2009. But it is well behind China, which drew a record $54.4 billion, and Germany that attracted $41 billion. More than 90 percent of the money went to the G20, or the world’s most advanced economies.
This country remains the global leader in clean energy innovation. It received 55 percent of all venture capital monies invested in clean energy, says Pew. That equates to $6 billion in 2010. But, Bloomberg New Energy Finance, which was hired to do the research for Pew, adds that the United States has not been creating the demand for deployment of those technologies -- a market that could be fostered by more progressive national policies.
Sharp differences between the two political parties, however, will preclude the kinds of policies that Pew would like: The implementation of carbon caps and national renewable portfolio standards, both of which would encourage investment in clean tech and green fuels. What now?
Modest Involvement Ahead
President Obama has put forth his clean energy standard that would require 80 percent of all such energy forms to come not just from wind and solar but also from nuclear, natural gas and “clean coal.” The proposal is getting hit from both sides: The Republican-controlled House is balking at the establishment of high fixed percentages while the Democratically-controlled Senate is looking askance at the increased use of nuclear power at this point in time.
Coal, meanwhile, is under scrutiny from national regulators. Next year, the U.S. Environmental Protection Agency says that it will implement its Clean Air Transport Rule. After that, it is expected to enforce the Maximum Achievable Control Technology standards that relate to mercury. Meanwhile, regulations involving disposal of coal ash are also in the queue.
Given the political and economic dynamics at play, an average onlooker might conclude that natural gas will be the bridge fuel going forward. If the market creates those circumstances then that’s okay, says Ken Green, resident scholar at the American Enterprise Institute. The artificial creation of demand for any product or service is just not practical over time, he adds.
He finds it odd that China is receiving such adoration for its clean energy pursuits, pointing out that it is erecting a coal plant every week. He says that it is just trying win kudos from the around world while attracting new investment in the process. Germany, like other European countries, is now regretting some of its investments in green energies because of their unsustainable high costs, Green adds.
Pew’s research “requires one to think green energy will provide a huge source for power generation in the future and that this energy will be less expensive than alternative sources,” Green says. “I don’t think that will be the case.”
Needless-to-say, the countries vying for international recognition that include not just China and Germany but also Italy, India and Brazil are creating national policies and economic incentives to drive more investment in this area. Like it or not, even governments that think of themselves as smaller and less invasive, have a tradition of partnering with promising private interests.
That’s how some technologies get out of the cradle and onto the playground. While some want a more activist U.S. governmental role here, their wishes will assuredly be tamped down by those who prefer a more modest and gradual approach.
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