The Clean Energy Race
Posted August 24, 2010 at 1:26 pm 
Filed in: By now, we all know that Congress went to the August recess without passing any significant energy and climate legislation. Interestingly, in the past years other nations have been working on long-term, well defined, national targets for clean energy deployment, implementing technology-specific incentives that reduce regulatory risks for investors. For example, China, which does not have prices or caps on carbon, surpassed the United States as the largest recipient of private and public clean energy investments. According to a Deutsche Bank report, nations like Japan, Germany and China are considered “low-risk” nations for clean energy investments because they offer “a comprehensive and integrated government plan supported by strong incentives.” This, of course, is not quite the case in the United States, which was ranked in a as a “moderate-risk” nation for private investment in clean energy.
In 2009, the Breakthrough Institute published a study documenting that the United States already lagged China, Japan, and South Korea in the production of all clean energy technologies and that, over the 2009-2013 period, the governments of these nations will out-invest us three to one. This large public investment gap will allow the Asian nations to attract a major share of private sector investments in clean energy technology, solidifying their competitive advantages over us. The report also claims that if such investment breach persists, we will end up importing the majority of clean energy technologies we use.
The use of renewable energy sources is also a key element of energy policy in Europe. As early as November 1997, the European Union (EU) Commission published the Community Strategy and Action Plan for renewable energy. Later, in March 2007, they also set a binding target which requires that 20 percent of their energy needs be sourced from renewables by 2020. To meet this objective, an EU Directive set individual targets for each Member State, while compelling all EU states to present their National Renewable Energy Action Plans by June 2010.
So far the EU strategy seems quite effective, as renewable energy accounts today for 18.4 percent of primary energy production and it is their second larger energy source (the first one is natural gas, with 19.3 percent). In fact, the EU statistics agency reports that, from 2008 to 2009 alone, the use of renewables increased 8.3 percent, while the production of energy from coal showed a decrease (9.2 percent).
Perhaps the most admirable case of Europe’s advance in the area is Portugal, where aggressive government planning and lots of private investments increase the renewable share of electricity production from 17 percent to 45 – in just five years. This comes mostly from hydro and wind resources, and they are currently developing other sources such as wave energy.
In the United States, some clean energy and climate advocates proposed a national renewable electricity standard (RES), requiring utility companies to produce a set amount of electricity from renewable sources. Such a measure could actually get the 60 votes in the Senate this fall, as many consider a moderate proposal like this to “…be an important step towards a cleaner energy future, but without the job-killing provisions that come with cap and tax” (Republican Senator Sam Brownback, Kansas).
Renewable clean and cost-effective energy must become a more critical part of our energy mix if we want to compete against the “Clean Asian Tigers” and Europe. Continued technological development, targeted investment and an effective regulatory environment will be vital for this development. We do not need a cap and trade, but rather a wide-ranging clean economy strategy.
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