China Walks the Walk, America Talks

(Wind farm off the coast of Shanghai)

It appears that the political rhetoric in the United States about Alternative Energy investment is not matched by it actions. A report from the Pew Charitable Trusts reveals that China overtook the United States in 2009 in investments in wind, solar and other sources of Alternative Energy.

U.S. clean energy investments were $18.6 billion in 2009, roughly half the Chinese total of $34.6 billion. Five years ago, China's investments in clean energy totaled $2.5 billion.

The United States was 11th in clean energy investment as a percentage of GDP, behind Canada and Mexico.

The Pew report pointed to a 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.

As reported in the Los Angeles Times, "It's certainly the case that the countries and areas with higher investment in clean energy will be able to produce more jobs," said Chris Lafakis, an economist at Moody's Economy.com, which is working with Pew in tracking the green economy and jobs. Lafakis said investment was the No. 1 factor in green job growth.

Germany in particular has done an excellent job in leveraging private clean energy investment, in part, by supporting wind and solar power with sustained financial incentives. According to Bloomberg New Energy Finance estimates, German subsidies from 2004 to 2008 amounted to about $74 billion.

However it is in China where the combination of its dominant manufacturing base and comprehensive government policies has promoted clean energy technology. This salient fact has drawn significant American corporate investment in China. (See “Follow the Money Winds", March 18, 2010)

Pew reported that the U.S. still leads the world in clean energy innovation and venture capital funding in the sector. It is important that a national energy policy is created to leverage these strengths, if the United States is to be a world leader in the quest for clean energy.

Richard Wottrich