If the United States doesn't take drastic measures to engineer new clean energy policies and investment initiatives, it will continue to take a back seat to China and Europe, which are driving the clean energy market toward a profitable future.
Both clean energy companies and a skilled workforce are heading overseas, where government policies are creating a more welcoming and promising market for clean energy products.
Take Massachusetts-based Evergreen Solar, Inc (Nasdaq: ESLR). In 2008, it used $58 million in government aid to open a new Massachusetts factory to build silicon wafers and cells and assemble solar panels. But in November 2009, it announced the assembly of solar panels would be moved to Wuhan, China, where solar panel manufacturing will cost far less than in the United States.
Evergreen earlier this month said it would expand its European sales division to cater to the robust government incentive programs in Europe, which are encouraging businesses to adopt more renewable energy practices.
NatCore Technology Inc. in New Jersey discovered how to make solar panels thinner, making them more cost efficient to manufacture. No American companies showed interest in the technology, so it reached a deal to finish developing and producing the technology in Changsha, China.
"The United States' competitive position is at risk in the emerging clean energy economy," Phyllis Cuttino, director of the Pew Environment Group's Global Warming Campaign, said in a statement. "Even in the midst of a global recession, the clean energy market has experienced impressive growth. Countries are jockeying for leadership. They know that investing in clean energy can renew manufacturing bases, and create export opportunities, jobs and businesses."
Overall 2009 global renewable energy investment came in at $162 billion. Investment only fell 6.6% from 2008 - small potatoes compared to the 19% decrease in the oil and gas industry.
Investment next year should reverse and make a huge leap forward. Global renewable energy investment expectations for 2010 are $200 billion, up 25% from last year, according to Bloomberg New Energy Finance.
It's not a passionate movement to save the earth that's behind the clean energy market; it's market competition and job creation driving the clean energy race - and the United States is losing.
Prices of renewable technologies are decreasing, making them more competitive. If climate concern isn't enough motivation to encourage use, economic and employment benefits will.
The city of Baoding, China is a perfect example. The city's pristine water quality made film production one of its top industries. But when digital cameras put an end to that era, the city needed new industries to thrive. Baoding saw an opportunity in clean energy, and now it is one of the world's largest manufacturers of solar products.
China is also enlisted Arizona-based solar panel manufacturer First Solar, Inc (Nasdaq: FSLR) to build the world's largest solar plant in the Gobi Desert.
Onshore wind energy is China's other clean energy focus: It's wind capacity doubled in each of the past four years.
China catches flack for the amount of greenhouse gases its plants release, but it has steps in place to reduce emissions while creating jobs and enjoying corporate growth.
"We may spend the next few years pushing China to do more, but will then spend all the years after that chasing them as they hurtle profitably down the road to the low-carbon transformation," said Todd Stern, the U.S. Special Envoy for Climate Change.
The Money Follows the Market
In 2009, China overtook the United States in renewable energy investments for the first time ever. China pushed $34.6 billion into renewable energy projects - mostly wind farms - while the United States only spent $18.6 billion.
Wind energy and solar power are the most popular renewables, nabbing billions of investment dollars.
Wind energy constitutes over 50% of global clean energy investment. Bloomberg New Energy Finance is expecting a 9% increase in global installations of wind turbines this year - the equivalent of 34 new nuclear power stations - with a price tag of $65 billion. That's partly because turbine prices have declined 15% over the past two years.
Still, solar energy has a smaller piece of the market than wind, and prices have sharply declined in recent years, positioning solar power for significant growth.
Compared to other Group of 20 (G20) nations, the United States falls short in the rankings, with 0.13% of its gross domestic product (GDP) invested in clean energy products, ranking it 11th against its G20 counterparts.
Spain invested five times more as a percentage of GDP in renewable energy projects than the United States; The United Kingdom, China and Brazil invested three times as much.
So why's the money moving so swiftly in China and Europe?
Foreign governments are implementing policies to encourage clean energy market growth by punishing carbon emissions and subsidizing renewable energy usage. Instead of talking about change - like the United States - they are already changing, shifting their businesses to acknowledge a more environmentally friendly market.
And the cash is pouring in.
Companies are recognizing the need to move to where the consumer base is developing for the clean energy market - and that is not the United States.
"If you want to have the same size of company that you have today, then you need to start the shift," said Katrina Landis, chief executive of the London-based BP Plc.'s (NYSE: BP) alternative energy unit. "It means to some degree giving up what you've done for the last 100 years."
General Electric Company (NYSE: GE) last week said it would invest $453 million in wind-turbine operations in the U.K, Norway, Germany and Sweden.
"What you see going on in Europe is long-term, predictable policy around renewables," Steve Bolze, head of GE's power and water divisions, told Bloomberg.
The European Union (EU) aims to drive 20% of its produced energy from renewable resources by 2020, and has the initiatives in place to meet that goal.
The European Wind Energy Association said Europe's offshore wind industry could grow by 70% in 2010. Once completed, those projects could account for up to 10% of the EU's yearly electricity output, while decreasing carbon emissions by 200 million tons.
The U.K. government is establishing a $3 billion Green Investment Bank for promoting low-carbon energy technologies. Funds will go to developing ports that support offshore wind turbine makers.
Another clean energy winner, Germany, offers a per-kilowatt subsidy for solar panel use. As soon as solar panels are put online, the panel users start earning money. The government pays per-kilowatt subsidies for 20 years - instead of a one-time payment like the United States. The more energy produced by the solar panels, the more money earned by the users.
Other countries have adopted feed-in tariffs, carbon-reduction targets, financial incentives for investment and energy production, and energy efficiency goals.
Meanwhile, the United States has talked a lot about needed changes, but has yet to move much through Congress.
"Our nation has a critical choice to make: pass the federal policies necessary to position us as the world leader in the large and growing global clean energy market or continue to watch as China and other countries race ahead," said Pew Environment Group's Cuttino.
Too Much Talk, Not Enough Action
While most of the country has had its eyes on healthcare reform, Senators John Kerry, D-MA, Joe Lieberman, R-SC, and Lindsey Graham, I-CT, have been outlining a climate and energy proposal.
Until now, Washington's way of handling climate change policies was to enforce cap-and-trade laws. "Cap" places limits via permits on the amount of greenhouse gas emissions allowed by companies; "trade" gives the companies a market to exchange their permits.
The cap-and-trade legislation has stalled in Congress, and is of little interest to companies because it doesn't do enough to encourage growth. The House's Waxman-Markey bill focused on cap-and-trade policies, but they will be a small part of a proposal by the Senate.
A new energy bill has to do more than punish carbon emissions if it's going to get support; it has to create jobs. After surviving the recession and facing stagnant job growth, people want to see the country move forward and enact policies that promote employment.
The private sector will be hesitant to increase clean energy investment, until a bill creating a job market is proposed,. The government's next steps will be key in creating a U.S. market impressive enough to compete with China and Europe.
"What the U.S. needs, which Europe, China and other countries have, is a stable, long-term policy," said GE's Bolze. "Our view is that you need a federal, renewable portfolio standard, or have that as part of a clean energy bill, to really restart and move forward."
Some of the proposals being talked about in Washington include a monthly auction for carbon share bidding, and business-friendly practices to encourage fewer foreign oils and fossil fuels.
President Barack Obama's goal is to make the United States the world's leading renewable energy exporter - but right now its businesses and employees are what's leaving the country.
"We're very good at creating companies," John Woolard, chief executive at solar power firm BrightSource Energy, said on a conference call. "We're not doing a very good job creating markets."
Get Out in Front in the Clean Energy Race
Companies with stakes in the promising clean energy lands of China and Europe, and companies that come out with innovative designs are in the best position to collect clean energy profits.
First Solar is a huge player in the solar industry and has a patented thin-film technology sought after by many companies globally. Its patented designs will be used in its largest free-field solar power plant being constructed in Spain.
Vestas Wind Systems, a Denmark-based wind-turbine maker that trades on the Copenhagen Stock Exchange, is the world's biggest turbine manufacture and is poised to profit handsomely from Europe's growing investment in onshore and offshore wind energy projects.
And for a more balanced play on clean energy, the Market Vectors Global Alternative Energy ETF (NYSE: GEX) includes 30 companies worldwide invested in alternative energies and related technologies.
Investments like these will will reap the rewards as the industry gets more government and private sector investment.
News and Related Story Links:
- The New York Times:
A Race to Win the Clean-Tech Market, or an Opportunity to Cooperate?
- Money Morning:
The Real Story Behind Solar Energy in 2010
- Money Morning:
Wind Power: Pickens Lobbies, While China Acts
- Money Morning:
Is the Dark Cloud Over Solar Energy Beginning to Break?
- Money Morning:
Solar Energy's Future Shines Brightest in China
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(1)There is a serious problem with wind and sunshine for energy systems. Wind is needed and daytime is needed. Al such energy systems need baseload power for when they are not working. This means that a double investment is required. Renewable efficiences are still far short of coal power. This means that far more investment is needed than would be if coal power was used alone. Therefore the countries investing heavily in renewables are wasting their money. Denmark gets its baseload electricity from nuclear France and Sweden.
(2) It is a fact of the nature of warming caused by CO2 that for every incremental unit of CO2 there is a diminshing warming effect. That means that a doubling of CO2 from current levels will produce a very small warming. This is acknowledged in the IPCC report. This does not support the idea of runaway global warming.
Just an observation on an otherwise great article. Joe Lieberman is an independent from CT not a Republican from SC. You have Graham and Liebermans politics switched.
Wind, Solar Photovoltaic, Solar Thermal(Roof) Solar Thermal(Power Station/Mirrors/Towers/Trough System), Geo-thermal(Heating and Cooling along with Electricity Production) Ocean Energy(Wave, Current, Tide) Hydrogen Fuel Cells(Electricity for Transportation and or Residential/Commercial Uses) Hydrogen Fuel(Transportation, Electicity),
Specialized Batteries for Storage, Green Roofs, Green Buildings(High Standard of Construction, Windows, Doors, Roofs, Walls, Interior Construction, low energy/Sturdy Appliances and Equipment are some of the Ways to Institute a Zero Carbon, Sustainable Future. Mass Transit, High Speed Rails, Bike/Walking Paths, Intelligent Grids, People Friendly Towns/Cities, Clean Factories with energy Efficient Technology/Uses of Renewables, Educated and Healthy People are ways to help the World become a more prosperous, Fair, Healthy and Sustainable World.
The Fossil Fuel Economy is costing the USA well over 3.5 trillion dollars a year in Health Problems, Resource Wars (Pentigon, Iraq, Afganistan, War on Terror, Military bases to protect Oil Routes, NSA, CIA, Homeland Security, Veterans Administration, Prison/Industrial Complex, military/industrial Complex, Trade Deficits, Loss of Jobs, Loss of Competitiveness to other Countries, Low life expectancy-50th and falling, low Healthy Citizens-72nd and falling, World's largest Debtor Nation 100 trillion and the debt is Growin Rapidly including Trade Debts, Government, Consumer, Corporate, State, Pensions, Medicare, Medicaid, Government Pensions, Military Pensions, etc.
Germany is a Huge Creditor Nation and the EU even with weaker members still have a Currenct account Suplus in 2009. Much Higher Life Expectancy/Healthy living, Powerful export economies, Sustainable Building, Energy Production, Energy conservation, etc,etc,etc.
When Germany for example has a trade surplus of 5.5% of GDP, Corporation and Citizens with little debt and yes they have a 3.5% Government Deficit which was 0% before the 2008 Crisis you add the numbers up and Germany actually has a Positive Creditor Status(Japan and Germany are the largest Creditors) while the USA is 15% a year in Deficit versus GDP.
The US Position is very, very dire and very Weak. The powers that be (Wall Street, Bankers) are doing everything in their power to keep this information away from the Public because the US system is failing and rapidly. They are trying to cover their asses and assets while America goes down in flames selling us out, using the citizens as they see fit and making the country into a Dicitatorship and it' not about Democrates versus Republicans but it's about a few Nasty, Filthy, Disgusting, Wealthy, Neo-Nazis Plantation Owners who think the World is for their Use and Abuse and people nothing more then Cattle to be Slaughtered or Slaves to be used.
Power Freks would be a Good Term, it's not just about the money/wealth they must have control over everything and they do not realize their control is only in their Minds and they will never control everything! Like all brutal Dictators they usually sow the seeds of their own destruction but hopefully in the process they don't destroy us all!
Go to European and Asian Trade Shows on Renewable/Sustainable living and see for yourself what is going on, Technologies and Ideas have advanced way beyond what the Media here is telling you all. I've been to Europe, Lived in Europe, have attended Trade Shows and visited Companies, sites, etc to see for myself what is possible and happening actually. If you take you Vacation money and skip Disney World for those of you who are lucking to have Vacation and Money to attend the Conferences, Go to Europe or Japan on Vacation and Check things out and how they live/Do things. It can be very fun actually and Enlightening on yourself and the World.
You will come back with a Different Prospective on many things and your eyes will be open along with your Minds.
Freedom, Wisdom, Power is something they do not want in the Common People's Hands in this country and some others so you must find your own light, seek your own path to discover the truth of things. God would agree that everyone should keep their eyes open and their Minds intuned to the Truth and Wisdom. Not enslaved, Dumbed down sheeple.
These are not profitable industries – wind and solar. They all require large government subsidies –meaning that these companies are profiting off me and you as the taxpayer. They create jobs at the expense of the national debt. Passage of cap and trade would greatly increase the cost of energy — Valero estimates an additional $0.75 per gallon in taxes. Cap and trade greatly benefits imported gasoline as the overseas refiners will have a carbon tax on the gasoline, but not on the production of the gasoline — a domestic refiner will face both taxes. This will shut down more refineries and increase are trade imbalance even further. With gasoline at $5+ per gallon maybe we won't be driving as much, as our unemployment would stay in double digits.
To expand on Peter's comment — When the wind stops blowing there had better be a Natural Gas plant nearby that can quickly come on line if you do not want a brown out. Same thing with solar — what happens at night (planned loss of power) or when it becomes cloudy (unplanned loss of power).
It is amazing to me that natural gas is never mentioned by this president. It is clean, local and abundant enough to act as a bridge fuel until the other renewable alternatives, mass transportation and nuclear power plants which are constantly mentioned are built and ready for prime time. Natural gas can power elecric grids, can be used in transportation, etc. I know it is not renewable but let's face it – the alternatives can't be produced in the abundance needed at this time and other alternatives to cars (high speed trains, more mass transit, etc.) needs to be built and will take years. It is time for natural gas while we plan for the future.
As an aside – Joe Lieberman is the I-CT and Lindsey Graham is the R-SC. You may want to change that in your article.
These European nations are desparately pursuing a mirage. As Professor Howard Hayden points out in his book The Solar Fraud it would take a windmill farm one mile deep into the Pacific from LA to San Francisco to replace one coal fired plant. The Solar Fraud presents an honest and competent review of all forms of renewable energy backed by correct math, physics and numbers instead of the nonsense presented here. When the facts are in wind and solar are a farce.
This article reminds me of all the histronics that were spread when Europe decided to build the supersonic aircraft, the Concorde while the US decided the economics did not make sense and passed. We were going to be blown out by the advances of Europe they cried. After years of subsidized unprofitable operations, the Concord was mothballed.
The best thing we could do in the US is to make much more use of our abundant and rapidly growing supplies of natural gas and "blow" by this kind of foolish magical thinking. And in case you haven't heard, man made global warming has been proven to be a fraud as well.
I developed a solar direct steam hybrid technology that integrated with a combined cycle gas turbine doesn't require any subsidies. But there is a lack of interest in the US because as a hybrid the subsidies and incentives are less than constructing a larger more profitable facility with government welfare. However, since subsidies are being cut in Europe, there is considerable interest there.
Every previous coments and the article is considering the big energy industry as people have move on the the last century from a model of producing an consuming its own ernergy to a mass and vulnerable energy production system.
This big energy business will not desappear in one week but the capacity to transform homes from always more energy consumers model to a model of energy producing and delivering bases even if limited in capacity is real.
And that will change the world couple with some important energy complex and an industrial approach less eager in energy as are big firms head quarters.
The move is possible and the results woukd be very potent.
The actual mose is dealing with ernergy industries economical power that cap some of the real possibilities of changes.
Wind Power Investment Blowing Towards Chile
The combination of pro-renewable energy legislation, economic stability and industrial demand are fueling a vibrant wind power sector in Chile.
The focus of this article is not about short term profits which Corporate America is accustomed to. Yes, the initial investment in renewable energy is expensive, but the long-term effects and profits make up the initial costs. It is also true that renewable energy sources like solar and wind are not as reliable, but so are fossil fuels. Peak Oil is just around the corner, and we are already depending on a large portion of our energy on imports. So why would we want to continue with that trend when other countries invest in renewable energy technologies, which are sure to become more efficient in the future. Although prices for fossil fuels seems cheap it does not incur hidden costs such as environmental destruction. Look at the recent oil spill in the Gulf of Mexico. How much will it cost to clean up one of the largest oil spills in U.S. History? And we are not only looking at environmental destruction we are looking at the destruction of industries such as the fishing industry. That means a huge loss of jobs. Those people didn't deserve what happened to them. It wasn't in their control. And this is all at the expense of short term profits by corporations for "cheap" oil, "cheap" coal. There is no doubt that renewable energy is the energy of the future. The U.S. needs to hop on the bandwagon, and to take the control of the renewable energy market. We live on a finite planet, but we use resources like we live on an infinite one.