The United States has fallen behind China as the top destination for clean energy investment, and it will need to take action to remain competitive in the multibillion-dollar sector, according to a report from the Center for American Progress.
Clean energy investment in the U.S. reached $36.7 billion in 2013, more than double what it was in 2004. However, the country has trailed China in four of the last five years and hasn’t topped the global rankings since 2009. Hanging in the balance are a host of benefits including domestic jobs and expanded market share in green technologies, the report noted.
President Barack Obama has sounded the alarm, saying in a speech at Georgetown University last year that countries like China and Germany have gone “all in” on the race for clean energy. He urged policymakers to pave the way for success in the space as more than 100 other countries have established national renewable energy standards.
“I believe Americans build things better than anybody else,” he said. “I want America to win that race, but we can’t win it if we’re not in it.”
The country already has steady footing in the burgeoning clean energy space. Use of wind and solar power in the U.S. has more than doubled over the last five years, according to the report, and the country has made significant gains in its clean energy inventory.
Consider the recent statistics surrounding the domestic growth of solar and wind power.
The U.S. added more than 4.7 gigawatts of solar photovoltaic capacity last year, a 41 percent increase over 2012, according to the report. (One gigawatt can power up to 750,000 homes and is equal to about two coal-fired power plants.) It also expanded cumulative wind capacity by 74 percent over the time period. Both technologies contribute to an electricity-generation mix that is 4.4 percent green, up from 1.9 percent in 2009.
Still, countries such as China and Germany are making gains as well, and America will need to redouble its commitment to clean energy policies in order to compete on the global scale, according to the Center for American Progress.
One of the factors potentially contributing to the America’s slide in the global race for clean energy investment, according to the report, is the winding down of certain energy-efficiency programs under measures such as the American Recovery and Reinvestment Act. The legislation allowed investors to finance green technologies during a time when capital resources were scarce. It provided more than $90 billion in clean energy investments through loans, loan guarantees to capital-intensive projects, tax credits and other incentives, the report notes.
The Center for American Progress recommends four steps that the Obama administration should take to drive investment in the clean energy sector:
- Using forthcoming power plant standards to drive clean energy investment.
- Develop strategies for attracting foreign investment in American clean energy projects.
- Expand use of existing financial instruments such as financial task forces and real estate investment trusts.
- Increase training of energy workers who operate in the space.
These steps will enable the U.S. to compete with nations that have discovered innovative ways to move forward with green energy initiatives, the report notes.
The report presents as an example the case of Germany, where leaders have created a “world-class solar market” by creating a tax structure that incentivizes clean energy production. The country has authorized payments to clean energy generators to offset the difference in cost between renewable energy generation and conventional methods.
China, the global leader in green energy investment, is presented as another example of successful government participation in the sector. The country has amassed $250.3 billion in clean energy investments over the past five years, the report notes. It has drawn $60.3 billion more in investments than the U.S. has since 2009.
All of these factors have contributed to a complex global scenario where there is much to be lost or gained in the clean energy realm, as the report notes.
“On one level, the growth of clean energy markets–whether in China or elsewhere–is a good thing, and we should welcome the fact that countries around the world are ramping up their efforts in the industry,” the report states. “But it also means that the United States must enhance its competitiveness and attractiveness as a place to invest in clean energy or risk losing its share of the growing clean energy market.”