New Report Warns US Risks Losing Ground in Clean Energy
Third Way’s recent report, Fire Sale: The End of American Ownership of Clean Energy, predicts that by 2014, federal clean tech investment will drop by 75%, from $44.3 billion in 2009 to just $11.0 billion. So what happens if the federal government really does decide to stop supporting the U.S. clean energy sector? Well, one thing can be certain; clean energy won’t die but it will move to foreign markets.
Just because U.S. clean energy investment growth has fallen short within the past five years, doesn’t mean that the market is vanishing. “The United Kingdom has established a £15 billion Green Bank. The China Development Bank has made available $32 billion in low-interest credit facilities to Chinese solar and wind companies. Saudi Arabia wants to raise $109 billion for its solar industry.” Countries like Germany and the U.K. are already coming close to doubling their clean energy use just since 2011.
While other governments are building massive programs to fund clean energy, Congress claims that it can no longer fund these sorts of initiatives, stressing that if a clean energy industry fails it’s because it’s not a competitive market player. Ironically, government funding has been used to make many other American industries “competitive players.”
Between 1994 and 2009 the government provided approximately $447 billion (adjusted for inflation) in cumulative energy subsides to the oil and gas industry. Compare that to the less than $6 billion federally invested in the clean energy sector from 1994-2009.
Although Congress might not see a future for America’s clean energy sector, it appears that foreign investors see plenty of prospects. As other nations continue to see robust government support and growth within their own clean energy markets, they are beginning to look for new opportunities to leverage and expand the success. Chinese investment in American clean energy has grown by 130% in 2011 alone!
According to Third Way, “foreign investors look at the U.S. market as a long term investment. They are strategic, rather than financial, investors and see long-term opportunity even if, in the short-term, there are challenges. They like the abundant natural resources in the U.S., our business and legal climate, the licensing opportunities that come with investment, and the diversification that comes from investing in stable markets outside of their home countries.”
Private domestic companies do not have the capital to continue to fund new clean energy projects on their own, so as federal support starts to pull away they are forced to turn to foreign investors.
With the global clean energy market expected to reach up 2.3 trillion by 2020, the U.S. must decide whether it will become the leader of this emerging 21st century market. If Congress let other countries take the lead “lack of federal investment will cost U.S. businesses in terms of lost revenues and lost intellectual property, and cost the nation in terms of growth and economic leadership.”
Thanks to Katie Fletcher for research and writing