The clean energy industry has become the fastest growing industry in the world. According to a recent report by the Pew Charitable Trust, renewable energy and other forms of sustainable energy have seen a 230% growth worldwide since 2005. In 2009 alone, the worst economic year since the end of the Great Depression, new Clean energy investments totaled $162 billion. According to the Pew report, “The clean energy economy is emerging as one of the great global economic and environmental opportunities of the 21st century.”
Clean and sustainable energy is important not only for the health of the planet and the people who live here, but also because it is a great generator of well-paid jobs. In the last 10 years, job growth in the clean energy industry was higher than in any other industry. Today, more than 770,000 Americans are employed in the clean energy industry, including as scientists, engineers, electricians, machinists, technicians, and in other high-paying jobs.
China is beginning to take the lead in this race to build a clean energy economy. In 2009 it invested $35 billion in clean energy technologies, compared to $19 billion by the US It has created 1.2 million renewable and sustainable energy jobs. And it is beginning to export its clean energy technologies to the rest of the world, including the United States.
For example, a wind farm project in Texas caused some controversy recently because it would be funded in part by US government stimulus funds designed to create American jobs. But the same number of jobs would be kept in China, where the wind turbines would be made. And California plans to build a high-speed electric train system using Chinese technology, equipment and engineers. GE will license technology from China for the project. While GE is the world leader in vintage diesel locomotives, it doesn’t have the necessary experience with clean electric locomotives needed for high-speed bullet trains traveling at 215 miles per hour.
Does this mean that China is winning the race to build a 21st century green economy? Can America catch up?
China is definitely making a move. Installed renewable generation capacity in China has grown by 79% in the past five years to 52.5 gigawatts (GW). That compares with 52.4 GW of installed renewable generation capacity in the US and a growth rate of just 24% over the same period. At this rate, China will have more installed renewable generation capacity than the US or any other country in the world at some point this year.
However, we must keep in mind that the clean energy race is a marathon and the competitors are just warming up. The entire world has installed only 250 GW of renewable energy, which represents only 6% of the total demand. More than 90% of that installed capacity is in the G-20 nations. There is a long way to go in this race.
We should also keep in mind that China is a unique combination of emerging global superpower and low-wage developing country. At the same time, it is trying to build a clean energy economy, it is struggling to build enough old and polluting coal-fired power plants to meet basic electricity needs. It is also the largest country in the world, which means that its investments per capita are only a fraction of the investments per capita in the US.
Rather, every dollar spent in the US on sustainable energy relies on the world’s broader energy infrastructure. The American Recovery and Reinvestment Act (ARRA), popularly known as the Stimulus Act, has allocated $85 billion for investments in clean energy and transportation. Much of that money will be spent over the next two years, greatly increasing both the amount and the growth rate of US clean energy investments above the $19 billion invested last year. Furthermore, the US is able to leverage that public spending with private investment due to its transparent legal system and financial institutions.
So who will win this race? Much depends on government policy. Renewable energy incentives and mandates, feed-in tariffs, and figuring out how to include the cost of pollution in the price of fossil fuels will have a tremendous impact on future clean energy investments. As the chairman and CEO of Dow Corning told Congress the other day: “Other nations have enacted aggressive policies to support the growth of the renewable energy industry… It is time for the United States to enact policies that essentially ensure that this industry grow here.”
