The fight for leadership in clean-tech is underway. The next decade will prove pivotal in determining where the Silicon Valley of clean-tech will reside. While the U.S. is now putting considerable resources into clean-tech, the strongest competitor has only just entered the contest.
Announced in July, China’s Golden Sun program will increase installed capacity of solar power by five times its 2008 level in the next 2-3 years. China also initiated a residential program to subsidize solar. The nation has quickly emerged as a major player in one of renewable energy’s key sectors. Furthermore, China earmarked nearly $100 billion of economic stimulus for projects related to climate change. This is not to mention the enormous growth of the wind power industry in China, which required Chinese lawmakers to double their wind power prediction for 2010. The country plans to add wind capacity to match the massive Three Gorges Dam within the next decade. All the while, China has strict protectionist rules limiting the beneficiaries to local companies. The likely best hope for foreign entities is to collaborate with their Chinese counterparts similar to the success of American automakers.
Meanwhile, the U.S. renewed its solar subsidy last year, the Investment Tax Credit (ITC) through 2016, in hopes of stimulating demand growth. The American Recovery and Reinvestment Act put aside a little over half China’s sum for energy-related projects. The U.S. hopes the greening of the economy will bring resurgence to the manufacturing sector and retain its leadership in technological innovation while simultaneously lowering greenhouse gas emissions in order to combat climate change. Reforming U.S. energy policy is one of the main pillars of the President Obama’s agenda. However, with healthcare reform dragging, Congress could delay cap-and-trade unless President Obama takes the lead.
The fundamental difference between China and the U.S. reveals itself in the push to stimulate clean-tech. With an open and vibrant democracy, the U.S. is stumbling its way through energy policy reform. The creation of market mechanisms like cap-and-trade or tax incentives is a typical solution from the American system. Until recently, the U.S. relied almost entirely on the states to act as incubators for new policy. The particular winners are unclear and the government will likely use the power of the consumer to drive renewable energy growth. On the contrary, China’s command-and-control methodology dumps heaps of money into clean-tech directly leading to marked growth in the country’s wind and solar industries. They spread the wealth through provisions such as the Golden Sun’s requirement that no province can get more than 20MW of new capacity from the program. Indeed, this new space race could prove to be the next ideological test for the United States.
5 comments
China vs. America…
I believe China is taking a very proactive approach to their future as well as looking at how they can control their destiny within their own boundaries. I sometimes think that America is so used to borrowing that perhaps, the citizens feel that they will just borrow energy from another nation. At some point, if America doesn’t have something to offer other nations (which seems to be getting less and less) the other nations are not going to stop needing anything from America. China seems to be going along educating their young well in science and engineering, while America seems to have a less structured and less determined attitude toward success. I believe most Americans still believe they can borrow or buy their way out of any consequence resulting from their poor choices. America (the people) should demand a change in how we educate our children. The status quo doesn’t work and just adding more teachers to a poor and ineffective learning system doesnt’ do anything except continue to rob our children of the education and learning they deserve. Until parents and all Americans decide that we are the best and that we are willing to stop the same process, nothing will change and more and more children will be left without a way to make a living. American seems to have put all the effort in producing STUFF for the consumer to buy, rather than investing time, money, innovation in our teaching system. China is driven to a goal and will not allow anything to stop that growth and success. They seem to really and truly desire to be the best, to become the leader of the world. The debate on health care is just another dilemma that America is having problems excepting and moving forward…to get on with other important issues. America seems to desire to keep everything the way it is, rather than to be proactive and accepting of the inevitable change. THE CHANGE WILL COME with or without our acceptance. In the end, it will be all about which country best prepared for the projected change.
A lot of Americans do not want to accept any information about global warming, although, there is empirical data. Anyone can create a lab experiment and see what the results are on a micro scale. One only needs to extrapolate that out further to a macro scale to understand what global means.
Americans need to quit hiding their heads in the sand and accept that we MUST change to progress to a better future. To a future where buying more useless stuff isn’t worth the destruction of our planet, the poisoning of our water, food and air and to absolutely rape our mountains tops and leaving a denuded environment left for future generations to deal with. God gave us clean water, clean air, and clean soil. He gave us our mountains and rivers and oceans and all things for our enjoyment. Everyone should look at a magnificent pristine mountain (the Appalachians) and then look at an aerial photo of what it looks like after a mining company has taken the top off…for fuel. Why in heavens name do we accept this? I’ll tell you why: BECAUSE WE ARE SO DANG LAZY AND GREEDY THAT WE WILL NOT SACRIFICE TIME AND ENERGY AND SENSELESS BUYING (OF STUFF TO FILL OUR EGO)TO BETTER EDUCATE OUR CHILDREN AND ADULTS, TO ALLOW THE INNOVATION TO BE DEVELOPED AND UTILIZED AND BROUGHT TO MARKET. At this point, those that must sacrifice to change the status quo……ARE FIGHTING LIKE HELL…to keep their life just the way it is…….NO MATTER THE COST TO THEIR children, their neighbors and certainly not our global friends. [note…should you not believe in God….then whatever you deem created this life system….created a beautiful and healthy place for our existence and we all are supposed to be grateful and respect it……and our lives. Why do we have to STAY SO STUPID!
I can’t believe that China will become No. 1 in CleanTech anytime. I think there will be a hart battle beetween some european states like Germany and UK on the one hand and the US on the other hand – therefore its very interesting to get informed about both innovative sides — about US Cleantech we stay informed on this great blog, about the european point of view we can get informed on http://www.cleanthinking.de – the battle is opened!
@Cleantech: I think the potential for Chinese companies to compete (and succeed) in Europe and the U.S. is largely dependent on the likelihood of protectionist policies. A leading German solar company is already calling for a “Buy European” rule.
@Dave: As you mention, the supply chain for solar is vast. The opportunity to create profitable enterprises is not limited to the panel assembly and installers (the heavy part) and the likely opportunities for innovation will not be at the end of manufacturing. Semiconductor-grade feedstock is light as are wafers for silicon-based products. This is in addition to the likelihood that companies will move away from heavy glass and aluminum frames as technology and durability progresses. We ship many things around the world because it’s economically efficient to do so. The same could be said for solar (or even wind given a large enough scale). As it is today, most of the business for Chinese solar companies is in Europe.
As for Solar, Neither will be. It is not economical to have a single leading manufacturing hub for solar energy equipment then ship all that assembled low density mass all over the Earth. It is far less costly to to do most of the manufacturing/assembly regionally, with only unique costly components shipped in from various hub locations. 1 piece from China, USA another piece, Germany another, Philippines another,… etc. Its a global market that is economically optimized regionally.
Most interesting article, thanks Nick !
As a European I think that the game won’t limit itself to the United States or China. Indeed, the European Union will also play an important role.
A country that is for the moment not really working much on cleantech is India. What would happen if it did ? The largest democracy in the world has a lot of inventive engineers…
In any case: the more countries will partake, the better the technologies will be.
Answering your question in tough. Indeed the cleantech sector is to me only starting and could last decades. How the world would be in 2020 or 2050 ?
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