The current issue of Manufacturing & Technology News includes a feature article, “Asian Nations Dominate Renewable Energy Industries,” based on our recent report, “Rising Tigers, Sleeping Giant.”  The article notes:

The United States has fallen behind China, Japan and South Korea in the race to commercialize and produce clean energy products and systems, according to the Breakthrough Institute and the Information Technology and Innovation Foundation.

“Asian nations are set to dominate the clean energy race by out-investing the United States,” says a report from the two organizations entitled “Rising Tigers, Sleeping Giant.” The three countries “have already passed the United States in the production of virtually all clean energy technologies and over the next five years, the governments of these nations will out-invest the United States three-to-one in these sectors.”

By investing public funds into clean technologies, R&D and infrastructure, private-sector investment will quickly follow, totaling in the trillions of dollars over the coming decade. “While some U.S. firms will benefit from the establishment of joint ventures overseas, the jobs, tax revenues and other benefits of clean tech growth will overwhelmingly accrue to Asia’s clean tech tigers,” the report concludes. Asian nations will “capture economies of scale, learning by doing and innovation advantages before the United States, where public investments are smaller, less direct and less targeted. Should the investment gap persist, the United States will import the overwhelming majority of clean energy technologies it deploys.”

As the article mentions, our report projects the governments of Asia’s rising “clean technology tigers” will invest far more than the U.S. government in the development and deployment of clean-tech over the next five years:

Chinese investment in clean energy technologies surpassed U.S. investment in 2008. China, South Korea and Japan will invest $509 billion in clean technology from 2009 to 2013. The U.S. investment is expected to be $172 billion, “a sum that assumes the passage of the proposed American Clean Energy and Security Act and includes current budget appropriations and recently enacted economic stimulus measures,” says the study. China is planning to invest up to $660 billion over the next 10 years.

As a result of this public investment gap, these nations are expected to dominate many of these industries, including advanced hybrid and electric vehicles, wind and solar power, nuclear energy, and high-speed rail:

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NPR’s All Things Considered aired a report today on China’s efforts to dominate the clean-tech industry called “In China, The Green Rush is On“:

Here are some key parts of the transcript:

A new gold rush in China is actually a green rush — an urgent drive to develop green technologies. One group of Western companies, the Cleantech Initiative, suggests China’s market for renewable energy could eventually be worth as much as $500 billion to $1 trillion a year.

Now, Obama administration officials are warning that the U.S. could risk losing the race in green technologies.

…

Gang Zhou, general manager of Applied Materials Xian facility, says the company has decided to put its money where its customer base is.

“China is No. 1 producer of solar panels. That’s where our market is. The China new R&D center, that’s where we validate a lot of R&D work that is being carried out in U.S. and in Europe,” he says

…

Meanwhile, American green technology companies are flocking to China: First Solar is building the world’s largest solar plant in Inner Mongolia, while Duke Energy is sharing solar, clean coal and smart-grid technology.

Officials in the Obama administration are beginning to sound worried.

“The longer we in the United States wait, the farther ahead China will be, and it will be harder for us to catch up,” Commerce Secretary Gary Locke warned recently. “If we don’t get our act together, we’re going to be watching the capital, the businesses and the good-paying jobs end up someplace else. And 10 to 15 years from now, we’re going to be saying, ‘How did Shanghai become the Silicon Valley of clean energy?’”

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The Wall Street Journal published an article today, “World’s Top Polluter Emerges as Green-Technology Leader,” reporting on how China is leading the world in carbon capture and storage, wind, and solar technology, achieving rapid economies of scale and lowering prices.  As reporter Shai Oster notes, this is being driven in large part by the Chinese government:

Mr. Xu is part of a broader effort by China to introduce green technology to the world’s fastest-growing industrial economy — a mission so ambitious it could eventually reshape the business, just as China has done for everything from construction cranes to computers…

China’s vast market and economies of scale are bringing down the cost of solar and wind energy, as well as other environmentally friendly technologies such as electric car batteries. That could help address a major impediment to wide adoption of such technologies: They need heavy subsidies to be economical.

The so-called China price — the combination of cheap labor and capital that rewrote the rulebook on manufacturing — is spreading to green technology. “The China price will move into the renewable-energy space, specifically for energy that relies on capital-intensive projects,” says Jonathan Woetzel, a director in McKinsey & Co.’s China office…

China’s government is backing the trend. It wants to replicate the success of the special economic zones that transformed cities such as Shenzhen from a fishing village near Hong Kong into one of the biggest manufacturing export centers in the world. Set up when China began its economic reforms in the 1980s, the zones were designed to attract foreign investment into light manufacturing to kick-start exports. They became engines of China’s economic boom.

Regulators will announce several low carbon centers next year that will have preferential policies to promote low carbon manufacturing and exports.

China is moving quickly to dominate the global wind and solar industry, and the government is considering a plan to increase solar power capacity targets five or ten-fold to achieve double the current global capacity by 2020:

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Guardian reporter George Monbiot writes a post called “US left behind in technological race to fight climate change,” noting how free-market economic ideology has become an obstacle to U.S. competitiveness and technological innovation:

“What has happened to the great pioneering nation, the economic superpower which once drove innovation everywhere? How did it end up so far behind much smaller economies in boring old Europe? How come, when the rest of the developed world has moved on, it suddenly looks like a relic of the Soviet Union, with filthy, inefficient industries, vast opencast coal mines and cars and appliances which belong in the 1950s?

It can’t all be blamed on George Bush: this technological backwardness pre-dates him. The real problem is the terror of all modern US governments of being seen to interfere in the free market. It’s ironic that the lack of effective regulation in the US has not ensured – as the free market fundamentalists prophesied – that the US came out in front, but that it has been left far behind. Just ask the car manufacturers. The truth, too uncomfortable to be discussed by US officials, is that government regulations are among the main drivers of technological innovation.”

Government investment is arguably an even more important driver of technological development, as we documented in “Case Studies in American Innovation,” which was recently cited by Fareed Zakaria in his Newsweek cover story.

In this excellent CNN report, Fareed Zakaria, Senior International Correspondent, cites a report by the Information Technology & Innovation Foundation, which co-authored our recent report on Asian vs American competitiveness in the clean-tech sector, “Rising Tigers, Sleeping Giant.”  His related cover-story for Newsweek, “Is America Losing Its Mojo?” also cited a report I co-authored with the Breakthrough Instiute, “Case Studies in American Innovation.”

One of Time Magazine’s “Top 10 Green Ideas of 2009” is “China’s Green Stimulus” and the new race between China and the U.S. to develop competitive clean-tech industries.  Time’s description of the idea features the report I recently co-authored with the Breakthrough Institute, “Rising Tigers, Sleeping Giant“:

“the green stimulus is a sign that China, after staying mostly silent on global warming for years, realizes that its old model of pollute then clean up simply isn’t sustainable. For the U.S., however, China’s gains may mean losses at home. A recent report by the Breakthrough Institute warned that the U.S. could be lapped by Asia in the clean-tech race.”

Mounting evidence suggests the clean energy race may quickly become one of the most powerful motivators for global clean-tech investment.  Indeed, the #2 prediction on Cleantech Group’s “Ten Clean Technology Predictions for 2010” is that “Clean economies become the new space race.”  As one of their analysts recently wrote, “2010 is the year when the realization that we are already engaged in a new ‘space race’ will become the widely accepted wisdom internationally, and when the West will start to feel the true extent of China and East Asia’s momentum within that race to dominate the industries of the clean economy.”

CNN reporter Matt Ford has written a new article highlighting China’s efforts to lead the global clean-tech sector, “From red to green: China’s drive to be a low carbon leader“:

“[Can] China be the leader the world needs?

“If we are talking about green technologies, then I think the answer is definitely ‘yes’,” the report’s co-chair Bjorn Stigson, President of the World Business Council for Sustainable Development, told CNN…

In particular, Stigson believes that China’s position as the world’s factory puts it in a strong position as a technological innovator.

“[China] can be a leader on the technologies that will be required to deliver green energy: solar, wind, bio-fuels and clean coal,” he says.

“Furthermore, as China is going through rapid industrialization, they have a chance to install some of the best available technologies in their industries.” …

But, in the end, it may be the fear of being left behind that drives change in the West — and East.

“The move towards a low carbon economy, not least in China, is triggering a positive race between countries,” says Stigson. “The USA has realized that both China and the EU are putting in place serious policies to take the lead on this issue.

“The ‘green race’ is on, and may the best man win.”

Cross-posted from The Breakthrough Institute

By Devon Swezey

In a forthcoming edition of the New Yorker, journalist Evan Osnos has written a great long essay called “Green Giant: Beijing’s crash program for clean energy,” on the role of the Chinese government in clean energy innovation in China.

Osnos documents how, beginning with the 863 program in 1986, Chinese government officials made a conscious effort to “join the new technological revolution” and make investments in science and technology a priority. Nowhere is this decision more evident today than in the rapid development of clean energy technology in China. In 2001, driven by increasing pollution and concerns over energy security, the Chinese government expanded their investment in energy technology. In 2006, the government expanded their commitment even further, and announced targets for the development of a suite of clean energy technologies:

“In 2006, Chinese leaders redoubled their commitment to new energy technology; they boosted funding for research and set targets for installing wind turbines, solar panels, hydroelectric dams, and other renewable sources of energy that were higher than goals in the United States. China doubled its wind-power capacity that year, then doubled it again the next year, and the year after. The country had virtually no solar industry in 2003; five years later, it was manufacturing more solar cells than any other country, winning customers from foreign companies that had invented the technology in the first place. As President Hu Jintao, a political heir of Deng Xiaoping, put it in October of this year, China must “seize preëmptive opportunities in the new round of the global energy revolution.”

China’s 863 program was modeled in part after the American research system used by NIH and the Department of Defense, the latter of which was instrumental in making early investments in technology that enabled the personal computing and information technology revolutions. And Chinese government investments in research and development (R&D) have been rising dramatically each year:

“R. & D. expenditures have grown faster in China than in any other big country–climbing about twenty per cent each year for two decades, to seventy billion dollars last year. Investment in energy research under the 863 Program has grown far faster: between 1991 and 2005, the most recent year on record, the amount increased nearly fifty-fold.”

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Cross-posted from The Breakthrough Institute

By Devon Swezey

Last week, U.S. Senators Jeff Bingaman (D-NM), Orrin Hatch (R-UT), Debbie Stabenow (D-MI), and Richard Lugar (R-IN) introduced bipartisan legislation aimed at accelerating the growth of clean technology manufacturing industries in the United States.

The American Clean Technology Manufacturing Leadership Act would extend a tax credit first introduced in the short-term American Recovery and Reinvestment Act (ARRA) to allow companies to write-off 30 percent of the cost of creating, expanding or re-tooling domestic clean tech manufacturing facilities.

The ARRA program–called the Advanced Energy Manufacturing Tax Credit–provides $2.3 billion in tax credits and has spurred new investments in U.S. clean tech manufacturing facilities. Funding for the popular program is expected to dry up in mid-January but the new legislation would provide an additional $2.5 billion to extend the life of the program.

In a statement on the release of the bill, Senator Stabenow proclaimed that the legislation is critical to boost economic growth, job creation, and U.S. competitiveness in the global clean energy race:

“In order to turn our economy around and create jobs, we need to build the clean energy technology of the future here in America. Otherwise, we will lose the race with other countries and see those jobs go overseas.”

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