Rob Atkinson of The Information Technology and Innovation Foundation and Devon Swezey of the Breakthrough Institute commented on the cleantech race this week in a BusinessWeek article entitled “America’s Green Innovation Problem.”

In the piece, the authors examine how energy R&D, and not just manufacturing, is following the investments to China, citing the world’s largest solar research facility built by Applied Materials and IBM’s $40 million lab for smart grid and other technologies as examples.  Statistics match the anecdotes as reports show the U.S. ranking 6th in the world in innovation-based competitiveness and last among 40 nations in progress over the last decade.  China, on the other hand, ranks first.  Atkinson and Swezey explain how government policy has played a role in these developments:

“The Chinese government has aggressively employed a comprehensive technology-based investment strategy to attract private investment and encourage leading companies to locate high-value research operations in the country. They have also erected a host of global welfare-reducing mercantilist policies to spur green-industry production and exports. These include turning a blind eye to intellectual-property theft, making access to Chinese markets contingent on U.S. firms expanding R&D activities in China, and blatantly manipulating currency values so as to subsidize exports of green products.”

Private investment has followed the government efforts as the $34.6 billion of venture capital in China more than doubled the second highest total from the U.S.  The authors go on to argue that this development will become a dangerous pattern:

“Cleantech clusters are being created in China, but not in the U.S.  That’s why U.S. government officials who are supporting the importation of heavily subsidized Chinese cleantech products need to recognize that this Chinese “gift” is actually a Trojan horse—cheaper products now, dramatically fewer high-wage U.S. jobs later.

The piece concludes with a prescription for the U.S. government:

“As such, the federal government must start the important work of facilitating the development of its own clusters of clean energy innovation in the U.S. To succeed, the U.S. must do two key things. First, it should prioritize major public investments in clean energy innovation, advanced manufacturing, and market creation, something it has been unwilling to do in any of the climate and energy bills currently before Congress. Second, it needs to significantly step up efforts to challenge Chinese mercantilism, whether in green industries or any high value-added industry critical to the country’s future.

Without these measures, the U.S. takes a big risk that the clean energy technologies of the future will not just be produced abroad, but invented there, too.”

To read the full article, click here.