As the United States struggles to cope with stubbornly-high unemployment rates and a pollution heavy electricity sector, it has turned to alternative energy as a potential solution to both problems. Not surprisingly, most of the attention has focused on well established industries like onshore wind, solar, and nuclear. Yet, over the last two years another once-obscure industry has begun to carry increasing interest from private and public entities alike: offshore wind.

Although a nascent industry, offshore wind faces many of the same hurdles that other renewable industries and government agencies have gained experience in overcoming, suggesting offshore wind could be built out quicker than would be expected. Indeed, given the immense potential benefits of offshore wind, from the investment and employment derived from founding a novel industry to the exploitation of a significant renewable resource, achieving rapid expansion should be a top priority for the public and private sectors. Actions taken by both sides thus far suggest public and private entities agree with this assessment, but to date no offshore wind turbines have been erected in the United States. Why is this?

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The Curious Case of the Texas Wind Industry

curious case of the texas wind industryIn January, Cape Wind attained what appeared to be the final permits needed to break ground on the long-awaited wind farm. For the past 10 years, the Massachusetts-based Cape Wind project has faced political and legal pressure from advocacy groups and residents who have lobbied hard against the 130 turbine offshore wind farm. In that same amount of time, almost 10,000 MW of onshore wind capacity has been installed in, of all places, Texas.

By 2010 Texas had become the undisputed leader of wind energy in the United States, a fact that flies in the face of conventional logic. How is a state steeped in oil and gas, and run by climate-change denying politicians, spearheading some of the largest renewable energy developments in the US? The answer could provide some insights into how renewable energy can flourish in states where environmental and climate concerns aren’t necessarily the main drivers of energy policy.

Oil, Money, and Politics

The Texas economy is valued at $1.2 trillion, putting it on roughly the same GDP level as India, Russia, and Spain. The State’s economy also produces, and consumes, more electricity than any other state in the country. The vast majority of this electricity comes from fossil fuels, making Texas the largest CO2 emitting state in the United States, which until 2006 was the largest emitter of CO2 in the world.

Fossil fuels are intrinsic to the politics and economy of Texas. According to the EIA, in 2009 Texas was the leading crude oil-producing state in the U.S., and its 27 refineries account for more than ¼ of total U.S. refining capacity. In 2008, the oil and gas industry contributed 16.5% of Texas’ Gross State Product, while employing over 360,000 people.

Oil and natural gas companies such as ConocoPhillips, Exxon-Mobil, and Halliburton are headquartered in Texas, and these companies have enjoyed substantial support from politicians such as Governor Rick Perry, who has been an unapologetic ally of the coal, oil, and natural gas industries throughout his decade-long tenure. Indeed, Governor Perry has long been one of the most prominent anti-environmental politicians in the country. And yet, Governor Perry has overseen one of the greatest renewable energy success stories in the United States.

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A Lesson from the History of Clean Energy Research

The focus on innovation in Obama’s State of the Union marks a new high point for clean energy R&D advocacy. In the coming months, politicians and policy makers will likely align around proposals to encourage everything from basic research to putting solar panels on our roofs and hybrids in our garages. It is easy, in such an environment, to forget the barren stretch of time between the oil crisis induced renewable energy craze of the 1970s and the present day. During this time, funding dried up, programs were cut, and renewable energy research and deployment was forced to go abroad or wither in an apathetic United States.

Politicians, policymakers and enthusiasts talk about ways that new programs will help America race past its competitors as it did in the space race, but there is not enough attention on how the old programs died and what was the full impact of their disappearance. There are important lessons to learn, the biggest of which is that inconsistency in policy can be crippling to research. While proponents of clean and renewable technologies should welcome the renewed interest and funding, it is important that they learn from the past and focus on creating a support system that is not only robust but also provides some assurances of long-term commitments.

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The Pew Center on Global Climate Change released a brief in April discussing economic and job growth opportunities in clean energy markets. According to the report, global investment in renewable energy more than doubled from 2004-2009. From 2008-2009, China was the only country — out of the U.S, EU, Brazil, and India — whose investment increased. China attracted more investment in clean energy technologies ($34.6 billion) than the United States ($18.6 billion) for the first time in 2009. This first movers advantage could have large implications for future competitiveness:

“History shows that it matters where industries are first established, and countries can use policy to foster domestic “lead markets” for particular industries, giving them the foothold that can lead to significant growth in global market share. In the United States, well-crafted climate and clean energy policy can give nascent clean energy industries such a foothold by creating domestic demand and spurring investment and innovation.”

With China and the EU leading the way in clean energy investment, the U.S has already fallen behind and is losing opportunities to get a “foothold” in industries such as wind energy.  As we previously reported, for two quarters running Ernst and Young’s quarterly “Renewable Energy country attractiveness indices” have listed China as the most attractive destination for clean energy investments over the United States.  As part of the indices, the U.S. ranked third behind the China and the U.K. in both offshore and onshore wind investment attractiveness. Recognizing the rapid expansion of the world wind energy market — “China Wind Power Outlook 2010” asserts that over 100 countries will have installed wind power by the end of 2009 — China has moved to the forefront of the industry and is looking to expand its global market share.  World total installed wind capacity has steadily increased since 2001 and China has lead the way with a 2009 growth rate of 113%, says the 2009 World Wind Energy Report.

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A new white paper out today from Bloomberg New Energy Finance.

The report examines the drivers of growth in clean technology in both countries; compares the competitiveness of wind and solar manufacturers; and reveals how the two countries are actually “joined at the hip” in the search for a cleaner energy future. It also highlights the role of innovation (alive and well in the US — for example, publicly-traded solar PV companies here are putting more funding into R&D than their Chinese counterparts are).

However, politics can introduce a wrinkle into this relationship; some are calling for protectionist trade measures, which the white paper cautions against. One conclusion: “A focus solely on trade-based winners and losers in the US-China clean energy relationship neglects the gains from both lower cost and higher quality clean energy technology. Both countries, and indeed all countries, will benefit as the US and China drive the cost of renewable energy below that of conventional energy.”

Instead, the study “finds there to be little zero-sum competition between the two nations and, in fact, the two countries will need to cooperate in many ways in order to meet their respective carbon reduction goals. (However, this is no excuse for America to delay. The report is highlighting the fact that US companies have a major role to play in the development of clean energy solutions — if they want. So let’s get moving!)

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