In the new decade, who is going to take the gold in the global clean energy market? Is America even in the running?
The answer is that the U.S. is behind in clean energy, but it's certainly not out of it. The nature of American ingenuity, its market system, and the fact that it's the best place to start a business means that even if it's lagging, that can be turned around quickly. Experts note that the U.S. trails in part because it doesn't invest enough in clean energy research and development; it hasn't put a price on carbon; and it doesn't have long-term incentives that provide investors certainty. All this is true.But there's another reason: exports. Or rather, the lack thereof. Even though the U.S. is the birthplace of such pioneering technologies as solar panels and commercial nuclear power, it is running a clean energy trade deficit of over $6 billion. It's not selling enough of its clean energy innovations to the rest of the world, and the U.S. government bears much of the blame.
Why? There is a green tide of protectionism throughout the world. Foreign governments discriminate against American businesses and workers without being called on it. Other nations heavily subsidize home-grown interests and coach them on how to succeed internationally. U.S. companies often struggle alone.
There is no greater perpetrator than China. Today they are to "green" protectionism as the East German women's bobsled team was to fair competition at the Lake Placid Olympics--bulked up on artificial performance enhancements and deaf to demands for open and honest competition.
That's why the U.S. government must step forward with its own policies--tough, focused and strategic--to promote American clean energy worldwide. Here are three things it should do:
1. Set a goal to double U.S.' global share of clean energy exports. Europe has a 40% share of the world's major clean energy technologies and products, while the U.S. has only an 8 to 12% share. America should dig itself out of this hole quickly by setting a clear benchmark for success and government performance. Aiming to double our share of clean energy exports would achieve this goal and complement the president's ambition of doubling exports overall. In government, as in business, if it isn't measured, it doesn't happen. The U.S. must make increased clean energy exports a national priority.
2. Force foreign rivals to play fair. Trade is China's No. 1 foreign policy concern. It's No. 4 or 5 for America. As a result, foreign governments are devising clever strategies to shut out American businesses and workers. Some of these barriers are obvious and heavy-handed, such as discriminatory tariffs, local content requirements ("Buy Chinese") or biased government contract rules. Other barriers are more subtle, such as burdensome customs procedures, restrictive licensing requirements and emerging forms of "green" protectionism. China awards government contracts to products with Chinese intellectual property (so-called "indigenous innovation"). U.S. firms face a tough choice--either develop their intellectual property in China or be shut out altogether.
The U.S. government must elevate the battle for fair treatment of our products and services by foreign governments. In addition to negotiating more market-opening trade agreements--including an agreement on environmental goods and services--this also means demanding fair access to markets in foreign countries that get our help in developing their own clean energy sources. An "early warning" system can also help to root out trade restrictions in new foreign laws and regulations being spawned by the global clean energy economy.
3. Reform U.S. export promotion programs. American clean energy companies--particularly small and mid-sized companies--deserve the same kind of help their foreign rivals get in finding new business opportunities abroad. But they are being shortchanged by an underfunded and poorly coordinated export promotion system in the U.S.
Many foreign governments invest significant resources in helping home-grown companies find customers overseas, navigate other nations' bureaucracies and finance the risk of shipping goods abroad. Australia provides free services to help new and potential exporters build export readiness, select markets and obtain initial market information, while a program in Malaysia links small and medium-size firms with the supply chains of larger exporting companies.
Among the reforms government should implement: a "one-stop shop" for export promotion and financing of clean energy exports; an increase in export promotion funding, particularly for new exporters and small and medium-size firms; and a "clean energy export promotion innovation fund" that would allow export officials to experiment with creative export promotion strategies and best practices from states or foreign governments.
In the global race toward clean energy, America is falling short--with potentially dire consequences for our future economic security. In the worst-case scenario, the U.S. simply swaps one energy addiction (and trade deficit driver) for another. Instead of Middle Eastern oil, America will import Chinese turbines, German solar cells and a host of other foreign-made breakthrough products.
What's at stake is a $6 trillion global energy market--a market now up for grabs as the world rapidly converts to cleaner forms of energy. The U.S. must be in this race to win.
Tuesday, March 2, 2010
The Global Green Energy Race
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Incremental change in the USA is happening. Making the foreign markets play fair may never happen. This is why we need a larger R&D effort to stay ahead.
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