Clean Energy Centers Growing Worldwide, Not in U.S.

Clean energy technology hubs are rapidly developing all over the world, except in the United States. Business leaders who met at the Reuters Global Climate and Alternative Energy Summit acknowledged that massive government investment has created vibrant clean energy markets in countries around the world, but unfortunately the U.S. has not taken part in this trend. As The Business Insider reports, Google Green Energy Czar, Bill Weihl noted:

“Other countries, China being one of the major examples, are investing very heavily in this space across the whole innovation pipeline…from shower to power, from the idea in the shower to generating the power (in a) commercial scale enterprise.”

Just yesterday, the China Greentech Initiative released a report describing how large-scale government investment is driving a clean energy market that could be worth upwards of US$1 trillion annually.

While China is home to some of the fastest growing clean energy centers, particular in the solar industry, Denmark, Japan, South Korea, India, North Africa, Singapore, and Abu Dhabi are all directly investing in creating domestic clean energy hubs.

Executives in Silicon Valley, who have become accustomed to leadership in key technology industries like IT and semiconductors are starting to sense the shift in power.

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Japan’s New Government Plans to Expand Clean Energy Deployment Incentives

Elected less than a week ago, the Democratic Party of Japan (DPJ) may be new to power but according to a recent Bloomberg piece, it has already acknowledged the urgency of the clean energy race. Centered on an aggressive target to reduce carbon emissions 25% by 2020 from 1990 levels and increasing the share of renewables to 10% of its energy mix by 2020, the DPJ has set forth a proposal to achieve those cuts that is on course to outdo its predecessor, the Liberal Democratic Party (LDP), in both promise and execution.

While many nations’ emissions targets end up as nothing more than empty promises, the DPJ’s proposal outlines plans that include direct investment in clean energy technology that could have a variety of positive impacts on Japan’s clean energy sector and ultimately improve its ability to compete in the clean energy race.

With the intent to expand and improve upon the LDP’s clean energy deployment initiatives and grow the share of renewables in its energy mix, the DPJ is offering increased subsidies for solar photovoltaics as well as planning to extend Japan’s soon-to-be feed-in tariff system, to include all renewables, instead of just solar.

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Can U.S. Meet Africa’s Call for Annual $67 Bn in Adaptation Aid?

Recognizing the need for a united stance on climate change in preparation for international negotiations in Copenhagen in December, ten African nations issued a joint draft resolution calling for “rich countries” to commit $67 billion per year in compensation for the deleterious effects of unmitigated climate change, according to a report in Reuters.

Africa, which houses 15 of the 20 most climate-change vulnerable countries, will almost certainly endure the most severe negative consequences of climate change, yet it contributes relatively little to the problem.

This new proposal arrives on the heels of a flurry of Copenhagen related news. The Financial Times reported yesterday that both China and India blame developed nations, such as the U.S., for impeding the progress of a climate treaty. As developing nations, they are demanding financial and technological assistance from the major historic contributors to climate change in order to mitigate the effects of a problem they are not primarily responsible for causing.

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NYT: China’s Solar Industry Poised to Leave U.S. in the Dust

To some, recent discussion of the “clean energy race” is just the latest iteration of flashy climate change rhetoric, refurbished and repackaged as a do-or-die clean technology race between the U.S. and Asia. Yet, as a New York Times piece entitled “China Racing Ahead of U.S. in the Drive to Go Solar,” testifies, the clean energy challenge is more than just verbal tap dancing, it’s a dynamic economic competition – and China is earning its racing stripes.

While the U.S. is still floundering with ad-hoc investments in clean energy, China has developed a straight-forward, no-nonsense approach to achieving its 2GW solar capacity target by 2011 and gaining leadership in the solar industry: build market share. With the help of serious government investment, China is on the path to achieving that goal. Chinese companies like, Suntech Power Holdings, have succeeded in driving solar panel price reductions over the last six months by selling panels on the U.S. market below the marginal cost. Furthermore, China is circumventing protectionist legislation by constructing assembly plants in the U.S.

According to Steven Chan, Suntech president for global sales and marketing, the first plant will be located in Phoenix, Arizona and will allow China to tap into the portion of the market that wants to “‘buy American’ and things like that.” The catch, however, is that even though the panels will be constructed in America, by Americans, the components will, of course, be made in China.

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New Climate Bill May Create “Super Lobby” Against U.S. Emissions Reductions

By Teryn Norris
Originally published by AlterNet
July 8, 2009

The recent passage of the American Clean Energy & Security Act (ACES) through the U.S. House of Representatives drew different reactions from climate and environmental advocates. But one key perspective shared by most advocates is that, despite its weaknesses, the bill is a good first step. ACES builds a solid foundation for future progress on U.S. climate mitigation, the argument goes, and climate advocates will be well-positioned to strengthen the legislation in years ahead.

But what are the prospects for strengthening ACES in future years? This question is subject to many uncertainties, depending on the vagaries of the political climate. But a closer examination reveals that ACES could create a “super-lobby” of interest groups that will significantly diminish the possibility of achieving future reforms.

The newest climate lobby — and potentially one of the most powerful in years to come — is the financial industry. If ACES is signed into law, the global carbon market could become the largest commodity market in the world. According to Bart Chilton, Commissioner of the U.S. Commodities Futures Trading Commission (CFTC), “The potential size and scope of a structured carbon emissions market in the US is unequivocally vast. It is certainly possible that the emissions markets could overtake all other commodity markets.”

A growing number of analysts are expressing concerns about the emergence of a new financial climate lobby and the potential for gaming in a new U.S. carbon market. A recent report by Friends of Earth (FOE), “Subprime Carbon,” argued that cap and trade proposals like ACES could create a system with similar financial and political interests to the housing market bubble. Just as financial practices during the housing bubble caused deteriorating standards in mortgages, cap and trade could create “subprime” carbon offsets — offsets that do not represent actual emission reductions and carbon derivatives based on future carbon reductions with high risk of not being fulfilled.

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Sketching a Waxman-Markey Alternative

The Congressional Budget Office recently released analysis of HR 2454, the American Climate Energy and Security Act (ACES) showing that nationwide emissions would fall by 4% through 2020.  Within the capped sectors, the reduction would be even less – only 0.5% (Breakthrough on CBO’s analysis).

Although the bill sets a goal of decreasing emissions 20% by 2020 and 80% by 2050 (the level largely agreed to be necessary to deter catastrophic climate change), the vast inclusion of international offsets permits a much lower level of actual reductions.  This, of course does not put the nation on course to actually solve its huge emissions challenges.

Assuming Nancy Pelosi was right when she said that China and India will follow if the United States takes the lead on climate change, these levels of emissions cuts do not provide a very inspiring example.

However, a lot of activists, analysts, and policymakers (myself included) have advocated using economic progress, international competition, and energy independence as more effective carrots towards developing a comprehensive climate bill.   Indeed, several of the measures in ACES address these issues and seem to be focused on spurring innovation and private enterprise.  More generally, advocates of ACES explain that even a modest carbon price, while not capable of reducing emissions on its own, does encourage the development and adoption of clean energy technologies by private firms.

Unfortunately, the innovation component of the Waxman-Markey bill is far too weak to accomplish any significant change (kind of like the emissions component).  This is true for two main reasons, an over-reliance on the private sector’s ability to innovate and provide the groundbreaking technology needed to solve this problem and an absence of public funding for innovation and RD&D.

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