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Published on November 20th, 2009 | by Zachary Shahan

15

Asia Light Years Ahead of the US in Clean Tech Investment — Financial and Economic Consequences

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November 20th, 2009 by Zachary Shahan 

Asia is investing hundreds of billions of dollars more than the US in clean technology, according to a new report by two research institutions. In the future, the US may be importing trillions of dollars of needed clean technology (and losing countless jobs to Asia) as a result.

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In total, the report showed that China, Japan, and South Korea will invest about $509 billion in clean tech over the next 5 years, whereas the US (with our greenest President in decades, maybe ever) is only expected to invest $172 billion (about 3 times less) — this is assuming the climate and energy legislation in Congress passes.

If the US were to invest the same percentage of its Gross Domestic Product (GDP) as South Korea, it would invest almost $140 billion per year ($700 billion over this five year period)! Compared to China, the anticipated per-GDP investment ratio is 1:4 (US to China).

In 2008, Japan almost matched US R&D spending on energy and achieved almost the same number of international clean energy patents despite having dramatically lower GDP.

The financial investment is not the only thing giving these countries a major advantage in this field, though.

The report‘s first key finding is:

Asia’s rising ‘clean technology tigers’ – China, Japan, and South Korea – 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. This public investment gap will allow these Asian nations to attract a significant share of private sector investments in clean energy technology, estimated to total in the trillions of dollars over the next 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.”

US Climate Bill Weak Compared to Asian Legislation

The Asian leaders are rushing past the US while Congress sits debating and further weakening a generally handicapped climate and energy bill.

Our climate bill (which is still struggling to get enough support to get passed) will probably do more for clean energy than anything in the history of the country, but it is relatively minor compared to these countries’ comparable legislation. It is not anticipated to spur a significant amount of investment, according to the report.

The report finds significant shortcomings in the US’ market-based strategies. As one part of that: “A cap-and-trade bill would slow American companies’ uptake of clean tech until 2020, (the report) suggests, because firms would be able to buy offsets for emissions.”

The report by the Breakthrough Institute and the Information Technology & Innovation Foundation concludes that “the direct and coordinated nature of these Asian nations’ public investments will confer significant advantages” over the US. Their second key finding in the report is: “Large, direct and sustained public investments will solidify the competitive advantage of China, Japan, and South Korea.

In further detail:

“In contrast to more direct investments by Asia’s clean tech tigers, current U.S. policies rely overwhelmingly on modest market incentives that are viewed by the private sector as more indirect, create more risks for private market investors, and do less to overcome the many barriers to clean energy adoption. The American Clean Energy and Security Act, passed by the U.S. House of Representative in June 2009, includes too few proactive policy initiatives and allocates relatively little funding to support research and development, commercialization and production of clean energy technologies within the United States.”

The report found that Asian policies were for a longer-term and more likely to avoid pitfalls with individual technologies (for various reason) as well — they were created to do so.

What is the Result? Heavy Clean Tech Imports & Economic Loss or Failure

If this investment gap persists, and the related policy advantages for Asia persist, the report predicts that “the United States will import the overwhelming majority of clean energy technologies it deploys…. This could jeopardize America’s economic recovery and its long-term competitiveness while making it even more difficult to reduce the U.S. trade deficit.”

The US will lose jobs, tons of money and much of its economic presence globally. Hopefully, policy makers will wake up to the urgent need for greater investment and stronger, more coordinated policy around clean technology (regarding energy, transportation, and other sectors). The economic future of the US depends on it.

via coolerplanet & the Breakthrough Institute

Related Stories:

1) China Invests $30 Billion in Renewable Energy; Economy Rebounds

2) Green Economy = More Jobs

3) China Forgets “China-Only Wind Turbines” Policy, but Why?

4) Super High Speed Rail for China — $4 Billion Purchase

5) UK’s Tony Blair Finds Climate Action Will Increase Global GDP & Create Millions of Jobs

Image Credit 1: Pink Dispatcher via flickr under a Creative Commons license

Image Credit 2: futureatlas.com via flickr under a Creative Commons license

Image Credit 3: 917press via flickr under a Creative Commons license

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About the Author

spends most of his time here on CleanTechnica as the director/chief editor. Otherwise, he's probably enthusiastically fulfilling his duties as the director/editor of Solar Love, EV Obsession, Planetsave, or Bikocity. Zach is recognized globally as a solar energy, electric car, and wind energy expert. If you would like him to speak at a related conference or event, connect with him via social media. You can connect with Zach on any popular social networking site you like. Links to all of his main social media profiles are on ZacharyShahan.com.



  • http://www.elementalled.com Elemental LED staff

    It’s too bad that the U.S. didn’t use the opportunity of the energy crisis of the ’70s, the birth of solar technology, and the budding green movement of the time as a starting point for real investment and action in sustainable technologies, instead of waiting until nearly 40 years later. And this was after we sent humans to the moon!

    And surprising that more U.S. companies are not seeing the opportunities for profit that exist in developing new forms of energy, even though many seem to have the capital to do so.

  • http://www.elementalled.com Elemental LED staff

    It’s too bad that the U.S. didn’t use the opportunity of the energy crisis of the ’70s, the birth of solar technology, and the budding green movement of the time as a starting point for real investment and action in sustainable technologies, instead of waiting until nearly 40 years later. And this was after we sent humans to the moon!

    And surprising that more U.S. companies are not seeing the opportunities for profit that exist in developing new forms of energy, even though many seem to have the capital to do so.

  • http://www.elementalled.com Elemental LED staff

    It’s too bad that the U.S. didn’t use the opportunity of the energy crisis of the ’70s, the birth of solar technology, and the budding green movement of the time as a starting point for real investment and action in sustainable technologies, instead of waiting until nearly 40 years later. And this was after we sent humans to the moon!

    And surprising that more U.S. companies are not seeing the opportunities for profit that exist in developing new forms of energy, even though many seem to have the capital to do so.

  • Karl

    Joe, that’s an awful lot of anger you have there. Perhaps you want to clarify how he’s an illegitimate president? Seems to me he won by a clear margin and has pretty good public support despite the magnitude of troubles he was and still is faced with. Politics aside, despite what you might have heard from whatever news source you read/listen to, between new fuel efficiency standards, a record increase in alternative energy funding and assembly of a green team he’s actually well on track to becoming a very green president. Considering how little Reagan, Bush I and even Clinton did for the environment that isn’t saying much but for this generation there really isn’t a comparison. Your anger clearly goes beyond his green record.

  • Karl

    Joe, that’s an awful lot of anger you have there. Perhaps you want to clarify how he’s an illegitimate president? Seems to me he won by a clear margin and has pretty good public support despite the magnitude of troubles he was and still is faced with. Politics aside, despite what you might have heard from whatever news source you read/listen to, between new fuel efficiency standards, a record increase in alternative energy funding and assembly of a green team he’s actually well on track to becoming a very green president. Considering how little Reagan, Bush I and even Clinton did for the environment that isn’t saying much but for this generation there really isn’t a comparison. Your anger clearly goes beyond his green record.

  • Karl

    Joe, that’s an awful lot of anger you have there. Perhaps you want to clarify how he’s an illegitimate president? Seems to me he won by a clear margin and has pretty good public support despite the magnitude of troubles he was and still is faced with. Politics aside, despite what you might have heard from whatever news source you read/listen to, between new fuel efficiency standards, a record increase in alternative energy funding and assembly of a green team he’s actually well on track to becoming a very green president. Considering how little Reagan, Bush I and even Clinton did for the environment that isn’t saying much but for this generation there really isn’t a comparison. Your anger clearly goes beyond his green record.

  • Zachary Shahan

    Joe, i’m aware of those accomplishments. i said in decades, “maybe ever.” we are yet to see what he actually accomplishes. but he is off to a fairly good start, at least (i have my criticisms, too, but he is doing more than any president in ages, for sure)

  • Joe

    “greenest president ever”?

    You obviously no NOTHING about US history,

    Such as it was T. Roosevelt that created the National Parks System and R. Nixon who created the EPA. J Carter put solar panels on the white house.

    King oumgbama is all PR and BS. He won’t finish out his phony term illegitimate term.

  • Joe

    “greenest president ever”?

    You obviously no NOTHING about US history,

    Such as it was T. Roosevelt that created the National Parks System and R. Nixon who created the EPA. J Carter put solar panels on the white house.

    King oumgbama is all PR and BS. He won’t finish out his phony term illegitimate term.

  • Zachary Shahan

    The per person investment is a fine thing to bring up, Jared, but i think more appropriate in this context is what i put in the article (per GDP).

    I agree with you about being cautious with investment, because there is the possibility of a “bubble” anytime there is a lot of investment growth. however, as Karl went on to discuss, there are a lot of benefits to being ahead of the game.

    overall, the US seems on track to lose its competitive advantage in the global marketplace (in many arenas, but especially this one). as the report said somewhere in there (maybe the end?), the US has fallen behind on other issues (i.e. space exploration) and then come from behind to take the lead, but i dont think this is actually a strategy or what it looks like it is doing here. we will see, though.

  • Karl

    As Jared points out money alone will not solve the problem. However, it is important to note that patents and intellectual property DO play a big role in future economics. That Japan had as many patents as the US last year is pretty predictive in my opinion. Although more patents doesn’t always mean more impact it is nevertheless an important component. Those that get the patents today get that paycheck tomorrow. That’s one of the reasons the US has been dominant for so long. I say good for the those Asian companies/countries that get it. Now the big question is how do we keep homegrown green tech that is its infancy to stay here rather than outsource overseas. Unfortunately, this has been a trend which we are seeing from Solar to wind and everything in between.

  • Karl

    As Jared points out money alone will not solve the problem. However, it is important to note that patents and intellectual property DO play a big role in future economics. That Japan had as many patents as the US last year is pretty predictive in my opinion. Although more patents doesn’t always mean more impact it is nevertheless an important component. Those that get the patents today get that paycheck tomorrow. That’s one of the reasons the US has been dominant for so long. I say good for the those Asian companies/countries that get it. Now the big question is how do we keep homegrown green tech that is its infancy to stay here rather than outsource overseas. Unfortunately, this has been a trend which we are seeing from Solar to wind and everything in between.

  • Karl

    As Jared points out money alone will not solve the problem. However, it is important to note that patents and intellectual property DO play a big role in future economics. That Japan had as many patents as the US last year is pretty predictive in my opinion. Although more patents doesn’t always mean more impact it is nevertheless an important component. Those that get the patents today get that paycheck tomorrow. That’s one of the reasons the US has been dominant for so long. I say good for the those Asian companies/countries that get it. Now the big question is how do we keep homegrown green tech that is its infancy to stay here rather than outsource overseas. Unfortunately, this has been a trend which we are seeing from Solar to wind and everything in between.

  • Jared

    TThis piece seems a little fanatical. The US economy hardly depends on our commitment to producing our own solar panels.

    Your Statistics can be misleading. If you compare just China’s Population (1.325 Billion) to the Asian (China+Japan+S.Korea) $509B amount you gave earlier you have roughly $384 invested per person. The same statistic for the US population (304M) yields roughly $566 invested per US Citizen. Using your own data it appears the US is actually making nearly a 50% larger investment than Asia. That doesn’t even factor in Japan and S. Korea’s populations which would increase the US lead.

    Throwing $$ at the problem doesn’t necessarily solve it either. Green tech is still in its infancy, and dropping too much money into production could be like buying a dozen Hummers 8 years ago expecting it to pay off down the road. Smart investment trumps Big investment any day of the week.

  • Jared

    TThis piece seems a little fanatical. The US economy hardly depends on our commitment to producing our own solar panels.

    Your Statistics can be misleading. If you compare just China’s Population (1.325 Billion) to the Asian (China+Japan+S.Korea) $509B amount you gave earlier you have roughly $384 invested per person. The same statistic for the US population (304M) yields roughly $566 invested per US Citizen. Using your own data it appears the US is actually making nearly a 50% larger investment than Asia. That doesn’t even factor in Japan and S. Korea’s populations which would increase the US lead.

    Throwing $$ at the problem doesn’t necessarily solve it either. Green tech is still in its infancy, and dropping too much money into production could be like buying a dozen Hummers 8 years ago expecting it to pay off down the road. Smart investment trumps Big investment any day of the week.

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