Published on November 20th, 2009 | by Zachary Shahan15
Asia Light Years Ahead of the US in Clean Tech Investment — Financial and Economic Consequences
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.
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.
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