Getting Back in the Game: It’s Time for U.S. to Lead in Clean Technology
Numerous news articles/op-ed pieces (see here, here & here) along with warnings from high-ranking governmental officials (see here & here) and Congressmen from both sides of the political spectrum have warned that the U.S. is losing the clean energy race to Europe, Japan and China. These countries are ramping up their national renewable energy portfolios and gaining export market share, positively positioning themselves for the largest future export markets in clean technology deployment—the developing world. According to the International Energy Agency (IEA), approximately $27 trillion will need to be invested in clean technologies in developing countries over the next four decades.
Why will these future markets be so large? In coming years, emissions will grow most sharply in developing countries, making clean technology deployment vitally important. The U.S. has enormous potential to lead in these markets, but without U.S. legislation that puts a price on carbon and includes public finance to help unlock developing country markets for clean energy, America will continue to fall behind top competitors and miss important opportunities.
A new WWF report, Getting Back in the Game, reveals the potential for U.S. market share in clean technology deployment in the developing world. WWF estimates that the $27 trillion investment needed in developing countries translates into a $150-450 billion annual export market. The report finds that if the U.S. is able to capture a 14% market share of this potential clean tech export market—on par with our current market share in environmental goods and services in developing countries—280,000-850,000 new, long-term American jobs would result.
A crucial component for harnessing the clean technology export market is public financing. Although private capital will provide the substantial majority of the finance for clean energy development, public financing to undertake key policy and institutional reforms and reduce investment risks in developing countries is needed to prime the pump. Well-targeted public investments can leverage much larger amounts of private capital and benefit American businesses by opening new markets for U.S. clean energy industries, spurring innovation and lowering costs for clean technologies.
Including public finance in a climate and energy bill is vital for generating a dedicated stream of revenue, avoiding the volatility of yearly congressional budget approval. Previous versions of the climate bill (House-passed Waxman-Markey bill & Senate’s Kerry-Boxer bill) set aside 1% of revenues from allowances to develop markets and overcome barriers to clean technology uptake in developing countries and help facilitate U.S. exports to these new markets.
To unlock new opportunities, this set-aside (which is not currently in the American Power Act) must be preserved and a climate and energy bill must be passed. Without legislative passage and public finance components, the U.S. will continue to hemorrhage clean energy market share to overseas competitors and fall behind in the energy race.
Key findings of the report:
- The US is falling behind top competitors, both in clean technology investments domestically, but also in exports of clean technologies abroad.
- Developing countries offer the largest future export markets— The International Energy Agency estimates $27 trillion will need to be invested in the developing world in coming decades.
- Getting back in the game requires that the US pass legislation that both puts a price on carbon domestically and includes public finance to help unlock developing country markets and accelerate demand for clean technologies.
- US companies are positioned to take advantage of those new markets. Capturing a 14% market share in this new market could result in 280,000-850,000 new, long-term American jobs. However, being positioned to capture that market share depends on whether domestic industries are supported by passing comprehensive climate and energy legislation that puts a declining limit on carbon pollution.