The race America is clearly losing is the competition for a rational, coherent national energy policy, which can create an environment for cleaner energy technology innovation. The United States has the world's largest installed base of energy infrastructure, which is ripe for modernization. Accelerated deployment of advanced cleaner energy technologies can deliver substantial benefits for both consumers and industrial users and create jobs, but investors cannot commit when the policy outlook is uncertain.

Technology leadership is a fragile asset. Lacking robust domestic demand, research, investment and technology development and commercialization will migrate. Almost every other country in the world has established a comprehensive energy policy aimed at diversifying their energy portfolios, reducing emissions and enhancing energy security. While they have an integrated, long-term energy strategy, the United States does not. This frustrates U.S. investment and greatly limits domestic technology growth.

Despite the lack of a long-term national strategy, American companies continue to innovate, compete and win globally. For example, earlier this month, GE announced a $600 million solar technology and manufacturing investment, which will create hundreds of jobs in Colorado and New York. GE has entered the solar power arena in a big way because we believe American technology, engineering and management can deliver the best value for electric utilities and consumers. We're also a major exporter of advanced, highly efficient gas turbines. This year, every gas turbine produced in our Greenville, SC, facility will be exported outside of the United States. GE will continue to be a world leader in advancing cleaner energy solutions. But lacking U.S. policy encouragement, commercial opportunities will grow faster outside of the United States.

The good news is that America has the elements required to be the global cleaner energy leader. America can out-innovate and out-compete any other nation. Technology and innovation are an historic national strength. Great American universities produce graduates with innovative ideas. An unparalleled financial system – despite the recent crisis – can deliver capital for good new business ideas. The U.S. government needs to get in the race and push clean energy policy over the finish line.

There’s no doubt that the U.S. is rapidly losing ground in the global race to develop and deploy solar. In 2010, the U.S. accounted for only about $6 billion of the global $70 billion solar market. And Washington is largely to blame.

I’ll admit that it’s not often that you see industry calling for additional regulation, but the renewable energy industry needs certainty as we invest billions in researching, developing, deploying and scaling the clean energy solutions of tomorrow. That’s why we need a strong and sensible policy framework in place to level the playing field between fossil fuels and renewable energy – this includes a Clean Energy Standard (CES), manufacturing tax credits, increased funding for R&D, grant programs and low-cost financing.

The U.S. solar industry has begun to achieve real economic results (despite some recent negative publicity). According to the Solar Industries Associations (SEIA), the U.S. was a net exporter of solar products last year (2010), by as much as $2 billion. And there are more than 100,000 Americans employed by the industry in all 50 states.

But without a robust and coherent clean energy agenda at the federal level, we risk falling further behind countries like China, Germany, Italy and Japan – countries that are establishing ambitious programs of tax incentives and renewable energy portfolio standards.

And yet Washington continues to squabble and stall when it comes to clean energy.

We do see some glimmers of good news here in California, where the California Air Resources Board last week unanimously voted to finalize the regulatory framework for the State’s landmark cap-and-trade system, which is set to launch in January. The State also recently adopted legislation requiring utilities to obtain an even larger percentage of electricity from renewable sources – a Renewable Portfolio Standard of 33 percent (up from the existing RPS of 20 percent). This is a clear signal that, in the absence of a federal standard on clean energy or carbon emissions, the California clean energy economy will continue to thrive.

The U.S. undoubtedly has the potential to dominate the global clean energy industry – we have some of the world’s best and brightest minds in the business. But the longer Washington delays, the more difficult and elusive this challenge becomes.

There’s no doubt that the U.S. is rapidly losing ground in the global race to develop and deploy solar. In 2010, the U.S. accounted for only about $6 billion of the global $70 billion solar market. And Washington is largely to blame.

I’ll admit that it’s not often that you see industry calling for additional regulation, but the renewable energy industry needs certainty as we invest billions in researching, developing, deploying and scaling the clean energy solutions of tomorrow. That’s why we need a strong and sensible policy framework in place to level the playing field between fossil fuels and renewable energy – this includes a Clean Energy Standard (CES), manufacturing tax credits, increased funding for R&D, grant programs and low-cost financing.

The U.S. solar industry has begun to achieve real economic results (despite some recent negative publicity). According to the Solar Industries Associations (SEIA), the U.S. was a net exporter of solar products last year (2010), by as much as $2 billion. And there are more than 100,000 Americans employed by the industry in all 50 states.

But without a robust and coherent clean energy agenda at the federal level, we risk falling further behind countries like China, Germany, Italy and Japan – countries that are establishing ambitious programs of tax incentives and renewable energy portfolio standards.

And yet Washington continues to squabble and stall when it comes to clean energy.

We do see some glimmers of good news here in California, where the California Air Resources Board last week unanimously voted to finalize the regulatory framework for the State’s landmark cap-and-trade system, which is set to launch in January. The State also recently adopted legislation requiring utilities to obtain an even larger percentage of electricity from renewable sources – a Renewable Portfolio Standard of 33 percent (up from the existing RPS of 20 percent). This is a clear signal that, in the absence of a federal standard on clean energy or carbon emissions, the California clean energy economy will continue to thrive.

The U.S. undoubtedly has the potential to dominate the global clean energy industry – we have some of the world’s best and brightest minds in the business. But the longer Washington delays, the more difficult and elusive this challenge becomes.

One of the core take home messages from economics since the 18’th century days of Adam Smith is that the value of specialization drives the gains from trade. That applies in the clean energy market as well.

The value chain for clean energy is complex; it is not a simple issue of “Made in America” or “Made in China.” There are several links in the chain. Each of these links has forms of specialization that may distribute the value across countries. For example, a wind turbine now operating in the state of Pennsylvania is a complex combination of basic scientific knowledge of aerodynamics developed by a German scientist, Albert Metz, in 1919, embodied in a foundation, tower, and blades, which together consist of thousands of components produced and assembled all over the world. The turbine is installed onsite primarily by U.S. labor, and the electricity it generates is distributed through a domestically produced electric power grid to Pennsylvania factories, commercial buildings, and households.

The U.S. has played a key role in the R&D and innovation stage of clean energy technologies. For instance, the first solar cell was developed by Bell Laboratories in the 1950s, and the solar power industry developed throughout the U.S. in the 1970s and 1980s. The U.S. is still a leading recipient of venture capital for new product development in this area, but its dominance is slipping as other countries have ramped up their focus on basic and applied research and development. China is increasing its emphasis in this area, with the new emphasis on science in its latest five-year plan. China is now breaking ground on several new universities to feed this growing desire for scientific prominence. Some of this growth is in collaboration with universities from the U.S. and the rest of the world.

There are clear benefits to those who develop and can effectively license (and enforce their intellectual property rights for) new products, with much of the value retained by entrepreneurs, scientists, and other “high-tech” workers. But there is also value added in the rest of the chain, all the way from the component factory workers and managers, to the engineers who design grid networks, to the truck and train operators who transport parts, to the construction workers who build generation units, to the designers, makers, and installers of energy efficiency systems. Beneficiaries of the same technology stream (e.g., wind, solar, biofuels) will generally reside in different countries as long as the borders are open to trade in clean energy goods and services. There are numerous examples of U.S. companies partnering with Chinese companies on clean energy initiatives. For example, in late 2010, GE announced a partnership with a Chinese company (Harbin) to manufacture GE-designed wind turbines for the Chinese market. Duke Energy, soon to be the United States’ largest electric utility,has an ongoing partnership with the Chinese firm ENN to operate electric generation plants in China, including a joint effort to provide power in Langfang, China’s first smart energy “eco-city.”

The U.S. and China are not the only players in the market. Europe’s relatively long history of renewable energy subsidies such as feed-in tariffs has established a viable regional market, both on the demand and the supply side. Brazil has become a significant player in renewables, especially in biofuels, and with the recent Fukushima nuclear disaster, Japan may consider greater investments in renewable energy if it continues to pursue its GHG emissions commitments with less reliance on nuclear energy.

[For more on this topic, read the Nicholas Institute working paper “The United States, China, and the Competition for Clean Energy” http://nicholasinstitute.duke.edu/climate/lowcarbontech/us-china-competition-for-clean-energy/at_download/paper ]

[this post is excerpted from Murray, Brian; Jonas Monast, Chi-Jen Yang, and Justine Chow. 2011. “The United States, China, and the Competition for Clean Energy”. Policy Brief NI PB 11-05, Nicholas Institute for Environmental Policy Solutions, Duke University. http://nicholasinstitute.duke.edu/climate/lowcarbontech/us-china-competition-for-clean-energy/at_download/paper.]

China’s recent clean energy surge significantly raises the volume of activity, changes where it is located and sourced, and ups the ante for other countries such as the U.S. to decide whether to aggressively compete for market primacy or cede this to China. What would it mean for the U.S. to aggressively compete? China has gotten to this point quickly with a combination of demand-side pull and supply-side push strategies. The demand-side pull includes specific clean energy targets dictated by government mandates and financial incentives. The supply-side push includes a mix of government investment in many stages of the value chain, subsidies, and partnerships with the private sector (both Chinese and foreign companies).

The Chinese economic model is distinct and not easily replicable in the U.S., but there are parallel policy decisions that the U.S. could consider, including the following:

• Demand-side incentives

––Mandate targets for clean energy (e.g., a federal clean energy standard or, as now exists, dozens of different state renewable energy standards)

––Mandate energy efficiency standards to reduce the demand for all energy, whether “dirty” or “clean”

––Give (via executive order or legislation) preferential treatment to clean energy or clean energy–sourced products in government purchases and building decisions

––Reconsider a price on carbon, either in the cap-and-trade model considered by the previous Congress, or through a carbon tax on emissions from other sectors

• Supply-side incentives

––Investment in basic science underpinning energy production and use

––Investment tax incentives, competitive grants, or other incentives to catalyze U.S.-based component manufacturers

––Investment (direct or through tax incentives) in clean energy infrastructure (e.g., transmission lines from renewable energy hotspots to population centers, smart grid)

––Coordination among regulatory agencies and other government entities on multi-jurisdictional issues such as siting, pollution control, and safety

This list is not complete or exclusive. It is meant to suggest that one approach (e.g., government man­dates) is necessarily preferred to another (e.g., private sector positive incentives). Several of these options have been proposed, evaluated, and even implemented (for example, ARRA), but it is fair to say that the current portfolio of policies on the books does not provide strong enough incentives to fundamentally transform the U.S. clean energy landscape—certainly not in the way envisioned by President Obama’s call for 80% clean energy by 2035. Given that public policy is likely to be the impetus behind clean energy expansion for the foreseeable future, clear and sustained policy signals will be necessary to provide investment certainty to drive such an expansion.

The global market for clean energy products grew to $243 billion in 2010, a year in which China and Germany both captured a greater share of this global investment than the United States. That has led many (myself included) to worry about the erosion of US competitiveness in a set of clean energy technology products—from solar and wind to nuclear and advanced batteries—originally invented in America.

Yet this growing market for clean tech is almost entirely dependent upon public subsidy and policy support. To be blunt: today’s clean energy markets are artificial, and without perpetual policy support, conventional clean energy products could not compete in most global energy markets.

Across the globe, cash-strapped governments and recession-hit publics are pulling back clean energy subsidies, revealing the ephemeral nature of today’s clean tech markets. In the last year, Spain, Italy, and the United Kingdom have all slashed feed-in tariffs for solar and certain other clean energy technologies. In America, expiring tax credits and fading stimulus investments are set to send federal clean tech expenditures plunging 75 percent from 2009 to 2014, according to our research.

There are a host of reasons why targeted policies and smart public investments in emerging clean tech sectors are justified. But clean tech business leaders and policymakers alike must be crystal clear: the true economic rewards in clean energy industries will not come from producing technology for subsidy-created markets that vacillate wildly with the public mood and the business cycle.

Without substantial innovation to improve the performance and reduce the cost of clean energy technologies, the promise that the clean energy sector might become economically viable, much less a cornerstone of American economic revival, will never be realized. The real clean energy race is thus to invent, commercialize, progressively improve, and mass-produce cheap and reliable clean energy technologies that can compete on cost not just with international competitors but also with fossil fuels.

In short, the race is to make clean energy cheap and subsidy-independent.

The ultimate economic prize is a $5 trillion global energy market expected to double over the next forty years. That economic opportunity dwarfs the value of today’s subsidy-dependent and often-volatile clean energy markets.

For security, economic, and environmental reasons, the global energy system is modernizing and diversifying. Developing and developed nations alike will move toward new forms of advanced energy technologies that reduce dependence on foreign nations, insulate their economies from volatile energy markets, and are cleaner and thus less costly from a public health perspective. Supplying this massive global market with reliable and affordable clean energy technologies thus represents one of the most significant market opportunities of the 21st century.

In this clean energy race, pole position is still up for grabs.

China may have cornered today’s subsidy-dependent markets for solar cells in recent years, but they have not yet won the race to make solar energy cheap. Chinese firms have achieved recent cost advantages by simply scaling up yesterday’s solar technology, wringing cost declines out of gigawatt-scale manufacturing supply chains and capitalizing on both a temporary glut in refined silicon and lucrative Chinese state subsidies. None of these factors are truly repeatable, and technology and market analysts project that China’s solar cost declines will soon stall out well above the levels necessary to make solar power truly affordable and subsidy-independent.

America is still home to the most innovative solar firms, from technology leaders like First Solar making advanced thin film solar technologies to SunPower Corp., the manufacturer of the world’s most efficient crystalline PV panels. And we retain a global lead in venture capital investment and clean energy research. Yet to win this race to make clean energy cheap, America must overcome two threats, one each from both home and abroad.

Abroad, we must ensure that Chinese firms play by the rules. And American manufacturers must out-innovate and out-compete China’s high-volume producers of conventional clean energy technologies, like crystalline PV cells, with steadily advancing technology and productivity. Already, technology leaders like First Solar are under pressure, with Citigroup reporting that the American firm may be facing layoffs of 10 percent of their workforce in coming months, as customers demand cheaper products. If these competitive pressures fuel a new round of American innovation, all the better. But if subsidized Chinese producers of conventional PV panels that will never become cheap enough to be subsidy independent end up knocking the real innovators out of the market, or squeezing their profits so much they cannot reinvest in continual R&D, both America and the world ultimately lose.

At home, today’s repeatedly expiring and poorly optimized energy subsidies do American innovators little favor. The problem is that today's subsidies are principally designed to accelerate market adoption—a situation that strongly favors America's mercantilist, low-wage competitors like China—rather than demand and reward innovation and support continual adoption of the most advanced manufacturing processes by US firms. Energy subsidies today operate more like crop supports than like the demanding military procurement policies that delivered jet engines, microchips, and a suite of other core technologies now enabling blockbuster products like Apple’s iPhone.

The intermittent and haphazard nature of US energy policy also wreaks havoc with the business confidence necessary for long-term investments in innovation. As a result, many private firms focus principally on ramping-up production for subsidized markets rather than pioneering next-generation designs and manufacturing processes.

This must change. Both industry and government must re-prioritize innovation and competitiveness if the United States is to build a durable and globally competitive clean energy industry. Making clean energy cheap and fully competitive should become our nation’s rallying focus.

The coming collapse of US clean tech policies thus presents a critical opportunity for intelligent energy policy reform. With the US clean energy policy system set to be effectively wiped clean in the coming years, American business and policymakers must now unite to craft a coordinated new set of limited but direct federal strategies optimized to drive innovation, advanced manufacturing, and competitiveness. With such a strategy in place, the United States has the potential to out-innovate and out-compete all global challengers and successfully make clean energy cheap enough for widespread export to energy-hungry markets throughout the world.

(Note: stay tuned for forthcoming research and recommendations on clean energy competitiveness from the Breakthrough Institute later this Fall…)

The whole idea of a “clean energy race” harks back to the “space race” and “arms race” of the Cold War era. Although those races had economic spinoffs, they were first and foremost geo-political, not commercial. Renewable energy companies try to recreate a Cold War sense of urgency and destiny about the products they sell. Missiles and space travel had an obvious potential to affect the outcome of a global power struggle. But wind turbines and solar panels?

The global marketplace comprises countless races, because each firm typically faces competition from many others. Dannon, Yoplait, General Mills, Kraft Foods, and Chobani, for example, are engaged in a global yogurt race, and by all accounts “we” (General Mills, Kraft) are losing. Yet you probably won’t read about it in the Washington Post. What then accounts for the celebrity status of the clean energy race, and is it deserved?

Energy Secretary Steven Chu has probably done more than any other government official to popularize the notion of a clean energy race. Let’s briefly examine his November 2009 congressional testimony on the subject, delivered not long after the Solyndra ground breaking ceremony.

Chu argued that the world would need to invest $2.1 trillion in wind turbines and $1.5 trillion in solar panels to meet global emission reduction targets. Thus, in his view, “The only question is – who will invent, manufacture, and export these clean technologies and which countries will become dependent on foreign products.”

Chu warned that China was investing “about $9 billion a month on clean energy,” lamented that America had “fallen behind” other countries in global market share, but said the Stimulus was helping U.S. firms make a comeback. However, he cautioned, the only way to ensure our clean tech companies can compete is to put a steadily tightening “cap” on carbon emissions. “That critical step will drive investment decisions toward clean energy.”

This does not compute. China does not cap carbon. China is fueling its development chiefly with coal, oil, and hydro-power, not wind- and solar-power. Almost 80% of China’s electricity comes from coal, and China is investing billions in Canadian tar sands oil production. If China is both threat and model, won’t America fall further behind in the “economic growth race” unless we produce more electricity from coal and approve the Keystone XL Pipeline?

Be that as it may, from day one, President Obama’s goal has been to make wind and solar power “the profitable kind of energy” by handicapping economically-efficient power generation from coal and natural gas. Banking on this, Solyndra’s business plan hinged on Congress passing the Waxman-Markey bill, with its carbon caps and renewable electricity mandates, as Amy Harder reported earlier this month.

But then a funny thing happened on the way to the clean energy future. One month after Chu testified, the Copenhagen climate conference fizzled. In 2010, Senate leaders failed to move a Waxman-Markey companion bill, and the November elections nailed the coffin shut on cap-and-trade.

By Chu’s (and Solyndra’s) logic, the clean energy race, predicated as it was on Copenhagen and Waxman-Markey, should be over. Nonetheless, we hear the same old, same old. China is pumping billions into wind and solar. If we don’t do the same, China will “eat our lunch” and we’ll become dependent on Chinese products.

This is bad advice for three reasons.

First, the easiest and cheapest way not to become “dependent” on Chinese wind turbines and solar panels is not to shoot ourselves in the foot in the first place. The Chinese are selling to an artificial market created by EU and U.S. policies mandating reliance on high-cost, intermittent electricity sources. Get rid of these Soviet-style production quota, and we won’t be tempted to buy Chinese products!

Second, we cannot beat China in catering to this ersatz market, and cannot afford to do so even if we could.

As my colleague Chris Horner points out, America’s strength is innovation, but China’s is mass production. Chinese solar panels are not more innovative than Solyndra’s – quite the contrary. But China, with its cheap labor, coal-based power, and a government free to fleece consumers and taxpayers for the benefit of favored producers (they’re communists, after all), will always be able to undersell competitors in a market where what really counts is not satisfying non-coerced customers but simply meeting politically-imposed quota.

To suppose that we can subsidize our way to a level playing field is to forget that Beijing is flush with cash and Washington is broke.

Third, even China’s profits may turn into losses, because the renewable energy market looks like a bubble about to burst.

As CCNet’s Benny Peiser noted last week, the recession and sovereign debt crisis are putting pressure on governments to scale back green energy subsidies. Spain’s Industry Ministry announced it intends to cut the feed-in tariff for wind turbines by 40%. Britain too may cut subsidies for wind farms and household solar panels. Japan, worried about the billions it is paying other countries for carbon credits, is reconsidering its commitment to cut carbon dioxide emissions 25% by 2020. Even the European Union acknowledges a “trade-off between climate change policies and competitiveness,” and is questioning whether it should press ahead with de-carbonization if other countries don’t follow suit.

China is to our times what Japan was to the 1980s – an economic rival that supposedly proves the superiority of industrial policy to free markets. But Japan, Inc. turned out to be a bubble economy, with the booming ‘80s followed by the “lost decade” ‘90s.

In August, China instituted a feed-in tariff program to offset declining demand as large buyers such as Germany and Italy shrink subsidies for solar panels. The feed-in tariff may be enough to keep the bubble inflated, but subsidies consume wealth, not create it.

Last spring, Pew broke the unfortunate news that the United States’ competitive position in the clean energy sector was at risk. Once the leader in attracting overall investments, we’re now third behind China and Germany—and lag behind various countries on a variety of other key measures. A major reason is that our clean energy policies are not as clear, consistent, or ambitious as those of other nations. Our research shows that where such policy exists, investment follows.

The United States has a number of clean energy strengths on which to rebuild our economic leadership. We remain the world’s leader in clean energy innovation and venture capital investments—the money that jumpstarts new technologies. U.S. companies make a number of the component parts in the renewable sector. In fact, U.S. solar firms achieved a positive $1.9 billion trade flow in 2010, and exports of wind power products have risen every year since 2007. At a time when few sectors of the economy are thriving, renewables are the fastest growing source of world energy, according to the U.S. Energy Information Administration.

With the global clean energy market expected to reach $2.3 trillion by 2020, a strong competitive position is vital for the United States to capture a significant portion of that revenue. Emerging economies are eager for clean energy sector products. Without a change in national policy, the United States risks missing out on a major new economic opportunity.

Nothing would do more to strengthen the U.S. competitive position than policy that encourages American businesses to invest domestically in renewable energy. To begin, establishment of a national clean energy production goal would signal to investors and business leaders that there will be sustained demand. It would also spur the development of a robust supply chain, helping lower prices at home and making our products and manufacturers more globally competitive.

We also need to create long-term and fair financial incentives for clean energy. At the moment, the United States has only a series of short-term tax credits for the production of wind turbines and solar panels. For example, the production tax-credit is nearing expiration, and uncertainty surrounding its renewal leaves the domestic clean energy community in a state of flux—leaving capital on the sidelines and forestalling job creation.

Finally, we need to encourage public and private investment in clean energy research and development (R&D) in order to maintain our innovation edge. A sustained commitment to R&D will enhance our competitive position in batteries and energy storage and position us to take advantage of next-generation technologies, as well.

The United States has a number of assets with which to compete in the global clean energy economy. Strong national policy will help us leverage these advantages and capitalize on this enormous economic opportunity.

This is becoming a common refrain: When it comes to helping our energy sector invest in critical technologies, the government should promote robust competition on a level playing field, reduce disincentives to investment and trade, and support basic research and development. Any government assistance beyond these basics increases uncertainty, distorts the market, and generates boom-bust cycles for some favored technologies (see: Solyndra).

Let’s back up. Anyone who speaks of “winning” a “race” in clean energy is assuming a rather abrupt and methodical shift away from fossil fuels. This is unrealistic. Fossil fuels are – and will continue to be – the backbone of our energy infrastructure. A rapid transition away from these fuels will be unduly expensive and economically damaging. Instead, I expect a slow shift toward new sources of energy fueled in large part by improving the ways we extract and burn fossil fuels. This is happening now, and America is undoubtedly winning this race.

When alternative energy sources become sufficiently abundant, cheap, and reliable, the market will start choosing them over fossil fuels. These alternatives might be the renewable, biotech, and battery technologies we’re working on today, or they could be something entirely different. A competitive and profit-driven private sector won’t forgo an opportunity to identify and bring to market the technologies that will win the future. So China can continue to manufacture and sell artificially cheap solar panels; that’s no evidence of an upper hand in the long march toward dominance in the energy market.

The government should do what it can to give the private sector all the right tools. Returning to the refrain, the best role of government is to encourage robust competition, remove barriers to investment and trade, and support basic research and development. Realistically, that means a host of policy changes. We can start by removing the patchwork of incentives for favored technologies and industries, making the R&D tax credit permanent, and lowering corporate tax rates.

But a more interesting question – and I’m glad this discussion touches on it – is how things have changed since 2010. The answer here is encouraging: we’re no longer talking about the energy market in the context of climate change and immediate carbon limits. For too long, the energy policy discussion was framed around an assumed increase in the price of fossil fuels. This prospect alienated important constituencies and discouraged investment in existing energy infrastructure. We’re now free to have a more mature, open discourse on the energy sector and the right policies to move the ball forward. That’s not to say we won’t see a carbon-constrained future, but we’re setting ourselves up to implement the right policies to make any limits a lot less painful.

The notion of a clean energy technology race that the US might be losing is a creation of politics, the media, and the environmental lobby. Does any one remember the space race, the semi-conductor race or any of the other so called races we were supposed to lose over the past half century?

The economic strength of a nation has a lot to do with it's investment in science and technology. As long as our colleges and universities remain world class in math, science, and engineering, we have little to fear from the manufacturing of China or any other emerging economy. We have been developing advances in energy technology for decades. As long as the cost of producing energy using them is lower than the real cost of so called “green technologies” our economy can prosper. The fact is that the carbon intensity of our economy continues to drop.

Wind and solar technologies are not close to competing with conventional energy technologies on a total system basis. The cost of attempting to use them on a wide scale basis makes no economic sense.

There are two reasons why China might be leading in the production of wind turbines and solar panels. The first is China's willingness to subsidize the sale of those systems. If China wants to do that, they are transferring wealth to purchasers. That is a benefit to the buyers. No firm or country can subsidize buyers indefinitely. The second reason could be that China has a comparative advantage in the manufacture of wind and solar. If it does, it would be economically harmful to us to try to compete. We should concentrate on production that creates the most national wealth for us.

If the Congress and Obama Administration want us to be more competitive in manufacturing, they need to re-examine policies that drive investment and manufacturing off-shore. Our corporate tax policy puts US companies at a disadvantage and the Administration's current tax proposals would only make the situation worse. Unnecessarily burdensome regulations drive up the cost of manufacturing and create another incentive to invest off shore. There should be a comprehensive review of regulations to make sure that their real as opposed to alleged benefits actually exceed their real costs.

We cannot win races if our economic system is weighed down with excessive and unnecessary burdens. Even the great Secretariat would not have won the Triple Crown if asked to carry too much weight.

Instead of focusing on one area of energy technology, Congress and the Administration should focus on fiscal, economic, and energy policies that will allow our economy to once again experience robust growth and be the model for others to follow.

The U.S. solar energy industry can compete with any country in the world. Solar is a technology invented in this country and this industry is a testament to American innovation. In just the last year, the U.S. market for solar energy grew by 69 percent, through innovation, private investment and recent modest policy support. Solar energy now employs more than 100,000 Americans at 5,000 companies across all 50 states. This is more than double the number of Americans employed in solar just two years ago.

Today, we face an important choice; we can build upon this success or cede to the competition. As someone who has seen the remarkable growth and progress of solar energy over the last five years, I think it would be a huge mistake and shortsighted to walk away. Instead, we need to double our efforts to expand our use of solar and keep America innovating. Here’s why.

Most of the 5,000 U.S. solar companies are small businesses; many created or expanded in the last 3 years during one of the worst recessions in U.S. history. The industry is also home to blue-chip leaders with significant, growing solar divisions such as Applied Materials, 3M and Dow Corning, who have invested their own resources in the rapidly growing U.S. solar industry.

Through the first half of 2011, the solar industry has already installed enough solar to power 120,000 homes and is on pace to more than double last year’s installation totals. Solar capacity in the U.S. now exceeds 3,100 megawatts – enough to power 630,000 homes and equivalent to three coal-fired power plants.

Solar energy is helping America meet its high peak energy demands with a reliable domestic energy source. Our greatest energy security challenge is to generate peak power to meet our growing demand. Solar generation occurs during those hours when demand is greatest – during the day – and when electricity costs are highest. This is why solar is already the fastest growing energy sector in the U.S., and analysts predict that in the next two to three years, solar will be the largest source of new electricity generation in the U.S.

In late August, a Solar Energy Industries Association (SEIA) and GTM Research trade balance report demonstrated that the United States is a net exporter of solar materials, components and products to the world, even – to the surprise of many – a net exporter to China. In fact, our net exports grew from 2009 to 2010 and we now export $2 billion more than we import.

The global trade of solar products has been good for the United States, expanding export opportunities for domestic manufacturers, creating jobs and driving down costs to consumers. As global competition in the sector intensifies, we will continue to support open markets based on free and fair trade principles.

Solar energy is on target to be a significant factor in the future of energy in the United States. The U.S. possesses some of the best solar resources of any country in the world. Regardless of the technology, utility-scale solar projects are one of the most impactful ways for our country to move away from polluting power plants toward clean, solar power.

As long as the U.S. is able to compete on an even playing field, the combination of policy certainty, private investment and continued technological advances will keep the solar industry one of the fastest growing economic sectors in the country.

Our goal is to create a market where companies with innovative products and services and smart business plans can succeed. Above all, we need to be clear that America should be doing everything it can to keep clean energy growing, to keep more jobs coming and to keep this country competitive on the global stage.

A big part of that effort is federal policy. The 1603 Treasury Program is hands-down one of the most successful policies ever enacted to deploy clean energy. It efficiently creates jobs and deploys energy across a dozen industries - including solar, wind and geothermal power – without choosing technology winners and losers. The 1603 Treasury Program has the greatest return on investment to the taxpayer of any policy in place today. It has driven the development of more than 19,000 solar projects in 47 states and the District of Columbia, which have supported over 4.4 billion dollars in economic investment.

America absolutely can compete in the global solar energy market. We’ve proven that. With our ingenuity, technology and skilled workforce, we have the opportunity to be the international leader in solar energy. But if we allow pessimism and rhetoric to get in the way of successful policy for this growing industry, we will have passed that opportunity on to foreign competitors.

Before we try to answer this question, we should define what is meant by the moniker “The Clean Energy Race.” Apparently, some view the race as “us against those-who-currently-make-solar-panels” or other clean tech products. I, on the other hand, support the notion that the race is much bigger than who is currently manufacturing our solar panels. What we really need to do is to look at the long term – the relay race of sorts – which requires us to foster innovation amongst our most talented people if we are to have a chance to ever regain the lead. We need to ensure our best and brightest embrace the opportunity of winning by enrolling in engineering or other technical programs (where the U.S. is widely known to be deficient). Only then, will the next generation of American innovators have the tools and intellectual horsepower to regain our once taken-for-granted lead in innovation in the energy field.

I am proud to say, I know the recent history of one engineering school pretty well. That school had on average only 20 (yes, twenty—that is not a typo) students enrolled in its nuclear engineering program during most of the nineties. Today, there are more than 200. Why did enrollment increase? There was a growing awareness of the market opportunities available because of the often predicted and reported growth/renaissance in the nuclear industry that drew the crowd. Does this increase then translate into greater enrollment in the overall engineering program or is it just the nuclear opportunity? Well in 2003, the engineering program accounted for approximately 8 percent of the total student population. Three years ago it accounted for 10 percent. Last fall it accounted for 12 percent. And this increase occurred while the overall student population was growing as well.

Perhaps a more telling statistic was that last year, the freshman class at this university grew by 30 percent and the number of Ph.D. students increased by 25 percent. Now, the underbelly of these rosy growth numbers is that in the electrical engineering Ph.D. program there was not one student that was a U.S. citizen. Where are the innovators who will lead the U.S. on the next leg of this energy innovation relay? Who can we pass the baton to?

Overall, the national uptick in enrollment in engineering programs while maybe not as dramatic as our sample school above is nevertheless encouraging to say the least. But we need our best and brightest to continue to study engineering. China is known for creating a Technological Institute from the ground up, and populating it with hand-picked students, because the state recognized the need for more engineers and scientists. China wanted to continue as a leader in the international marketplace. Can you imagine that ever happening in the U.S? I can’t. We let the market create the demand pull that is needed to achieve the growth in our technical schools. Besides, I am reasonably confident that if our Government were to choose where to send our brightest students, it would be based on some philosophically convenient major suited to the current political climate.

However, while the U.S. currently may be lagging in training our next generation of energy innovators, each of us in the energy industry has the ability to foster the up-and-coming energy stars who work for us, in order to ensure that we are competitive on the next leg of the Clean Energy Race relay.

If clean-energy means “low-carbon” (a definition to which I object), then the U.S. is way, way ahead of China in the clean-energy race. If it means low-everything-else, we are still way, way ahead, since China has a pathetic record on controlling genuine pollution.

Getting hung up on commoditized solar-panel or wind-turbine production ignores the phenomenal increase in coal-generated power in China—an increase that swamps that country’s installed wind and solar production. From parity with the U.S. around 2005, China’s CO2 emissions will grow to roughly double America’s in 2012.

Here’s the kicker: Market-driven energy choices are cutting more tons of CO2 in the U.S. than have been cut by wind and solar—even with their billions of dollars in subsidies.

Natural gas-fired electricity generation has grown from 15.8 percent of America’s power generation in 2000 to 24.1 percent in the most recent 12-month tally from the Energy Information Administration. That 8.3 percent increase is enough to cut 120 million metric tons of CO2 per year compared to coal.

Over the same span, wind- and solar-generated power grew to 2.75 percent of total power generation. That would cut CO2 by 108 million metric tons per year compared to coal power. So over the past decade, hugely subsidized wind and solar have done less to cut CO2 emissions than market-driven natural gas production.

This rising trend for gas-generated power is likely to continue, thanks to hydraulic fracturing and Adam Smith’s invisible hand.

In summary, for those who obsess about CO2 emissions and want to have a race, we are whipping China handily. And the market has done more to cut CO2 than all the subsidies, mandates, and regional CO2 agreements combined.

When it comes to market innovation, it’s clear the U.S. is at a critical crossroads in the global clean energy race. The U.S. government (irrespective of political party) does a poor job when it attempts to pick winners and losers in the energy markets. However, if unfair competition from China is upsetting the balance normally achieved by the free market, that may represent one of the limited circumstances in which greater governmental intervention is warranted in the short term.

Regardless of the competition, there is an even greater obstacle preventing growth in renewable energy markets in the U.S. – a complex patchwork of rules and regulations. With rules and regulations that vary not only from state to state, but even within a given state on a utility-by-utility basis, sustained development of renewable energy remains an undertaking fraught with political complexities and risks.

With the expansion of smart grid plans and the roll-out of smart meters, the role that the utility plays with renewable energy adoption becomes increasingly important. While some utilities have embraced a pro-competitive view on renewable energy, many others are less than enthusiastic about it.

A deregulated retail energy supply industry spurs customer choice, allowing companies such as BlueStar Energy Solutions to address customer demands through the provision of renewable energy options that customers would not have access to in regulated markets.

We must find ways to address America’s inability to bring cutting-edge clean energy innovations to market or forfeit our position as a global energy leader. To address these market challenges, the Federal government must step in with cohesive, nationwide standards and subsidies to simplify the landscape and promote research and innovation in the renewable energy markets. As noted by John Rowe, CEO of the Chicago-based utility Exelon, in his interview with The Wall Street Journal this weekend, this issue is one that eludes simplistic political labels. State and Federal government support through incentives and other policy mechanisms will be critical to allow U.S. renewable energy markets to compete globally, as the competitive landscape continues to erode U.S. market share, growth and business opportunities.

There are a number of ways to look at evaluating America’s success in solar versus that of other countries. One key indicator is job growth. American solar companies continue to add jobs. How do we know? We asked them. The Solar Foundation recently completed our second annual National Solar Jobs Census. It found that the combination of continuing innovation in the sector, coupled with growing demand boosted by the 1603 Treasury Program and incentives at the state level fueled job growth in all 50 states as the U.S. solar industry now employs more than 100,000 Americans.

We examined employment along the solar value chain, including installation, sales and distribution, manufacturing, utilities and other fields and included growth rates and job numbers for 31 separate occupations. The report includes data from more than 2,100 solar company survey respondents.

The 100,000 plus Americans who get up every day to work in the solar industry fill positions with a wide variety of job titles, including installers and assembly workers, but also marketers and accountants just to name a few. Employment in the solar industry grew by nearly seven percent since you last asked about America’s ability to compete in clean energy – making it one of the fastest growing industries in America. Compare this to anemic 0.7% overall job growth in the economy. For an even more stark comparison, fossil fuel energy production lost 2% of its jobs in the past year. More Americans now work in the solar industry than work in coal mining.

Job growth in solar is providing an economic lifeline to workers and areas that have been hit by the recession. We see this in factory workers in the rust belt who are now employed in solar manufacturing, in real estate planners who’ve jumped to solar in the wake of the housing bubble burst and in empty storefronts that are now occupied by growing solar companies. Over the next 12 months, nearly half of solar firms expect to add jobs, according to our Census.

Digging deeper into the data, there is an obvious pattern. States that have enacted policies that invest in solar have more solar jobs. Of the top 20 states with the most solar employment, 18 have a renewable portfolio standard and 15 allow third-party financing of solar projects. Employers pay attention to incentives and regulations when planning for the future. When policymakers create new incentives and encourage investments, it signals to employers that the business climate is friendly, thus prompting private investment and job creation.

The race for clean energy is far from over. Incentives that increase the adoption of solar for consumers and businesses and promote rules that create a fair competitive environment for solar energy relative to fossil fuel projects would help the American solar industry continue its impressive growth and provide jobs to tens of thousands more Americans.

(These comments were submitted by Gordon Brinser, president of SolarWorld Industries America Inc., headquartered in Hillsboro, Oregon.)

America’s solar manufacturing industry should be one of the economy’s bright spots. The U.S. booming solar business is one of the few growth markets in the current economy, yet America’s solar manufacturers have faced unwarranted plant closures and job reductions in recent years. So what lies at the heart of this disconnect?

China.

The answer is clear: China is cheating on global trade rules. China’s state-sponsored solar industry is receiving massive illegal subsidies and is illegally dumping crystalline silicon solar products into the U.S. market. The result is a decimation of American manufacturing, American jobs and fair competition. China’s violations of international law make it impossible for U.S. solar manufacturers to compete on a level playing field with Chinese solar manufacturers in our own market, let alone globally.

Consider this: Chinese solar manufacturers export nearly all of their production, and their dumping margins – the degree that illegal subsidies help them to lower prices -- are well in excess of 100 percent. China’s exports of solar cells and panels into the U.S. increased more than 350 percent from 2008 to 2010. Incredibly, Chinese exports in July alone exceeded those from all of 2010. There is no substantive domestic market for these solar cells and panels in China; Chinese companies produce solely for export.

U.S. subsidies and markets are open to all Chinese companies, but Chinese subsidies and markets are closed to competitors. In fact, that’s part of what makes them illegal: They provide Chinese manufacturers with a preferential benefit. Plus, China mostly has not even bothered to register its subsidies with the WTO every two years, which was an obligation that China assumed when it joined the organization in 2001.

Further, Rep. Stearns got it wrong. Chinese solar manufacturers have no production cost advantage to warrant their low prices. Labor accounts for only about 10 percent of production costs. Chinese companies import raw materials and equipment from the U.S. and compete for other commodity inputs just like everyone else. Add to this their extra shipping costs and comparatively lower labor productivity, and it is clear that their pricing is impossible without massive illegal subsidies and dumping.

China’s illegal actions are undercutting fair market value and threatening to eliminate America’s solar manufacturing. The non-market-based surge in Chinese solar manufacturing and exporting has been the primary cause for a 40 percent collapse in prices over the past year. Given the cost structure for making solar products, there is no way Chinese pricing could drop this low - in one year - without massive subsidies and dumping as a root cause. This artificial price decline has caused seven U.S. solar manufacturing plants to close or downsize during the past 18 months, wiping out jobs in Arizona, California, Massachusetts, Maryland, New York and Pennsylvania.

Make no mistake. China has a plan for the U.S. solar power market: to gut it and own it.

We cannot allow China to get away with it! America needs a strong solar energy manufacturing base to meet rising U.S. demand as solar energy becomes more and more mainstream. The U.S. solar industry has innovated for decades to put this unique American invention – harnessing the sun’s energy on a device made out of silicon – into factory production at a mass scale to bring solar power into our communities. If China’s illegal support of its solar manufacturers is allowed to continue, China would gain a de facto monopoly over the U.S. market, causing thousands more Americans to lose their jobs and making America more dependent on China. Moreover, with no competition on pricing, it would become a unilateral price-setter.

That is why Oregon-based SolarWorld Industries America, in conjunction with the Coalition for American Solar Manufacturing, filed antidumping and countervailing duty petitions this month with the U.S. Commerce Department and International Trade Commission (ITC) . We and the six other solar companies comprising the coalition together employ, directly or indirectly, thousands of American workers and represent a significant majority of U.S. production with manufacturing sites in virtually all U.S. regions: Northwest, California, Southwest, Midwest, Northeast and South. We expect the Commerce Department and ITC to complete their investigations in about a year, but their decisions can’t come soon enough.

America’s solar industry can compete with any foreign company, anywhere, anytime -- but only so long as those foreign companies adhere to international law to ensure they act on a level playing field. China, on the other hand, is committed to ensuring that its manufacturers win the U.S. solar market at any cost, even if it means massively breaking the rules to do so.

China’s solar industry is like an athlete whose team has given a bucket full of steroids. As long as China is allowed to continue cheating, there is no way America can expect to compete in the solar energy race.

Anyone who attended last weekend’s first ever Energy Day, held in Houston and organized by the Consumer Energy Alliance, would know that there is unbelievable innovation going on in the US alternative energy sector. To see the sheer number and variety of companies working to develop long-term alternative solutions in our country right now, it’s pretty clear that when we talk about this “race,” it’s probably fair to say that not only are we not losing it, but it is really just beginning.

Many people too narrowly discuss alternative energy possibilities as merely encompassing wind and solar. And while those are certainly two established and exciting alternative options, the possibilities go way beyond this. What about the companies that are trying to turn algae into biodiesel and those that are transforming biomass into natural gas for producing electricity? The possibilities are truly endless.

There is amazing work going on at our public and private higher education institutions that really exemplifies how US ingenuity and innovation can accelerate the drive to green energy. And part of what we need to do as a country is ensure that this type of scientific discovery is pushed down to high schools, middle schools and elementary schools.

One of the many fascinating exhibits enjoyed by the 12,000 guests of Energy Day was a model designed by four middle school girls and showcased a city that makes the most of all of our natural resources, including geothermal power from the ground and solar power from the sun to heat homes and large office buildings. It was inspiring to see such young minds at work but we need to do more.

In terms of how we as a country figure out how to harness this talent, innovation and these incredible ideas, we must continue to start early, work with our best young minds, establish incubators to weed out the winning ideas from the rest and seek avenues to spur additional competition and growth. After all, energy is our nation’s life-blood; it touches everything we do. Therefore we must do all we can to encourage the exciting innovation across the broader sector and access our resources to meet current needs. If we are going to champion an all-of-the-above approach to energy, which Consumer Energy Alliance strongly believes we should, then we need balanced assessments of the economic, environmental and performance-based factors of any new energy source, and continue to tap into the brain-power that has made America a leader in innovation.

The U.S. is very emphatically NOT losing to China in wind power. However, we are rapidly approaching a fork in the road, where decisions Congress makes will determine whether the enormous progress America has made in building a domestic industry continues or is rolled back.

The numbers tell the story:

- Wind turbine installations in the U.S. increased more than tenfold over the past decade, from a total of 2,650 megawatts (MW) at the end of 2000 to 40,181 MW (enough to power the equivalent of 10 million homes) 10 years later.

- In recent years, wind has muscled its way into the electric power mainstream. Wind energy’s cost has been reduced over 90% since 1980, driven by a continuing stream of game-changing technology advances. Utilities are increasingly choosing to rely on wind, recognizing its ability to guarantee low electricity rates for the long term. In fact, wind power has provided 35 percent of all new electric capacity installed in America over the past four years, more than coal and nuclear combined.

- Even as domestic installations of wind turbines were expanding dramatically, the domestic content of those turbines grew even faster--from 25 percent prior to 2005 to 60 percent today. As the nonpartisan Congressional Research Service (CRS) recently found, American wind manufacturing facilities have kept pace, growing from as few as 30 in 2004 to nearly 400 in 2010. Overall, wind energy supports between 2,000 to 3,000 jobs in Rep. Stearns's Florida and 75,000 across the U.S. As the CRS commented, “Wind turbine manufacturing is at the core of the multifaceted wind power industry. Because of the use of castings, forgings, and machining, turbine manufacturing is a significant contributor to U.S. heavy manufacturing.”

The bottom line? Clean, homegrown American wind energy is not only a manufacturing market that America can compete in, it’s a market that we are winning – with the support of a key federal tax incentive.

The federal wind Production Tax Credit, wind power's primary incentive, has been allowed to expire periodically since its inception in 1992, creating a boom-bust cycle. When taxes on the industry have increased, wind energy installations have dropped as much as 93%. Extending the PTC will help wind power become increasingly cost-competitive and keep generating badly needed income and taxes for rural communities. Imposing a substantial tax increase on wind will roll back the progress America has made in diversifying our electricity generation portfolio with this clean, affordable, homegrown energy source.

For the last five years, the Clean Air Task Force has been working with companies in China and the United States on joint ventures to develop and market clean energy technologies in both countries and around the world. Based on that experience, we believe that the metaphor of a zero-sum China-US race on clean energy is misplaced and drives us to the wrong conclusions. Here are some perspectives that may make for a more productive discussion:

China is a critical ally in moving forward low-carbon energy development. CATF is working in China not only because it is the world’s largest carbon-emitting country, set to double its emissions by 2050, but also because China is a can’t-miss place to demonstrate new clean technologies at scale. Why?

First, China actually has growing electricity demand and needs to build a lot of new capacity; it is far cheaper to include low-carbon features into new designs than to retrofit them. In contrast, with stagnant energy demand in the US, the full cost of new clean technologies here must compete against low marginal costs of existing plants.

Second, Chinese companies can build first-of-a-kind projects more quickly than in the US, due to substantial infrastructure construction capability that has been lost in recent years in this country.

Third, Chinese firms are willing to spend significant funds to develop and launch new technology; for example, China National Offshore Oil Corporation (one of the country’s largest energy companies) reportedly has an alternative energy R&D budget that may be approaching the size of the entire US Department of Energy’s. And fourth, of somewhat less importance, developing projects in China is less expensive, at least in the short term.

That’s why CATF is helping western companies – in coal gasification, CCS, solar thermal, and energy storage -- to find local allies in China that can quickly build clean energy projects at scale. Because the highest stakes race is the one to slow carbon emissions before we reach points of irreversible change. Winning that race requires commercializing every possible low-carbon technology as quickly as we can, wherever we can.

China’s engagement also means flow-back of valuable innovation and capital from China. Aside from being critical to helping the US and the world address climate change by being a test bed for innovative low-carbon technologies, China’s engagement also brings direct economic benefits to the US. First, the knowledge acquired by US-based companies developing first-of-kind projects in China will flow back to the US, reducing costs for clean technology deployment here and elsewhere, creating “reverse innovation.” Second, as a result of this cooperation, capital from Chinese companies is already flowing into US clean energy projects and manufacturing. The Wanxiang Corporation last year opened up a solar panel manufacturing plant in the US; China-based ENN is investing in Duke Energy solar projects in the US; and several Chinese companies are looking to gain valuable CCS experience by exploring joint ventures to do enhanced oil recovery-based projects in the Gulf States region. Third, Chinese companies are themselves developing innovative technology that can potentially be licensed to the US; emerging Chinese innovations in coal gasification and gas-cooled nuclear reactors are especially notable.

The significance of the low-end manufacturing race may be overstated. Recent events, including the recent trade petition submitted by seven US-based solar manufacturing companies (including SolarWorld, a German-owned company), have suggested China is unfairly subsidizing its solar panel companies. Of course the WTO should rectify any trade rule violations. IP theft must also be addressed. But it’s not clear how much retaining the low-end part of the clean energy supply chain matters in the end to US employment (although it may matter to company stockholders), or to building innovative clean-energy companies in the US that demand higher-end talent. First, much of low-end component manufacture in commodity items like solar cells and smaller turbine blades is moving to automation in any case, both in the US and China. Second, large-component manufacture such as increasingly supersized wind towers and turbines is likely to remain in the US, due to shipping costs. Finally, while much innovation undoubtedly stems from manufacturing experience, US companies manufacturing through joint ventures in China can still internalize that incremental learning.

Arguably, the US should focus on what it does best – high-end design, systems integration and advanced manufacturing – and not declare defeat if we lose the commodity end of the supply chain offshore, which is, in many cases, probably a losing battle anyway. We may have lost flat panel television and iPhone manufacture to China and South Korea, but does anyone seriously talk about trying to recapture it, or suggest that this development impedes US innovation in IT or electronics?

None of this means we should be complacent. American companies should accelerate, not slow, their partnerships with Chinese companies to demonstrate and commercialize technology. Government should continue to insist that China and its companies play by international trade rules and abide by IP protection agreements and rules. Finally, and most importantly, the US should play to its strengths at the higher end of the supply chain. That means adopting policies that accelerate the pace of energy innovation on our own shores through research, demonstration, and commercial scale-up of advanced energy systems – specific initiatives that we have detailed elsewhere: .

http://www.catf.us/resources/publications/view/102 and http://www.catf.us/resources/publications/view/101

Globalization is here to stay in clean energy, as in every other sector. Let’s be smart and play it to the advantage of the atmosphere and the US economy, rather than trying to run futile, distracting mercantile “races” that we are unlikely to “win.”

“Is America losing the clean energy race?” The simple and sad answer is…yes.

The wealthiest, most innovative and capable nation in modern history risks getting beaten to a pulp in the competition for the $2.3 trillion global clean energy market. What’s worse is that it’s our own fault if we lose.

We know what to do to compete. We need to make it easier for emerging companies to have access to capital through an independent Clean Energy bank and reforms in the tax code that free up private capital. We need to fund innovation so that new technologies are invented and built in the United States. We need to create domestic markets for clean energy technologies by driving demand with a national clean energy standard, a feed-in tariff or price on carbon. Republican and Democratic governors, and the governments of China, India and the European Union have put similar policies in place with great success.

We know there’s huge global demand for clean energy. Global investment in the clean energy sector soared 59% in 2010, to $211 billion, and is expected to continue its rapid growth pattern in 2011 and beyond. China’s investment in clean energy has enabled it to manufacture half of the world’s solar panels and wind turbines and create 100,000 new clean energy jobs every year.

The United States desperately needs the long-term economic opportunity that clean energy presents. The Chinese government was disappointed with 9.1% economic growth in the 3rd quarter 2011. The United States sputtered along at 0.9%. Where are the businesses to drive growth? Overall manufacturing in the U.S. was down 4.4% at the end of the 3^rd quarter 2011. But the American solar industry? Up 66% from the 1^st quarter 2010 to the 1^st quarter 2011. The newly energy-conscious American automotive industry? Up 11% over last year. It’s clear that there is profit in clean technologies—we are just not taking advantage of it.

If we know what to do, know there’s a huge clean energy market and need the economic growth, what’s the problem? It is certainly not because, as Rep. Cliff Stearns claims, “We cannot compete with China.” Let’s be very clear: the United States can out-compete any country in any technology we set our minds to.

We are losing the clean energy race today because some conservatives on Capitol Hill like Rep. Stearns would rather score political points by attacking an emerging sector of our economy than help it blossom and drive growth. The policies we need are no different than the policies that have driven technological innovation since the turn of the 20th century. These public-private partnerships helped the rise of the American oil industry, automobiles, civilian aviation, nuclear energy, the Internet and biotechnology.

There were always risks and always some failures in the American model of public-private partnership for innovation. In the past, such failures were accepted as part of the innovation process that drove our nation’s long-term growth—and it was understood that the losses from these failures were far outweighed by the economic benefits from the more successful initiatives. Today, political opportunists seize upon such failures to gain an electoral advantage, no matter how much it could hurt the economy. For the sake of the United States’ economic future and our hopes of capturing a meaningful share of the $2.3 trillion global clean energy sector, this has to stop.

CHINA SHOULD PLAY BY THE RULES AND AMERICA SHOULD PLAY TO WIN

There’s no doubt the US is losing the clean-energy race. In 2010 our level of investment in clean energy fell behind both China and Germany, with a growth rate that is 11^th among the industrial nations. Last year, China gave $30 billion to its largest solar manufacturers, 20 times the amount that the United States gave, according to Jonathan Silver, former executive director of the U.S. Energy Department's loan program. As a result, in 2010 China sold more than half of the world’s solar panels, and is now gearing up a similar effort to dominate global wind markets.

We are consistently losing both manufacturing and deployment leadership in clean energy technologies which were pioneered and developed in the United States. That’s simply not worth debating – the interesting question is what should we do about it?

There are, broadly, four approaches.

GIVE UP

The view of the Koch Brothers (who don’t want competition for fossil fuels), coal companies, and much of the Republican leadership Congress, including Representative Cliff Stearns, who is leading the witch-hunt into “Who Lost Solyndra?” Attacked by President Obama for saying the US should not try to compete in manufacturing solar and wind power, Stearns responded that his position was based on the fact that “these other nations have cheaper labor, no environmental or safety standards, less regulation and easy access to raw materials….” False. Of the world’s ten largest wind manufacturers, five are in countries with higher wages and less access to raw materials than the US, one is American. The main raw material in a solar cell, polycrystalline silicon, is made in the US and exported to China. None of Stearns’ stated “advantages” are a significant part of why China – and Germany – are outpacing the US.

INVENT ONLY

Represented by the Breakthrough Institute, and Republicans like Alaska’s Lisa Murkowski, along with some high tech advocates, this school argues that as long as the US keeps getting more patents and inventing more new technologies, we’ll make the big bucks – who cares where the stuff is made or deployed? The answer is that jobs don’t flow from invention alone – a point made most eloquently eighteen months ago by Intel’s Andy Grove

They flow from the combination of initial innovation, market creation, manufacturing , deployment, and perfection. It’s the package that drives the jobs – and the competitive edge. The US dominated auto engineering in the 20^th century not because we invented the basic technologies – they were mostly European. We dominated because we build the roads, created the assembly line, and because Henry Ford decided to make his workers his customers, generating the mass market. The key American perfecting technology – Kettering’s self-starter – was not invented until 1915, well after American dominance in autos was well established.

A variant approach is to concede that America needs big markets for renewables, and that jobs and leadership will flow to the country with the largest volume of clean energy, but to argue that manufacturing doesn’t really matter. This is the approach taken by some who argue that while the US ought to have a renewable energy standard, efforts like the DOE loan guarantee program to bring manufacturing back to the US are foolish – what matter is how much clean energy we buy, not how much we make. This has been the response of many solar energy development firms to concerns about the tactics used by the Chinese to compete in the solar manufacturing arena – if the Chinese want to sell solar panels cheaply, even at a loss, that builds US markets and helps create jobs installing solar power.

ENFORCE THE RULES

Last week a group of US Solar manufacturers filed unfair trade complaints against China, arguing that Chinese companies were receiving massively unfair subsidies which allowed them to dump their solar cells in US markets at unfair and economically unrealistic prices. The complaint, joined by Oregon Senators Ron Wyden and Jeff Merkeley, paralleled an early US government complaint against similar Chinese subsidies for wind turbines.

So what are the rules? Are the Chinese breaking them? How important is it if they are?

Grossly oversimplifying, under world trade rules, a country can subsidize a particular industry to help it grow. What it cannot do is subsidize exports – it has to subsidize a whole industry. And companies cannot export below cost to get control of the market.

Initial Chinese solar and wind subsidies were not accompanied by any massive growth in domestic sales of renewables in China. China was manufacturing wind and solar, exporting them, and building coal plants domestically. And most economists believe that by keeping its currency artificially cheap the Chinese also subsidized all of their exports, not just clean energy. So those complaining about artificially cheap Chinese solar and wind exports start off with some pretty potent arguments. And since the cost of manufacturing any new technology comes down dramatically with scale, if the Chinese built up the scale of their wind and solar industries with unfair subsidies, that’s a big deal, one that disadvantages US manufacturers now and into the future.

But having said that, the Chinese have now taken two very important steps to create huge domestic markets for clean energy. They established a $0.075/kwh feed-in tarrif for wind several years ago, and have tacked on a $0.15/kwh price for solar – this is much more than the US has done to encourage domestic deployment of our solar and wind products.

We ought to make China play by the rules. But they may be starting to do so anyway.

PLAY TO WIN – WITH MANUFACTURING

And if all we do is go after the Chinese when they cheat, we’ll still lose. The way you win a game is by setting out to win it. And if the game pits countries against other countries, Team USA has to play. That’s the final perspective on the clean energy race, and its strongest advocates are major corporate leaders like – unsurprisingly perhaps – Andy Grove – and more surprisingly Andrew Liveris, the CEO of Dow Chemical. These leaders see our loss of the clean energy race as emblematic of a broader national failure – the inability to see that manufacturing, whether for established products like cars or new ones like solar cells – is the key to economic vitality.

Manufacturing sits in the middle of a supply chain. You have to invent wind-turbines before you can make them, and you must have a market downstream into which you can sell them. But if national policy makes this crucial middle link unable to compete, then the whole supply chain eventually shrinks.

We need an American commitment to become first in manufacturing clean energy technologies. That’s going to require, upstream, that we invest in programs like DOE’s ARPA-E, so we have the best new technology. That’s going to require, downstream, that clean energy developers have fair access to utility markets and customers, and reliable access to capital to build their turbines and solar farms. But it’s also going to require a national manufacturing innovation policy, that enables the US to deploy the new ideas it creates, manufacture the products its markets demand, and do so on a level playing field with the rest of the world.

TRADE http://www.nytimes.com/2011/10/22/business/global/china-warns-of-bad-effects-if-us-turns-protectionist.html?_r=1&pagewanted=2

The study calculated that the United States imported $1.4 billion worth of solar panels and other solar products from China last year, but exported solar factory equipment and raw materials valued at $1.69 billion to $1.98 billion to China.

But SolarWorld Industries America, the lead company in the trade filing against China, has pointed out that shipments of Chinese solar panels to the United States surged to $1.6 billion in the first eight months of this year.

“The United States remains the global leader in clean energy innovation, receiving 75 percent of all venture capital investment in the sector, a total of $6 billion in 2010, but the U.S. has not been creating demand for deployment of clean energy. As a result it is losing out on opportunities to attract investment, create manufacturing capabilities and spur job growth

The United States excels in renewable energy innovation, but lags in translating it to commercial-scale production. We could handily win the race for clean energy if we maintain the political will and put in place stable, long-term supportive public policy.

For instance, the United States is a leader in biotechnology research and development for more energy efficient manufacturing processes that are inherently cleaner, utilizing renewable resources and generating fewer pollutants or byproducts. Industrial biotechnology is also the basis for biofuels, renewable chemicals and biobased products. These innovations in biotechnology can revitalize America’s manufacturing infrastructure and provide markets for U.S. agriculture, where we also lead in productivity.

American innovation is creating great potential to build a stronger economy, sustain economic growth and generate new jobs by increasing the adoption of biotechnology innovation. Converting biomass into fuels, energy, and chemicals has the potential to generate upwards of $230 billion to the global economy by 2020, according to the World Economic Forum. By working toward the creation of a biobased economy – using renewable resources for energy, fuels, chemicals and materials – we can also reduce our reliance on foreign oil.

But translating any innovation into practice requires long-term planning and capital investment. And that requires consistent, stable policies over a long time frame.

U.S. energy policy is too short-sighted and reactive to encourage adequate investment in renewable energy and bioproducts. Further, while there is good support for research and development of clean energy technologies, too often there is no support for commercialization of the fruits of that research. In the end, this encourages continued reliance on incumbent technologies. Meanwhile, foreign countries can attract companies to commercially develop American-made technologies simply by offering support over a longer time period. We should be working to create a new biobased economy to preserve our lead in technology and innovation.

You can debate the merits of wind and solar and whether America's leading or following all day long. And this debate about future energy technologies is an important one to have.

But while you're having that debate, there's one energy technology that there is no doubt that America is winning on - and that is clean diesel technology. US companies are technological and manufacturing global leaders in producing highly efficient and low emissions diesel engines, fuels and equipment that just so happens to also be a highly valued US export.

In a recent study by Aspen Environmental Group and M-Cubed, diesel engines, fuels and equipment are an export powerhouse for the U.S. with five times the value ratio of the national average, amounting to 4.35 percent of all US exports. Making, selling and servicing these advanced technolog diesel engines are 1.25 million Americans in an industry that contributes $480 Billion annually to the US Economy through both direct and indirect means. Diesel engines are a productivity multiplier as well, with every one dollar invested in diesel technology facilitating $4.51 in added income elsewhere in 16 related industries (construction, farming, mining, warehousing, etc). full study is at www.dieselforum.org/economicreport.

Globally, today diesel power moves 94 percent of all trade in some form (truck, train, boat, barge). And diesel engines are the most flexible engine technology for use of w wide range of first and second generation renewable biofuels like biodiesel and other fuels engineering from algae or sugars.

In the haste and hyperventilation about new economies we ought to not lose sight of what is working in America and which technologies and sectors where America is leading, and diesel power is a great example of that.

Over the last 36 months, over 100 new US renewable energy and energy efficiency manufacturing plants have opened in the United States. According to a report by Ernst & Young. Global private sector investments in the renewable energy sector reached a record $243 billion in 2010, an annual increase of 30%,. On Oct 13, 2011, Reuters reported that “wind farm and solar park financing surged to a record $41.8 billion in the third quarter, even though clean energy share prices and the European economy slumped, a report by research firm Bloomberg New Energy Finance”.

A new report released in September (2011) by The Pew Charitable Trusts stated, “Globally, 2010 clean energy finance and investments grew by 30 percent to a record $243 billion. The United States received $34 billion in equity last year, a 51 percent increase from 2009.” But a 51% increase isn’t shabby. A new report shows that the US is central to the global solar supply chain. In 2010, US solar firms achieved a positive trade flow of $1.9 billion (USD) globally, according to Solar Energy Industries Association's (SEIA) and GTM Research's US Solar Energy Trade Assessment 2011. Photovoltaic (PV) components accounted for more than 99% of the year's exports, with solar heating and cooling (SHC) claiming the remainder of the positive balance. For the US PV manufacturing industry, 2010 was a record year. Exports totaled more than $5.6 billion, with PV polysilicon feedstock and capital equipment leading all components at $2.5 billion and $1.4 billion, respectively. The leading destinations for US-sourced PV components were China and Germany.

A new US solar employment report just released by The Solar Foundation shows real net growth in US jobs in the US solar industry, stating “Over the last 12 months solar manufacturing jobs grew nearly 25 percent, and employers expect to add an additional 3,473 new jobs by August 2012. Jobs at solar installation firms grew by 5.6 percent and are expected to grow by an additional 22 percent – 13,068 new jobs – by August 2012”.

The bad press on the recent bankruptcy’s of EvergreenSolar and Solyndra is distorting the status of the US solar industry and by default, all the green industries. Evergreen’s demise was no surprise. Bloomberg News reported, “Since 2010, Evergreen has been the worst-performing company on the Bloomberg Global Leaders Solar Index.

Solyndra’s failure also was not a surprise to many of us, whose production exceeded $3/watt and whose product was brittle and had larger-than-industry standard breakage. Solyndra’s failure has nothing to do with solar or green industries.

Most US industries have turned to China for scaled-up manufacturing – which has nothing to do with who leads in clean energy. In fact the US leads in innovation. Leads in system integration, leads in building material integration, leads in resource assessment, mapping and forecasting, leads in innovative support and tracking structures, and leads in innovative storage, nanotechnology materials, and advanced manufacturing processes.

To confuse solar and wind’s manufacturing in existing solar and wind technologies with global technology leadership is foolhardy and substantively wrong. And there are a host of green technologies, other than solar and wind, where the US is a global leader including geo-exchange, compressed and battery storage, concentrated solar power, management software, biomass power and fuels, marine energy, small wind, solar daylighting, geothermal, and advanced fuel cells – to name a few.

Like too many of today’s elected officials, Rep. Stearns goes for the glib, hyperbolic sound bite that gets attention but does little to shed light on the problem or the solution.

His first mistake is lumping the wind and solar industries together. While solar and wind are similar as renewable energy sources they are a good bit different on many fronts, the biggest of which is that solar is about 10 years behind wind in terms of becoming a more mature form of renewable energy.

In the world of wind, the majority of turbines are built in either the U.S. or Europe. China does have an increasing market share in America, but it’s still dwarfed by other manufacturers. Even if the Chinese could manufacture wind infrastructure more cheaply than in the U.S., you have to factor in the reality that shipping turbines the size of a bus or blades the size of three buses is extremely expensive. The real threat to the U.S. wind industry supply chain is government policy uncertainty (more on that later).

Solar is different as solar panels manufactured in China can be shipped to the U.S. and the Chinese have flooded the PV market that has resulted in the price of solar panels tumbling. There is no doubt that China is taking advantage of its ability to provide equity for projects and cheaper labor/manufacturing costs to advance its solar industry. However, one need only to look back a few decades when everyone thought Japanese cars were always going to be superior to American automobiles. Just like that sector has morphed into a competitive global industry, we should expect the same with solar – from R&D to manufacturing to development. Ultimately, this makes it more likely that solar can begin to offer a real option for a piece of the energy pie.

As for the U.S. Government’s role, the only thing it needs to do is what it politically is unable to do: provide certainty. The government could extend production tax credits for wind and include a phase out on a declining scale over four to six years beyond 2012. The government could set a national renewable energy standard with a reasonable target (15% by 2025?) and then sit back and watch the free market thrive in a growing, certain marketplace.

However, even if that doesn’t happen, I would still suggest that one never, ever underestimate the ingenuity of the American manufacturing sector.