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 December 02, 2009
Why Europe Wants U.S. Cleantech Leadership

 

From the war in Afghanistan to economic recovery, the world often looks to Washington for guidance.

But recently, sitting in a packed Capitol Hill caucus room, I saw a parade of foreign clean energy pioneers teach spellbound American power brokers about leadership.

There at the American Council on Renewable Energy's Phase II Policy Forum, it became clear that we have been the ones waiting for marching orders.

Energy Change at the Heart of Political Power

Everything from the window treatments to the columns in the hallway outside signaled that we were in the very heart of U.S. political power. And ACORE is one of very few groups that can get such a prime spot on the Hill for its own policy powwow. Coming from just across the street, one of the first to address the ACORE crowd early that Friday was Senator Jeff Bingaman of New Mexico. 

Bingaman, sponsor of the American Clean Energy Leadership Act (S. 1462), was the first of several speakers who asserted that greenhouse gases and other noxious emissions do serious damage to the U.S. economy, and that the market is not yet factoring the environmental, economic, and health-related costs of carbon-intensive energy generation.

Yet Bingaman and others from policy and industry grew in chorus throughout the day to make the case that renewable energy is "its own task" - not just a component of emissions reduction plans.

In a letter on November 16, Bingaman told President Obama that through a Clean Energy Deployment Administration (CEDA), his energy bill could create 350,000-500,000 jobs in R&D and implementation over the next decade.

That point - that clean energy should be considered as a wide-reaching economic change - was really driven home when Hermann Scheer, a legislator in Germany's Bundestag, gave voice to the international urgency of America's clean energy transformation. In prodding the businesspeople and policy types I sat with to action, he flipped D.C.'s "go it alone" attitude on its head.

A Message from Europe: Don't Wait, Go On!

Hermann Scheer is something like a Founding Father of international clean energy policy progress. He was instrumental in the crafting of Germany's feed-in-tariff (FIT), which kickstarted a national clean energy employment boom that now finds Germans with 8 times as many jobs in wind energy and solar power per capita than the United States has.
And if he wanted to, Scheer could have asserted with his insistent hand gestures and Teutonic emphasis, that the U.S. should move in lockstep with the European Union or the United Nations. But he didn't.

Essentially, Scheer said not to wait for anyone, especially the traditional energy concerns - the "coalition of postponers," as he put it - to approve a massive green power buildout. With every year that complacency is excused, America falls further behind.

After all the bashing of Old Europe in the Rumsfeld era, it was a bit surprising to hear Scheer encourage American exceptionalism.

"No technological revolution in the last 200 years happened based on an international treaty. Not one!" Encouraging action over reaction, Scheer refused to shed crocodile tears for energy industries that will be phased out during clean power implementation. "Nobody said ten or fifteen years ago that we should slow the introduction of laptops because we should protect the typewriter industry!"

So why would this firebrand from southern Germany travel to D.C. to prod a national renewable energy boom that will compete with his own country?

Well, the Ernst & Young Renewable Energy Attractiveness Index consistently ranks the U.S. as the most appetizing market on earth. Chalk that up to size and potential.

For all their trailblazing, European economic chiefs would give anything for access to a robust American market. The U.S. is still the strongest economy in the world; in recent generations, Germany's very economy was restored with American money and ideas.

Scheer has seen a shift "from a fuel-driven business to a technology-driven business" that can compete far beyond Germany's borders. By emphasizing technology over raw resources, Germany's historically strong automotive and chemical industries have been reinvigorated. And entrepreneurs from other European countries are all gearing up to compete with an American cleantech boom that they see as inevitable.

I've personally spoken with many policymakers and businesspeople over the years about the segmentation of the American market along state lines and differing regional priorities. The overall feeling I get from them is genuine confusion as to why Washington hasn't taken the reins.

As it stands, even the U.S. stimulus package has served to do more for foreign clean energy companies than to stimulate a homegrown generation transformation. Leo Gerard, head of the United Steelworkers Union, pointed out that the 85% of clean energy spending under the American Recovery and Reinvestment Act is going offshore.

If Ed Markey has his way, dog-eat-dog competition will ensure that renewable energy money stays in the States.

"A Darwinian, Paranoia-inducing Marketplace"

Congressman Edward Markey knows that the worldwide market in cleantech is expected to rocket past the half-trillion-dollar mark by 2020. He wants a stake in it, with Washington taking the lead to help homegrown companies avoid the "Green Valley of Death."

That's where many good ideas die because money simply costs too much from private sources. The government is in a position to help long enough to usher startups through the danger zone and into market viability. Morgan Stanley's Jeff Holzschuh had already told the ACORE gathering that capital markets simply aren't big or deep enough to provide stage-1 financing like government can.

"Our job is to create a Darwinian, paranoia-inducing marketplace."

Ed Markey, a Massachusetts liberal Democrat, didn't sound like a bleeding heart at the ACORE conference. He sounded like a rabid capitalist: "Our job is to create a Darwinian, paranoia-inducing marketplace." Past the initial incubation period, Markey said, he would like nothing more than for the government to "get out of the way."

It's happened before in telecommunications. Markey was involved back then, too. The end result of D.C. loosening its grip on the frequency spectrum while encouraging innovation is that today's high-speed, wireless data flow would be completely unrecognizable to Alexander Graham Bell.

Sadly, much of the energy world looks pretty much the same as it did in Bell's day.

Markey's calls were echoed all day by people like BP Wind Energy's John Graham, who wants policymakers to establish a value chain based on clear carbon pricing. In telecoms, policy moves helped make American companies like Qualcomm (NASDAQ: QCOM) and Nextel (NYSE: S) leaders worldwide. Their domestic success brought prices down, enabling poorer countries like Kenya to leapfrog fixed-line infrastructure and achieve maximal efficiency as their markets develop.

When it comes to a decision between products from the U.S., Germany, Denmark, or even China, consumers from those countries won't even be the main people entrepreneurs need to impress.

Kevin Parker of Deutsche Bank Asset Management said that by 70% of clean energy technology demand growth by 2030 would come from companies outside the 30-country Organization for Economic Cooperation and Development (OECD, or "rich country club"). That means that a sizable portion of the people we want to sell energy products to in the future probably have no stable household energy supply today.

That's a promise for market-based growth that the United States should be happy to take the lead on.

In the coming days, you'll learn about an unlikely cooperative effort between America's top technology minds and some of the world's most entrenched petroleum partisans. Stay tuned.

Regards,

 

Sam Hopkins
Sam Hopkins
International Editor