How to beat China at its own game
American politicians campaigning now would do well to stop polarizing the climate change debate and start talking about jobs, economic development and beating China at its own game.
That would mean employing social capitalism to create a powerful national energy plan that ignites the private sector through public incentives. Although the Chinese are faced with horrible environmental conditions, at least they are doing something about it and may win an economic war in the process.
Aided by a currency peg to the dollar — many say an unfair manipulation that has hurt U.S. exports — the Chinese are currently winning the trade battle. Imports from China surged to $33 billion in July, a figure not seen since the dark days of 2008, ballooning the U.S. trade deficit with the People’s Republic.
To date, U.S. policymakers are losing the Earth Race and the only environmental target they can hit are their own feet. The Chinese recently pulled ahead in the contest, announcing through its State Information Center that it would spend $738 billion in renewable energy projects over the next decade.
By any measure, that’s a great leap ahead of U.S. clean-tech efforts. The stimulus plan set aside about $36 billion for a host of U.S. Department of Energy-led projects in the wake of the 2008 financial meltdown. In contrast, China’s stimulus investment for reducing greenhouse gas emissions was $221 billion, according to a report by British Bank HSBC.
What’s at stake isn’t whether climate change will be tackled this year by the world’s largest economy. It’s a matter of millions of new jobs that will likely flow to China, Germany and any other country with a comprehensive policy. Even poor, tiny Portugal has a better energy plan — it gets more than one-fifth of its energy from renewable sources, whereas the U.S. only gets 4%.
The International Energy Agency estimates that there’s a $27 trillion market for clean-tech over the next 50 years. If the U.S. just captures 14% of this business, that creates 850,000 new jobs, reports the World Wildlife Fund. Clean energy is not only a proven job creator, it’s relatively recession proof, according to a Pew Charitable Trust study. It declined only 6.6% last year despite one of the worst economic climates since the 1930s.
A tremendous opportunity for America is being lost as Washington has stumbled at every turn this year when it had a chance to launch a world-class energy policy.
Despite the passage of a U.S. House plan to address climate change and promote energy projects, the Senate was unable to bring any energy bill to the floor and recessed this summer without doing a thing. Not even the largest oil spill in history was a call to arms.
Misguided deficit hawks have been deriding clean-tech as an expendable line-item. Some $3.5 billion in renewable energy loan guarantees have been rescinded this year, according to the Solar Energy Industries Association, a trade group. And an untold number of clean-tech ventures have been put on hold. If the U.S. doesn’t get in this game soon in a big way, it will be playing catch-up for years.
So, to help our country along, here is what we must do:
• Increase and extend loan guarantees and tax breaks for all clean-tech companies over decades, not year to year. A national energy program shouldn’t be subject to the political climate of the moment.
• Create incentives for all consumers to buy clean power. There’s a reason why Germany is one of the largest manufacturers and consumers of solar power appliances. Utilities buy back home-generated power over time. The U.S. needs a renewable energy portfolio standard to do the same.
• Create financing that favors energy-efficient buildings. That means widespread programs for “green” mortgages that offer lower rates for environmentally friendly buildings. That would stimulate the overall housing market and green building.
• Enact a permanent national trust fund to build/repair infrastructure in an environmentally friendly way. By my rough estimate, we need at least $5 trillion to fix crumbling roads, bridges, water systems and other public amenities. (The estimate is based on what the American Society of Civil Engineers projected should be spent to fix up essential infrastructure in 2009 minus what was allocated by the stimulus plan.)
Washington has battled many enemies over the years and rallied Americans to the cause. When it comes to forging a long-term, job-producing U.S. energy policy, though, their worst nemeses are stateside. So having an external foe may rouse more productive emotion than simply citing numbers and bungled opportunities.