According to the Pew Study, “The U.S. is Falling Behind on Energy Research?”
The U.S. lags behind many of its G-20 partners in clean energy finance and investment, according to a new study by the Pew Charitable Trusts.
Many factors, including a tight credit market and the lack of a strong national framework for clean energy funding, are cited as contributing to the U.S.’s declining position in the ranks for total investment and investment intensity. As of 2009, China has taken the U.S.’s former top spot in overall clean energy investment, dedicating $34.6 billion to the sector. Spain leads the G-20 nation’s in investment intensity, while the U.S. ranks 11th. The report also points out that the U.S. has yet to put into place several national clean energy policies that are becoming standard among G-20 countries.
The Pew study examines G-20 investment during a period of remarkable growth. Since 2005, global clean energy investment has grown by 250 percent. Even during the 2009 economic downturn, investment declined by only 6.6 percent, while investment in other sectors plummeted. Last year, global clean energy investment was estimated at $162 billion, approximately $110 billion of which came from G-20 countries. The study cites estimates that clean energy investment will increase 25 percent to a record $200 billion this year.
U.S. investment, however, has not kept pace with the rapid growth in other countries. For the first time in five years, the U.S. has fallen to number two in overall investment. In 2009, U.S. clean energy investment totaled $18.6 billion, 40 percent less than in 2008. Numbers improved in the latter half of 2009, as initial funding from the American Recovery and Reinvestment Act became available, but remained far below Chinese investment for the year. The situation is even more stark in investment intensity, where the U.S. ranks in the lower half of the G-20.
There are a few encouraging notes in the report for the U.S.. The U.S. venture capital industry remains the strongest in the world and continues to support the development of new companies and technologies. The U.S. still leads in installed renewable energy capacity, although it ranks second in both of the categories Pew uses to evaluate capacity (China leads in the wind, small hydro, biomass and waste category; Germany leads in solar, geothermal and marine due to its leadership in the solar sector.) While credit markets remain tight, Recovery Act funding for clean energy should help improve U.S. investment levels in 2010.
The study notes that the U.S. has yet to pass several policies that other G-20 countries have employed to increase investment. While clean energy tax incentives and auto efficiency standards are in place, the U.S. lacks a carbon cap and carbon market system, a national renewable energy standard, feed-in tariffs or green bonds.