As the global demand for energy rises, the world faces a daunting array of challenges in order to supply energy in a clean and affordable manner. The U.S. is taking a huge gamble by neglecting the adoption of clean energy sources, allowing emerging economies like China to take the lead in manufacturing renewable energy products such as wind turbines and solar panels.
According to the International Energy Agency (IEA), approximately $26 trillion will be spent on the world’s energy infrastructure between 2010 and 2035. This investment presents an unprecedented opportunity for economic growth. The country that positions itself as the center for innovation and manufacturing of clean energy technology stands to benefit tremendously over the coming decades.
The private sector in America has been unable to commercialize many clean tech innovations due to the lack of a long term energy policy. In the meantime, the European Union (EU) and China have led the push for the adoption of clean energy technologies, many of which were originally developed in the U.S. If America hopes to remain competitive in this rapidly growing market, the government must develop a national energy policy that puts forth a clear set of incentives and goals for companies to pursue.
Clean energy legislation has been led thus far by progressive state governments interested in attracting more manufacturing jobs. A state-led initiative to make the energy transition has several disadvantages. Due to the high fixed costs associated with manufacturing and deploying energy technologies, companies require confidence that their investment will pay off in the long term.
A national Feed-in Tariff that mandates utilities to purchase a portion of their base load from renewable energy sources would go a long way towards encouraging companies and investors to pursue more domestic projects.
Furthermore, the establishment of a nationwide target for renewable electricity generation and a strategic plan for America’s energy mix will encourage companies to setup domestic manufacturing plants. During his State of the Union address four weeks ago, President Obama set a goal to produce 80 percent of America’s electricity from clean energy sources. This is an extremely ambitious task that requires long term planning on the part of government and industry.
The most immediate mandate of a national energy policy should be to eliminate America’s dependence on foreign oil. According to the Census Bureau, over $1.3 trillion was spent on oil imports over the past four years, accounting for nearly half of the nation’s trade deficit. Between 2000 and 2008, the price of gasoline shot up from $1 to nearly $4.20 per gallon, adding an average annual burden of $3200 on each household. By providing tax credits to electric vehicle consumers and subsidizing battery and vehicle research, the federal government can hasten the transition to an oil-independent economy.
As the transportation sector shifts to become less oil-dependent, the demand for electricity will rise, making renewable sources such as wind and solar more economically viable. The federal government must ensure that America has a manufacturing base capable of supplying this demand by investing in vocational programs to create a highly-skilled labor force.
According to a report published by the Pew Research Center, China spent over $34.6 billion on clean energy commercialization in 2009, exceeding the U.S. by $18.6 billion. This trend must be reversed if the U.S. hopes to prevent emerging economies from out-competing American firms for domestic clean energy projects.
Some say that the federal government should not intervene to help clean technologies be more viable, and that any solution to our energy crisis must be driven solely by private industry. While I agree with this sentiment, the current energy ecosystem is setup to unfairly favor conventional energy sources.
There are also those who argue that now is not the time for a massive government led investment in clean energy, with the rising national debt and high unemployment. Most experts agree that clean energy investments can help the U.S. lower its unemployment rate and lead to economic growth. If not now, when?
Solving the energy problem will be one of the defining challenges of my generation. The federal government must act now and provide a national energy strategy that addresses all the issues facing the industry today. Doing so will return manufacturing jobs to America and provide long term economic growth and prosperity.