China, Europe Lapping the United States in the Clean Energy Race

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BY KERRI SHANNON, Associate Editor, Money Morning

If the United States doesn’t take drastic measures to engineer new clean energy policies and investment initiatives, it will continue to take a back seat to China and Europe, which are driving the clean energy market toward a profitable future.

Both clean energy companies and a skilled workforce are heading overseas, where government policies are creating a more welcoming and promising market for clean energy products.

Take Massachusetts-based Evergreen Solar, Inc (Nasdaq: ESLR). In 2008, it used $58 million in government aid to open a new Massachusetts factory to build silicon wafers and cells and assemble solar panels. But in November 2009, it announced the assembly of solar panels would be moved to Wuhan, China, where solar panel manufacturing will cost far less than in the United States.

Evergreen earlier this month said it would expand its European sales division to cater to the robust government incentive programs in Europe, which are encouraging businesses to adopt more renewable energy practices.

NatCore Technology Inc. in New Jersey discovered how to make solar panels thinner, making them more cost efficient to manufacture. No American companies showed interest in the technology, so it reached a deal to finish developing and producing the technology in Changsha, China.

“The United States’ competitive position is at risk in the emerging clean energy economy,” Phyllis Cuttino, director of the Pew Environment Group’s Global Warming Campaign, said in a statement. “Even in the midst of a global recession, the clean energy market has experienced impressive growth. Countries are jockeying for leadership. They know that investing in clean energy can renew manufacturing bases, and create export opportunities, jobs and businesses.”

Overall 2009 global renewable energy investment came in at $162 billion. Investment only fell 6.6% from 2008 – small potatoes compared to the 19% decrease in the oil and gas industry.

Investment next year should reverse and make a huge leap forward. Global renewable energy investment expectations for 2010 are $200 billion, up 25% from last year, according to Bloomberg New Energy Finance.

It’s not a passionate movement to save the earth that’s behind the clean energy market; it’s market competition and job creation driving the clean energy race – and the United States is losing.

Prices of renewable technologies are decreasing, making them more competitive. If climate concern isn’t enough motivation to encourage use, economic and employment benefits will.

The city of Baoding, China is a perfect example. The city’s pristine water quality made film production one of its top industries. But when digital cameras put an end to that era, the city needed new industries to thrive. Baoding saw an opportunity in clean energy, and now it is one of the world’s largest manufacturers of solar products.

China is also enlisted Arizona-based solar panel manufacturer First Solar, Inc (Nasdaq: FSLR) to build the world’s largest solar plant in the Gobi Desert.

Onshore wind energy is China’s other clean energy focus: It’s wind capacity doubled in each of the past four years.

China catches flack for the amount of greenhouse gases its plants release, but it has steps in place to reduce emissions while creating jobs and enjoying corporate growth.

“We may spend the next few years pushing China to do more, but will then spend all the years after that chasing them as they hurtle profitably down the road to the low-carbon transformation,” said Todd Stern, the U.S. Special Envoy for Climate Change.