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News : International Last Updated: Nov 23, 2009 - 3:47:05 AM


Asia’s rising “clean technology tigers” - - China, Japan, and South Korea - - to overtake United States
By Finfacts Team
Nov 20, 2009 - 12:52:44 AM

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Asia’s rising “clean technology tigers” - - China, Japan, and South Korea - - have already passed the United States in the production of virtually all clean energy technologies and will  invest a total of $509bn in the sector over the five years to 2013, compared with $172bn in the US.

China has already allocated $177bn in stimulus funds for green projects including high-speed railways.

Two American think-tanks, the Breakthrough Institute and the Information Technology and Innovation Foundation, this week published a report, Rising Tigers, Sleeping Giant, which says increasingly, nations are seeking to gain competitive advantage in this rapidly growing, high-technology sector and the stakes for the US are significant.

The report analyses clean energy investments and policy support for research, manufacturing, and domestic demand, with a particular focus on six key technologies: wind, solar, nuclear, carbon capture and storage, hybrid and electric vehicles and advanced batteries, and high speed rail.

According to the report, this year China will export the first wind turbines destined for use in a US wind farm, for a project valued at $1.5bn.

China is already the world's -biggest exporter of solar power components and has one of the biggest wind -turbine manufacturing industries.

The report says China is "poised to replicate many of the same successful strategies that Japanese and South Korean governments used to establish a technological lead in electronics and automobiles."

According to the report, by 2012, China, Japan, and South Korea plan to produce 1.6 million hybrid gas-electric or electric vehicles annually compared to North America, which is projected to produce 267,000, less than a fifth as many, according to industry forecasts. Japan has unveiled a plan to boost domestic solar power capacity by a factor of 20 by 2020. The nation also plans to generate 20 percent of its electricity from renewable sources by 2020. Both objectives are backed up by targeted R&D investments, technology-specific deployment incentives, and government procurement programs. China plans to deploy up to 86 GW of new nuclear capacity by 2020, and is rapidly deploying wind and solar power spurred by guaranteed preferential tariff prices and, in many cases, low interest financing. The country is expected to generate between 15 to 18 percent of its electricity from renewable sources by 2020; Chinese officials have recently indicated this amount could reach 20 percent.

Summary of comparison of public investments by the United States and key Asian competitors in core clean energy technologies, including solar, wind, and nuclear power, carbon capture and storage, advanced vehicles and batteries, and high-speed rail. Core findings include:

1 Asia’s rising “clean technology tigers” - - China, Japan, and South Korea – have already passed the United States in the production of virtually all clean energy technologies, and over the next five years, the government’s of these nations will out-invest the United States three-to-one in these sectors. This public investment gap will allow these Asian nations to attract a significant share of private sector investments in clean energy technology, estimated to total in the trillions of dollars over the next decade. While some US firms will benefit from the establishment of joint ventures overseas, the jobs, tax revenues, and other benefits of clean tech growth will overwhelmingly accrue to Asia’s clean tech tigers.
2 Large, direct and sustained public investments will solidify the competitive advantage of China, Japan, and South Korea. Government investments in research and development, clean energy manufacturing capacity, the deployment of clean energy technologies, and the establishment of enabling infrastructure, will allow these Asian nations to capture economies of scale, learning-by-doing, and innovation advantages before the United States, where public investments are smaller, less direct, and less targeted.
3 Should the investment gap persist, the United States will import the overwhelming majority of clean energy technologies it deploys. Current US energy and climate policies focus on stimulating domestic demand primarily through indirect demand-side incentives and regulations. Should these policies succeed in creating demand without providing robust support for US clean energy technology manufacturing and innovation, the United States will rely on foreign manufactured clean technology products. This could jeopardise America’s economic recovery and its long-term competitiveness while making it even more difficult to reduce the US trade deficit.
4 Proposed US climate and energy legislation, as currently formulated, is not yet sufficient to close the clean tech investment gap. In contrast to more direct investments by Asia’s clean tech tigers, current US policies rely overwhelmingly on modest market incentives that are viewed by the private sector as more indirect, create more risks for private market investors, and do less to overcome the many barriers to clean energy adoption. The American Clean Energy and Security Act, passed by the US House of Representative in June 2009, includes too few proactive policy initiatives and allocates relatively little funding to support research and development, commercialization and production of clean energy technologies within the United States. Including investments in clean energy R&D, demonstration, manufacturing and deployment in both US economic recovery packages and the House-passed climate and energy bill, the United States is poised to invest $172 billion over the next five years, which compares to investments of $397 billion in China alone, a more than four-to-one ratio on a per-GDP basis.
5 If the United States hopes to compete for new clean energy industries it must close the widening gap between government investments in the United States and Asia’s clean tech tigers and provide more robust support for US clean tech research and innovation, manufacturing, and domestic market demand. Small, indirect and uncoordinated incentives are not sufficient to outcompete China, Japan, and South Korea. To regain economic leadership in the global clean energy industry, US energy policy must include large, direct and coordinated investments in clean technology R&D, manufacturing, deployment, and infrastructure.

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