This post was originally featured on the Zayed Future Energy Prize blog.
There has been much-hyped talk about the massive growth of the Chinese economy in recent years and how it’s poised to overtake the world’s current largest economy, the United States. Nowhere is that talk at a higher pitch than in the clean energy arena, as a report released earlier this year by the United Nations Environment Programme (UNEP) demonstrated that China, with $49.8 billion in total annual renewable energy investment in 2010, overtook the United States to become the leading destination in the world for renewable energy investment. In fact, during 2010, for the first time total investment in clean energy was greater in the developing world ($72.2 billion) than in the developed world ($70.5 billion).
One of the extraordinary aspects of China’s (and to a lesser extent other non-Western nations’) ascension to the lead in renewable energy investment is that it occurred despite the fact that such investment in the U.S. was at an all-time high in 2010 (aided by the Obama stimulus plan). Renewable energy investment in the United States in 2010 totaled $29.6 billion and represented 56 percent growth over 2009.
Is this West-to-East/developed-to-developing country passing of the clean energy “baton” a fluke or a new paradigm shift in the global landscape for clean tech capital flow and technology deployment? The climate, of course, doesn’t care – emissions reductions matter the same wherever they are made. The climate would benefit from a cold-war style arms race for the lead in the development and deployment of clean technologies.
The U.S. and other Western countries should care, however. Putting aside any environmental concerns, we in the West should have our competitive juices flowing, since we like to be “number one” in just about anything we can. We should want to lead the world in innovation, manufacturing, and in clean energy deployment. China is on its way to leadership in the latter two categories and it is likely solely within their control as to whether they succeed on a sustained basis – they have proven cost advantages in manufacturing and they have the largest single market for energy services. I suspect they aim also to be the leader in clean technology innovation – a title that still rests largely in the developed world.
In the U.S., we should not relinquish our claim to leadership in any of these areas easily. Innovation, manufacturing and deployment of clean energy are things we need more of here at home regardless of any competitive juices that lead us to want to be “number one.” Clean technology creates jobs, builds new and lasting skills in our workforce, cleans our air, and balances our trade deficits. “Winning” a clean tech “arms race” should be a national priority - regardless of what you call it - for a number of different reasons.
But as tempting as it is for many in the U.S. to frame the clean tech issue as China vs. the West, there are many other countries besides the US and China engaged in serious investment, innovation and deployment of renewable and other clean energy projects. Some may be pleasantly surprised to learn that oil-rich United Arab Emirates is one.
I recently had the privilege of visiting its capital, Abu Dhabi, for the first time to participate in a very special meeting with some of the world’s top renewable energy and sustainability experts. The occasion served to change some of the preconceptions of this region that I suspect many people from my part of the world have. Over the course of two intensive days I helped assess some of the world’s most innovative sustainable energy companies and leaders' ideas and projects competing to win the prestigious Zayed Future Energy Prize.
The $4 million prize is just as remarkable as its host country which continues to amaze me by what it has achieved over a short period of time. Launched in 2009, the prize recognizes individual innovators and leaders, large corporations and small-to-medium enterprises and NGOs that have had a significant impact on society through their work in renewable energy and sustainability.
While in Abu Dhabi I got to visit Masdar City, a six square kilometer parcel of land on the outskirts of the city that is home to the Masdar Institute of Science of Technology which focuses on actively researching and developing the clean and sustainable energy technologies of tomorrow. I was thoroughly impressed by what I saw. Even though the $22 billion project is still under construction, its plans are ambitious and this is just the start. Masdar aims to attract commercial investors who will play a crucial role in developing economically viable renewable energy solutions. Germany’s engineering giant, Siemens, has already set up the permanent regional headquarters of its energy arm in Masdar City, a sure sign that something big is in the pipeline for the project.
It’s great to see that the Zayed Future Energy Prize is promoting the world’s renewable energy industry which, in these tough economic times, needs all the support it can get. I’m glad I could be an instrumental part of it and am sure the experience will enhance and further inform my own work. And more importantly, I drew optimism from seeing that many different parts of the world seek to be leaders in the clean technology economy that will benefit us all.
Roger Ballentine is the President of Green Strategies Inc., where he advises clients on business strategy, transaction execution, investment evaluation and public policy matters in the energy and environmental arena. He has also served as board member for China Energy Recovery Inc. which specialises in generating low-cost electricity from capturing industrial waste energy.
image: Sebastiano Piturezzello via Flickr cc (some rights reserved)