China top clean-energy investor

WASHINGTON – China overtook the United States for the first time last year in the race to invest in wind, solar and other sources of so-called “clean energy,” according to a comprehensive new report that raises questions of American competitiveness in a booming global market.

U.S. clean-energy investments approached $19 billion last year, according to report from the Pew Charitable Trusts, a little more than half the Chinese total of nearly $35 billion. Five years ago, China’s investment in clean energy was just $2.5 billion.

The United States also slipped behind 10 other countries, including Canada and Mexico, in clean-energy investments as a share of its national economy.

Although part of the American investment decline last year can be attributed to the deep recession, the Pew report pointed to another factor constraining U.S. competitiveness: a lack of national mandates for renewable energy production or a surcharge on greenhouse gas emissions that would make fossil fuels more expensive.

The report warned that the current U.S. approach, in which states make varied efforts and the federal government’s efforts have been sporadic, has produced a “comparatively weak clean energy economy” – and risks losing out on economic growth and job creation.

“It’s certainly the case that the countries and areas with higher investment in clean energy will be able to produce more jobs,” said Chris Lafakis, an economist at Moody’s Economy.com, which is working with Pew in tracking the green economy and jobs. Lafakis said investment is the No. 1 factor in green job growth.

Worldwide, the report found clean energy investment surging overall, more than doubling since 2005. Investment levels have already rebounded from the global financial crisis and are projected to grow 25 percent this year, as nations increasingly seek energy sources that do not emit the heat-trapping gases produced by burning fossil fuels.

The study tallied public and private spending for clean energy equipment and generating capacity as well as venture capital funding of companies involved in green industries and related areas. The figures are derived from Bloomberg New Energy Finance’s database and do not include investments in basic research and development in clean energy.

President Barack Obama has called for federal limits on carbon emissions and renewable power mandates, promising they will unleash investment and create jobs.

But the faster pace of such investments in other countries is already producing jobs that might otherwise have been created on American soil. Spain, Germany and Italy have leveraged private clean energy investment, in part, by supporting wind and solar power with sustained financial incentives.

According to Bloomberg New Energy Finance estimates, German subsidies from 2004 to 2008 amount to about $74 billion in higher energy costs. In Spain, subsidies from 2006 to 2008 amount to about $53 billion. In Italy, subsidies from 2007 to 2008 amount to about $9 billion.

Nowhere is the competition as strong as in China, with its globally dominant manufacturing base and wide-ranging government policies promoting clean energy technology.