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This is what the US needs to stay competitive in the clean energy race

For those in Washington who are patting themselves on the back for a job well done on positioning the United States for improved global competitiveness on clean energy, you’re not done yet. 

Yes, the future looks much brighter thanks to the passage of the Infrastructure Investment and Jobs Act, CHIPs and Science Act, and Inflation Reduction Act. Together, these bills can revitalize U.S. manufacturing of cleaner and more efficient technologies, spurring the rapid deployment of these technologies and creating jobs in the process. Despite this progress, the United States still faces stiff competition abroad in clean tech and American policymakers would be remiss to underestimate it. 

Now that President Biden has submitted his budget request, Congress should double down on appropriations for clean energy innovation. Investments in innovation will reap economic benefits for years to come, so they should not be trimmed in the name of fiscal discipline. 

The newest players in town are China and India, but in recent years South Korea, Mexico and Brazil have ranked among the top 10 for public investment in energy research, development and demonstration (RD&D), when the spending by Pemex and Petrobras are included. Historically, the United States and Japan were consistently the top public investors in energy RD&D globally, often trading places for No. 1. This ended in 2014 when China surpassed Japan for the No. 2 slot, based on data released March 14 by the Climate Policy Lab at The Fletcher School, Tufts University.  

The top contenders are in a dynamic race. In 2016, India jumped into third place and Japan dropped to fourth, and in 2020 the European Union reached third place for the first time, displacing India. In 2018, the last year for which complete data are available for China, China’s public renewables RD&D investments were more than double those of the United States. Although the data for China are not as granular or reliable as for the United States, it appears that China’s clean energy (non-nuclear) investments surged past those of the United States starting in 2015. For the past two years, China has not reported RD&D expenditures but nobody should assume that means that China’s public investments have dried up — they may have gone underground. Meanwhile, India has made a big public bet on nuclear energy. Its nuclear RD&D civilian investments have consistently surpassed those of the United States. 

The United States is still in the leading position, in terms of overall public investment in energy RD&D, but it is not even in the top 10 when measured as a percentage of gross domestic product. The winners in this category are Norway, France, Belgium, Canada, Finland, Japan, Switzerland, Sweden, Denmark and the United Kingdom. China and India are in worse shape than the United States by this metric, coming in 25th and 28th, respectively.  

If innovation investments are a leading indicator of where a country is heading, the good news is that the United States is likely to rapidly decarbonize its energy system in the coming decades, especially if it takes a systemic approach. The U.S. has largely phased out RD&D investments in traditional fossil fuel technologies (although it has an important carbon capture and storage program). But our new data reveal that all the other leading countries have done the same, so the United States has gained little comparative advantage by doing so. One important footnote is that most state-owned enterprises are still heavily invested in fossil fuels — they will be the laggards. Brazil, Russia, Iran, Saudi Arabia, China and India all have these state-owned energy companies. 

The other good news is that the United States is taking a comprehensive approach for the first time, both pushing advanced energy technologies into the market (its investments in energy RD&D) and funding strong demand incentives for consumers to utilize these new energy technologies. Still, as the United States begins to catalyze new factory production and purchases of new products, such as the Ford Mustang Mach-E, utilizing the substantial incentives provided by the Inflation Reduction Act, it cannot afford to relax its efforts in RD&D if it wants to preserve its first-mover advantage. 

It already may have lost technological advantage in some areas, such as high-voltage transmission lines or lithium-ion batteries (including raw materials, refined materials and subcomponents), but these could be clawed back with effort. China’s steady gains against the United States in almost all areas of clean energy, as measured by their public (non-state-owned) RD&D investments, are a sure-fire indicator of their determined and sustained effort. 

And China is just one of many countries who are now contending for first place. The United States must not only match the effort of others but surpass it, if it wants to be competitive in the clean energy race for the future. 

Kelly Sims Gallagher is a professor of energy and environmental policy at The Fletcher School at Tufts University, where she directs the Climate Policy Lab and the Center for International Environment and Resource Policy. She served in the Obama administration as a senior policy adviser in the White House Office of Science and Technology Policy, and as senior China adviser in the Special Envoy for Climate Change office at the U.S. State Department.

Tags clean energy Emerging technologies Innovation Joe Biden Research and development

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