In a major departure from conventional climate wisdom, Thomas Friedman argues in today’s New York Times that the UNFCCC framework is broken and should be replaced by a global competition in the clean-tech industry, which he says the United States can and should lead. “Let the Earth Race begin,” he declares, contrasting this with the long-dominant “Earth Day” strategy:
“This Copenhagen climate summit was based on the Earth Day strategy. It was not very impressive. This conference produced a series of limited, conditional, messy compromises, which it is not at all clear will get us any closer to mitigating climate change at the speed and scale we need…
Today, we need the Earth Race: who can be the first to invent the most clean technologies so men and women can live safely here on Earth… An Earth Race led by America — built on markets, economic competition, national self-interest and strategic advantage — is a much more self-sustaining way to reduce carbon emissions than a festival of voluntary, nonbinding commitments at a U.N. conference.”
Friedman is right. The race to develop competitive clean-tech industries is the critical element with the potential to motivate enough development and deployment of clean technologies – far more than any potential “legally-binding” global emissions treaty, as we’ve seen with the failure of the Kyoto Protocol and the inability of the UNFCCC framework to produce a meaningful treaty at Copenhagen. The International Energy Agency estimates that $10.5 trillion of global investment in clean technology and energy efficiency is necessary over the next 20 years to stay below 450ppm – an unimaginable sum under any UNFCCC treaty.
Moreover, building the long-term political support of a broad segment of the American public requires a national agenda centrally focused on competing in the clean-tech growth industries of the future. As Friedman explains, “If you start the conversation with “climate” you might get half of America to sign up for action. If you start the conversation with giving birth to a “whole new industry” — one that will make us more energy independent, prosperous, secure, innovative, respected and able to out-green China in the next great global industry — you get the country.”
Indeed, countries like China, Japan, and South Korea are already launching massive government investment programs to dominate this industry – not because their priority is reducing carbon emissions, but because they recognize the economic potential. In our recent report, “Rising Tigers, Sleeping Giant,” we found that China, Japan, and South Korea – Asia’s “clean technology tigers” – have already surpassed the United States in the production of virtually all clean energy technologies, an advantage they are solidifying and expanding with direct, large-scale government investment strategies.
As his competitive solution, Friedman repeats his call for a price on carbon. “The goal of Earth Racers is to focus on getting the U.S. Senate to pass an energy bill, with a long-term price on carbon that will really stimulate America to become the world leader in clean-tech,” he writes. “All [Obama] needed to do in his speech was to look China’s prime minister in the eye and say: “I am going to get our Senate to pass an energy bill with a price on carbon so we can clean your clock in clean-tech. This is my moon shot. Game on.”
The Chinese prime minister might just have laughed in Obama’s face. Why? Because a modest carbon price is far too weak to regain American competitiveness in the face of Asia’s massive investment projects. These governments are set to out-invest the United States by three to one in these industries over the next five years – about $509 billion compared to $172 billion in the U.S., assuming passage of the proposed American Clean Energy and Security Act and including current appropriations and stimulus measures.
No wonder Deutsche Bank recently concluded that “generous and well-targeted [clean-tech] incentives” backed by “comprehensive and integrated government plans” in China and Japan will create a low-risk environment for investors and stimulate high levels of private investment. In contrast, Deutsche Bank concluded, the U.S. is a “moderate-risk” country compared to the lower-risk environment of China and Japan, because we rely on “a more volatile market incentive approach that has suffered from a start-stop approach in some areas.” According to another recent report by the China Greentech Initiative, China’s national clean-tech market could eventually grow to $1 trillion annually.
Earth to Thomas Friedman! Winning the “Earth Race” requires major federal investments in clean technology development and deployment. “If the United States hopes to compete for new clean energy industries,” we conclude in “Rising Tigers, Sleeping Giant,” “it must close the widening gap between U.S. and Asian government investments in research and innovation, manufacturing, and domestic market demand. Small, indirect and uncoordinated incentives are not sufficient to outcompete Asia’s clean tech tigers. To regain economic leadership in the global clean energy industry, U.S. energy policy must include large, direct and coordinated investments in clean technology R&D, manufacturing, deployment, and infrastructure.”
Winning the “Earth Race” also requires a national effort in high-tech energy education, and President Obama’s RE-ENERGYSE proposal is a critical first step, especially in the realm of higher education. As my colleague and I wrote in the San Francisco Chronicle, “To win today’s clean-energy race, the United States must respond with the same vigorous commitment to education and innovation that won the space race four decades ago. If America does not take immediate action to bridge its energy education gap – and if we fail to make substantially larger investments in our own clean-energy economy – we will effectively cede the clean-energy race to Asia.”
Yet instead of calling for an effort to actually strengthen the Senate bill to match what energy innovation experts say is necessary (including dozens of Nobel Laureates, Brookings Institution, Association of American Universities, Google, and others) – at least $15 billion per year for clean energy R&D, compared to $1.2 billion in the current proposal – Friedman simply calls for passing the bill in its current form. Indeed, he doesn’t seem to care whether the bill is strong enough to accomplish much of anything besides a modest price on carbon, as he explained in an op-ed after the passage of Waxman-Markey:
“It is pathetic that we couldn’t do better [than Waxman-Markey]. It is appalling that so much had to be given away to polluters. It stinks. It’s a mess. I detest it. Now let’s get it passed in the Senate and make it law.”
That is no strategy to win the “Earth Race.” Reflecting on the surge in Afghanistan, Friedman recently wrote, “China, Russia and Al Qaeda all love the idea of America doing a long, slow bleed in Afghanistan.” His point extends here as well: China, Japan, South Korea, and the rest of our competitors would love the idea of America settling on a “pathetic” bill with modest clean-tech investment and pricing.
The United States did not win the space race with a tax on airplanes. We did not invent the Internet by enforcing a cap and trade system on fax machines, nor did we create the personal computer by taxing typewriters. Those who suggest we can simply rely on indirect, market-based mechanisms to achieve a clean energy revolution – including Thomas Friedman – fail to understand the history of technology innovation and competitiveness, and they risk relegating our clean-tech industry to second-class status or worse.
Fifty years ago, in the wake of the launch of Sputnik, the United States launched a massive national effort to lead the space race and win the Cold War. Today, the clean energy race represents one of the greatest opportunities and challenges for American leadership in a generation. If we do not take immediate action to launch a national energy competitiveness project based on large, direct, and coordinated innovation policies, we will effectively cede the clean-energy industry to Asia and other competitors. The mass majority of exports, jobs, tax revenues, and other economic benefits will accrue to foreign countries, and we will miss a historic opportunity to achieve a new era of American leadership. The choice should be clear.