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Deutsche Bank's Parker: Senate Clean Energy Policy Failure Driving Investor Exodus
By Devon Swezey and Jesse Jenkins
The failure of the U.S. Senate to pass clean energy and climate legislation has caused investment giant Deutsche Bank to take its clean energy dollars elsewhere, according to Kevin Parker, Global Head of Asset Management for the firm.
"They're asleep at the wheel on climate change, asleep at the wheel on job growth, asleep at the wheel on this industrial revolution taking place in the energy industry," said Parker (pictured right).
Deutsche Bank manages over $700 billion in funds with $6 to $7 billion invested in clean energy markets worldwide.
These blunt comments from the global investment firm have cap and trade advocates renewing the argument that a price on carbon would have made the United States a world leader in clean energy technology.
Yet according to Deutsche Bank's own reports, cap and trade and carbon pricing would have done little to change the investment outlook in the United States relative to its competitors.
In a report released last October, after the passage of the House's Waxman-Markey climate and energy bill (HR 2454), Deutsche Bank ranked the United States as a "moderate-risk" nation for private investment in clean energy since it relied on "a more volatile market incentive approach" and "has suffered from a start-stop approach in some areas."
By contrast, countries like China, Germany, and Japan were "low-risk" nations for investors because they each rely on "a comprehensive and integrated government plan supported by strong incentives."
Mr. Parker is correct that the Congress remains "asleep at the wheel" as international competition for clean energy markets heats up.
The fact that the Senate got nothing done on climate and energy this year is outrageous, and continued policy uncertainty will ensure that the U.S. will keep lagging further and further behind economic competitors in the global clean energy race.
But let's be clear. The cap and trade legislation that Congress spent the better part of two years debating would have had, at most, a modest impact on America's standing in global clean energy markets, and would have been wholly insufficient to keep the U.S. in the game with economic competitors in Asia and Europe.
Is Carbon Pricing Really the Key?
We issued precisely that warning last November when the Breakthrough Institute and ITIF published "Rising Tigers, Sleeping Giant." The comprehensive report documented that the United States already lagged China, Japan, and South Korea in the production of virtually all clean energy technologies, and was poised to be out-invested three to one over five years by the three Asian 'Clean Tech Tigers,' even if the House-passed cap and trade bill had become law.
Deutsche Bank themselves clearly acknowledge that while carbon pricing may be important in the long-term, it is not what is helping governments around the world attract private investment and build domestic clean economies in the near-term.
According to Deutsche Bank's Parker and Global Head of Climate Change Investment Research Mark Fulton: "While emissions targets express an intention and carbon markets might deliver a price signal in the long-term, governments must strengthen underlying mandates and incentives immediately if capital is to be deployed to cover the gap, creating more investment and jobs."Deutsche Bank's conclusions are consistent with other analyses of the impacts of cap and trade legislation in the United States. According to the U.S. Environmental Protection Agency (EPA), under the House's Waxman-Markey bill: "allowance prices are not high enough to drive a significant amount of additional [deployment of] low- or zero-carbon energy (including nuclear, renewables, and CCS) in the shorter-term, excluding the technologies with specific financial incentives (e.g. CCS)."Similarly, the EPA concludes that the cap and trade system's impacts on transportation markets would be negligible. With potential carbon prices the equivalent of just 10 or 20 cents per gallon of gasoline, "the increase in gasoline prices that results from the carbon price ... is not sufficient to substantially change consumer behavior in their vehicle miles travelled or vehicle purchases..."
What Really Matters
What really matters to create a new clean energy economy and stimulate private investment in the near-term are policy regimes that employ direct and targeted public investments to cover the cost gap between higher-cost clean energy and fossil fuels.
Indeed, China has surpassed the United States as the largest beneficiary of private clean energy investments without a price on carbon. Rather, China, along with Germany, Japan, and other "low-risk" nations, has implemented generous, technology-specific deployment incentives that reduce regulatory risks and are much more attractive to investors, and are backed by aggressive, long-term national targets for clean energy deployment.
China has targeted procurement policies for clean energy, and a variable feed-in tariff for wind power. In Germany, Deutsche Bank credits the nation's generous feed-in tariff policy, not the carbon markets of the European Emissions Trading Scheme (ETS), for Germany's world-leading solar energy sector. These incentives have "demonstrated their ability deliver renewable energy at scale," according to the bank.
If the United States wants to avoid being permanently relegated to the backwaters of the global race for clean energy investment, it needs a new clean energy competitiveness strategy that, like those of its competitors, prioritizes large and sustained public investment in clean energy technology.
That strategy should include robust and long-term investments in areas such as research and innovation, manufacturing, market creation, workforce training and education, and the development of new, globally competitive industry clusters.
Time is short, and the next several years will see first-movers establish dominant positions across a range of clean energy sectors. Already the U.S. is failing to attract significant private-sector investment in clean energy markets, losing out on a key opportunity to grow American jobs, build new high-tech, export-oriented industries, and capitalize on the economic opportunity of a fast-growing clean energy sector.
If Washington continues to ignore this growing economic imperative, the U.S. will remain behind in clean energy investment and will wind up importing the vast majority of the clean energy products needed to satisfy U.S. markets.
Almost as dangerous, however, would be a continued reliance on cap and trade and the modest carbon prices it would establish as they key to building America's clean energy industries.
The message from clean energy investors like Deutsche Bank and the model provided by our global competitors are both quite clear: what the U.S. needs is not cap and trade but a comprehensive clean economy strategy. And it needs one now.
Devon Swezey is Project Director and Jesse Jenkins is Director of Climate and Energy Policy at the Breakthrough Institute. Both are co-authors of "Rising Tigers, Sleeping Giant: Asian Nations Set to Dominate the Clean Energy Race by Out-Investing the United States"
See Also:
The failure of the U.S. Senate to pass clean energy and climate legislation has caused investment giant Deutsche Bank to take its clean energy dollars elsewhere, according to Kevin Parker, Global Head of Asset Management for the firm.
"They're asleep at the wheel on climate change, asleep at the wheel on job growth, asleep at the wheel on this industrial revolution taking place in the energy industry," said Parker (pictured right).
Deutsche Bank manages over $700 billion in funds with $6 to $7 billion invested in clean energy markets worldwide.
These blunt comments from the global investment firm have cap and trade advocates renewing the argument that a price on carbon would have made the United States a world leader in clean energy technology.
Yet according to Deutsche Bank's own reports, cap and trade and carbon pricing would have done little to change the investment outlook in the United States relative to its competitors.
In a report released last October, after the passage of the House's Waxman-Markey climate and energy bill (HR 2454), Deutsche Bank ranked the United States as a "moderate-risk" nation for private investment in clean energy since it relied on "a more volatile market incentive approach" and "has suffered from a start-stop approach in some areas."
By contrast, countries like China, Germany, and Japan were "low-risk" nations for investors because they each rely on "a comprehensive and integrated government plan supported by strong incentives."
Mr. Parker is correct that the Congress remains "asleep at the wheel" as international competition for clean energy markets heats up.
The fact that the Senate got nothing done on climate and energy this year is outrageous, and continued policy uncertainty will ensure that the U.S. will keep lagging further and further behind economic competitors in the global clean energy race.
But let's be clear. The cap and trade legislation that Congress spent the better part of two years debating would have had, at most, a modest impact on America's standing in global clean energy markets, and would have been wholly insufficient to keep the U.S. in the game with economic competitors in Asia and Europe.
Is Carbon Pricing Really the Key?
We issued precisely that warning last November when the Breakthrough Institute and ITIF published "Rising Tigers, Sleeping Giant." The comprehensive report documented that the United States already lagged China, Japan, and South Korea in the production of virtually all clean energy technologies, and was poised to be out-invested three to one over five years by the three Asian 'Clean Tech Tigers,' even if the House-passed cap and trade bill had become law.
Deutsche Bank themselves clearly acknowledge that while carbon pricing may be important in the long-term, it is not what is helping governments around the world attract private investment and build domestic clean economies in the near-term.
According to Deutsche Bank's Parker and Global Head of Climate Change Investment Research Mark Fulton: "While emissions targets express an intention and carbon markets might deliver a price signal in the long-term, governments must strengthen underlying mandates and incentives immediately if capital is to be deployed to cover the gap, creating more investment and jobs."Deutsche Bank's conclusions are consistent with other analyses of the impacts of cap and trade legislation in the United States. According to the U.S. Environmental Protection Agency (EPA), under the House's Waxman-Markey bill: "allowance prices are not high enough to drive a significant amount of additional [deployment of] low- or zero-carbon energy (including nuclear, renewables, and CCS) in the shorter-term, excluding the technologies with specific financial incentives (e.g. CCS)."Similarly, the EPA concludes that the cap and trade system's impacts on transportation markets would be negligible. With potential carbon prices the equivalent of just 10 or 20 cents per gallon of gasoline, "the increase in gasoline prices that results from the carbon price ... is not sufficient to substantially change consumer behavior in their vehicle miles travelled or vehicle purchases..."
What Really Matters
What really matters to create a new clean energy economy and stimulate private investment in the near-term are policy regimes that employ direct and targeted public investments to cover the cost gap between higher-cost clean energy and fossil fuels.
Indeed, China has surpassed the United States as the largest beneficiary of private clean energy investments without a price on carbon. Rather, China, along with Germany, Japan, and other "low-risk" nations, has implemented generous, technology-specific deployment incentives that reduce regulatory risks and are much more attractive to investors, and are backed by aggressive, long-term national targets for clean energy deployment.
China has targeted procurement policies for clean energy, and a variable feed-in tariff for wind power. In Germany, Deutsche Bank credits the nation's generous feed-in tariff policy, not the carbon markets of the European Emissions Trading Scheme (ETS), for Germany's world-leading solar energy sector. These incentives have "demonstrated their ability deliver renewable energy at scale," according to the bank.
If the United States wants to avoid being permanently relegated to the backwaters of the global race for clean energy investment, it needs a new clean energy competitiveness strategy that, like those of its competitors, prioritizes large and sustained public investment in clean energy technology.
That strategy should include robust and long-term investments in areas such as research and innovation, manufacturing, market creation, workforce training and education, and the development of new, globally competitive industry clusters.
Time is short, and the next several years will see first-movers establish dominant positions across a range of clean energy sectors. Already the U.S. is failing to attract significant private-sector investment in clean energy markets, losing out on a key opportunity to grow American jobs, build new high-tech, export-oriented industries, and capitalize on the economic opportunity of a fast-growing clean energy sector.
If Washington continues to ignore this growing economic imperative, the U.S. will remain behind in clean energy investment and will wind up importing the vast majority of the clean energy products needed to satisfy U.S. markets.
Almost as dangerous, however, would be a continued reliance on cap and trade and the modest carbon prices it would establish as they key to building America's clean energy industries.
The message from clean energy investors like Deutsche Bank and the model provided by our global competitors are both quite clear: what the U.S. needs is not cap and trade but a comprehensive clean economy strategy. And it needs one now.
Devon Swezey is Project Director and Jesse Jenkins is Director of Climate and Energy Policy at the Breakthrough Institute. Both are co-authors of "Rising Tigers, Sleeping Giant: Asian Nations Set to Dominate the Clean Energy Race by Out-Investing the United States"
See Also:
- The Challenge of China's Green Technology Policy
- A Clean Energy Competitiveness Strategy for America
- Report: Rising Tigers, Sleeping Giant
- Report: Strengthening Clean Energy Competitiveness
Bucking the Debate: Clean Energy Industrial Policies At Work
By Matthew Stepp, Breakthrough Fellow, originally posted at the Breakthrough Institute
A vigorous debate about whether the U.S. government should invest in and help manage clean energy industries to spur economic growth is unfolding among academics, policy makers and business leaders. Curiously, a handful of federal, state, and local government officials are forging ahead in spite of the national discussion and formulating targeted industrial policies to create vibrant clean energy innovation ecosystems that include manufacturing, material suppliers, customers, and R&D. Cases like Rioglass Solar, a Spanish glass manufacturer expanding operations in Arizona, as well as the considerable growth of the wind industry across the US show how the public and private sector can collaborate and, more importantly, how effective industrial policy can create well-paying, long-term jobs.
This past week Rioglass Solar, which provides curved glass sheets used in solar panels, decided to build a $50 million headquarters and a 130,000 square foot manufacturing plant in Surprise, Arizona. The project will create 100 new jobs at the headquarters alone and many more in the manufacturing plant - a welcome economic boost for the town.
The chief incentive for the American operations expansion? Local, state, and federal officials provided almost $12 million in tax credits and fee reductions to (successfully) lure Rioglass to the area.
Additionally, a recent analysis of the emerging U.S. wind energy industry found that since 2004 over 200 wind turbine component manufacturing facilities have opened and the number of domestic wind energy companies has tripled. The wind industry's installed energy capacity has rapidly grown from 6.7 MW in 2004 to 35,000 MW in 2009 and expansion continues.
In fact, as the report explains, the expansion of the wind industry has been national in scope:"The U.S.'s wind manufacturing ecosystem extends from coast to coast and border to border. There are online or planned facilities in rust belt states like Michigan and Ohio, Midwest states like Kansas and Iowa, where youthful rural populations now have an alternative to moving to urban centers for opportunity, and in Southern states like Texas and Arkansas, where manual labor now has an alternative to unemployment."The chief incentive for the expansion of domestic wind manufacturing - the $2.3 billion Advanced Energy Manufacturing Tax Credits (AEMC) funded through the 2009 American Recovery and Reinvestment Act -- provided support for 183 individual projects and led to $5.4 billion in private investment.
Both Rioglass Solar and the U.S. wind energy industry are shining examples of how government industrial policy can work. In both cases, specific public investments are being made, not to pursue a narrow technology goal like some skeptics worry, but to ensure that a host of clean technology companies have the ability to innovate, compete, and grow in the global free market.
Thus, the real debate should not be on whether industrial policy is good or bad, but what shape it should take. Local actions in Arizona and the one-time funded federal energy manufacturing tax credit should be just a start.
It's time to kick these policies into high gear and luckily, clean energy industrial policy may have a key advocate - President Barack Obama.
A recent Businessweek article dubbed the President "Clean Energy's Venture Capitalist-in-Chief," thanks to his plans to channel $69 billion in tax credits, low interest loans, grants, consumer tax credits, and R&D to thousands of clean tech companies across the clean energy spectrum through 2011. But while these incentives are critical, their short-term focus will not create the market stability necessary to advance sustained growth in the clean tech sector.
A spokesperson for the American Wind Energy Association (AWEA) explains: "...effective manufacturing incentives [like the AEMC] need to be coupled with a stable, long-term market and even strong programs like [AEMC] can't revitalize the sector if we don't create a market."The next step for the so-called Capitalist-in-Chief is to make these policies explicit U.S. industrial policy, not just one-time stimulus efforts. Investments and incentives need to be expanded in the long term and centered around growing the "clean energy innovation ecosystems" that are emerging across the country. A long-term strategy would provide a clear signal to private investors that a clean energy economy is a priority for the U.S.
Even with Congress's failure to pass comprehensive energy legislation, a clean energy economy is still a very real possibility once the national debate internalizes already effective industrial policy advances -- as exemplified by wind industry growth and Rioglass Solar -- and focuses on how best to implement sound national industrial policy. Limited local and state policies along with short-term federal funds can only go so far given the competition from countries like China, which may dedicate as much as $740 billion over the next ten years toward building a clean energy industry. It's time for the federal government to consistently and fully support the progress local and state governments are making in order to ensure a robust green economy.
See Below For More on the Breakthrough Institute's series on the National Industrial Policy Debate:
A Needed Debate on Industrial Policy
In Defense of Andy Grove: Toward a More Effective Industrial Policy
In Defense of Bill Gates: Investing in Clean, Cheap Energy
A vigorous debate about whether the U.S. government should invest in and help manage clean energy industries to spur economic growth is unfolding among academics, policy makers and business leaders. Curiously, a handful of federal, state, and local government officials are forging ahead in spite of the national discussion and formulating targeted industrial policies to create vibrant clean energy innovation ecosystems that include manufacturing, material suppliers, customers, and R&D. Cases like Rioglass Solar, a Spanish glass manufacturer expanding operations in Arizona, as well as the considerable growth of the wind industry across the US show how the public and private sector can collaborate and, more importantly, how effective industrial policy can create well-paying, long-term jobs.
This past week Rioglass Solar, which provides curved glass sheets used in solar panels, decided to build a $50 million headquarters and a 130,000 square foot manufacturing plant in Surprise, Arizona. The project will create 100 new jobs at the headquarters alone and many more in the manufacturing plant - a welcome economic boost for the town.
The chief incentive for the American operations expansion? Local, state, and federal officials provided almost $12 million in tax credits and fee reductions to (successfully) lure Rioglass to the area.
Additionally, a recent analysis of the emerging U.S. wind energy industry found that since 2004 over 200 wind turbine component manufacturing facilities have opened and the number of domestic wind energy companies has tripled. The wind industry's installed energy capacity has rapidly grown from 6.7 MW in 2004 to 35,000 MW in 2009 and expansion continues.
In fact, as the report explains, the expansion of the wind industry has been national in scope:"The U.S.'s wind manufacturing ecosystem extends from coast to coast and border to border. There are online or planned facilities in rust belt states like Michigan and Ohio, Midwest states like Kansas and Iowa, where youthful rural populations now have an alternative to moving to urban centers for opportunity, and in Southern states like Texas and Arkansas, where manual labor now has an alternative to unemployment."The chief incentive for the expansion of domestic wind manufacturing - the $2.3 billion Advanced Energy Manufacturing Tax Credits (AEMC) funded through the 2009 American Recovery and Reinvestment Act -- provided support for 183 individual projects and led to $5.4 billion in private investment.
Both Rioglass Solar and the U.S. wind energy industry are shining examples of how government industrial policy can work. In both cases, specific public investments are being made, not to pursue a narrow technology goal like some skeptics worry, but to ensure that a host of clean technology companies have the ability to innovate, compete, and grow in the global free market.
Thus, the real debate should not be on whether industrial policy is good or bad, but what shape it should take. Local actions in Arizona and the one-time funded federal energy manufacturing tax credit should be just a start.
It's time to kick these policies into high gear and luckily, clean energy industrial policy may have a key advocate - President Barack Obama.
A recent Businessweek article dubbed the President "Clean Energy's Venture Capitalist-in-Chief," thanks to his plans to channel $69 billion in tax credits, low interest loans, grants, consumer tax credits, and R&D to thousands of clean tech companies across the clean energy spectrum through 2011. But while these incentives are critical, their short-term focus will not create the market stability necessary to advance sustained growth in the clean tech sector.
A spokesperson for the American Wind Energy Association (AWEA) explains: "...effective manufacturing incentives [like the AEMC] need to be coupled with a stable, long-term market and even strong programs like [AEMC] can't revitalize the sector if we don't create a market."The next step for the so-called Capitalist-in-Chief is to make these policies explicit U.S. industrial policy, not just one-time stimulus efforts. Investments and incentives need to be expanded in the long term and centered around growing the "clean energy innovation ecosystems" that are emerging across the country. A long-term strategy would provide a clear signal to private investors that a clean energy economy is a priority for the U.S.
Even with Congress's failure to pass comprehensive energy legislation, a clean energy economy is still a very real possibility once the national debate internalizes already effective industrial policy advances -- as exemplified by wind industry growth and Rioglass Solar -- and focuses on how best to implement sound national industrial policy. Limited local and state policies along with short-term federal funds can only go so far given the competition from countries like China, which may dedicate as much as $740 billion over the next ten years toward building a clean energy industry. It's time for the federal government to consistently and fully support the progress local and state governments are making in order to ensure a robust green economy.
See Below For More on the Breakthrough Institute's series on the National Industrial Policy Debate:
A Needed Debate on Industrial Policy
In Defense of Andy Grove: Toward a More Effective Industrial Policy
In Defense of Bill Gates: Investing in Clean, Cheap Energy
Science says wind power is safe
From an editorial in the Wisconsin State Journal:
The Wisconsin Division of Public Health has reviewed more than 150 scientific and medical reports related to wind turbines and public health.
Division staff have listened and responded to concerns about wind turbines from the public, municipal leaders and local health officers. The division has sought the expertise of the University of Wisconsin School of Medicine, the Centers for Disease Control and Prevention, and health departments in states with heavier reliance on wind energy.
So what did the Wisconsin Division of Public Health determine from all of that careful inspection?
“We conclude that current scientific evidence is not sufficient to support a conclusion that contemporary wind turbines cause adverse health outcomes in those living at distances consistent with current draft rules being considered by the Public Service Commission,” wrote Dr. Seth Foldy, state health officer and administrator, in a July 19 letter to wind farm critics who claim all manner of ailments from wind turbine noise, vibrations and shadow flicker as the sun sets behind turbines.
Dr. Jevon McFadden, an epidemiologic intelligence service officer with the CDC, offered similar reassurance in May to the Wisconsin Wind Siting Council that he serves on.
“Evidence does not support the conclusion that wind turbines cause or are associated with adverse health outcomes,” McFadden wrote in his presentation.
Solar Stocks Sector Close-Up August 18th, Barclays Capital analyst Vishal Shah Comments on Solar Stocks
August 18, 2010 (Investorideas.com renewable energy/green newswire) Investorideas.com a leading global investor and industry portal covering the green and renewable energy sector release a sector close-up on solar stock for trading August 18th following upgrades by Barclays Capital analyst Vishal Shah.
AMSC Spends $8 Million to Acquire 25 Percent of Blade Dynamics
08/18/2010 - American
Superconductor, a global power technologies company, recently
announced that it has acquired for $8 million in cash a 25 percent
ownership position in
Wind Energy Instruments getting Bigger & Better
Renewable energy production and demand growth is gaining momentum in many ways across the world. There is a booming demand of wind power today and all wind energy equipment manufacturers are gearing up to meet the demand and take advantage of it. Wind power capacity growth will be reaching 447GW in the next five [...]
Posted in: Wind Farms, Wind Power, Wind Turbines
Posted in: Wind Farms, Wind Power, Wind Turbines
800,000 Jobs by 2012
Today, President Barack Obama visited ZBB Energy Corporation in Menomonee Falls, Wisconsin, and declared that our commitment to clean energy is expected to lead to more than 800,000 jobs by 2012.
ZBB Energy Corporation is a clean energy manufacturing company specializing in the production of advanced zinc bromide flow batteries and intelligent power control platforms for renewable energy storage. They are a prime example of how the Recovery Act is helping new clean energy industries bolster the manufacturing economies of mid-western states and lead us toward a brighter, greener economic future. Using funds from two of the Department of Energy’s Recovery Act projects, $1.3 million from the State Energy Program and a 48C Manufacturing Tax Credit worth $14.6 million, ZBB Energy has already been able to retain nearly a dozen workers, and over time, they expect to hire about 80 more.
To learn more about DOE Recovery Act investments in Wisconsin and/or your state visit energy.gov/recovery/states
Published on DOE Blog (http://blog.energy.gov)
ZBB Energy Corporation is a clean energy manufacturing company specializing in the production of advanced zinc bromide flow batteries and intelligent power control platforms for renewable energy storage. They are a prime example of how the Recovery Act is helping new clean energy industries bolster the manufacturing economies of mid-western states and lead us toward a brighter, greener economic future. Using funds from two of the Department of Energy’s Recovery Act projects, $1.3 million from the State Energy Program and a 48C Manufacturing Tax Credit worth $14.6 million, ZBB Energy has already been able to retain nearly a dozen workers, and over time, they expect to hire about 80 more.
To learn more about DOE Recovery Act investments in Wisconsin and/or your state visit energy.gov/recovery/states
Published on DOE Blog (http://blog.energy.gov)
