We neglect to account for externalities such as the cost of war ships keeping the Suez Canal open when Iran threatens to close it, oil spills inland and offshore, the wars in Iraq, and the limited liability given to the operators' nuclear plants. If Fukishima happened here, it would be no problem for U.S. companies -- Uncle Sam would pick up the tab.
In China, the energy debate is very different. When China sees its imports of coal rising and dependence on foreign oil growing, it springs into action. Not by screaming, "Drill, baby, drill," but by investing billions of dollars in home-grown energy sources. Yes, I'm talking about clean, renewable energy, and China's investment in these energy sources make U.S. subsidies look like the half-hearted effort they are.
Building a homegrown industry
China has put tens (maybe hundreds) of billions of dollars into building a renewable manufacturing industry, and it started long before the U.S. even noticed the emergence of wind and solar power. Sinovel Wind Group was founded in 2005 and quickly became the third largest wind turbine manufacturer behind Vestas and General Electric (NYSE: GE ) . It has plans to surpass these companies within the next two years and is fueled by funding from Chinese state-owned banks. Goldwind, Guodian, and Ming Yang have also sprouted up in China, pushing European and American companies out of the wind market.
Putting their money where the future is
Unlike the U.S., China also has a national goal when it comes to solar power, the fastest-growing renewable energy source. It plans to install 40 GW of solar by 2015, 30% more than what was installed globally in 2012. To put that number into some context, solar installations in the U.S. grew 76% last year and still reached only 3.3 GW. We would have to nearly double solar installations annually to reach 40 GW in installations over the next three years.
When you put these figures into dollars, China's green energy dominance is even more staggering. Keep in mind that the U.S. economy is more than twice as big as China's when you read the following data from a report released by Pew Charitable Trusts and Bloomberg New Energy Finance earlier this week.
- China invested $65 billion into wind, solar, and other renewable energy sources in 2012, 20% growth from 2011. The U.S. invested $35.6 billion, down 37% from a year earlier. As a percentage of the economy, China's investment in clean energy is nearly four times as large as that of the United States.
- Worldwide, clean energy investments fell by 11% in 2012 to $269 billion while investments in Asia grew 16% to $101 billion.
- China accounted for 30% of all clean energy investment by G-20 countries in 2012.
There's also an environmental aspect to China's pursuit of clean energy. This view of Shanghai covered in smog is an increasingly common occurrence over large parts of China:
There are a fleeting few U.S. companies that can now stake claim to a significant piece of the clean energy future. First Solar (NASDAQ: FSLR ) and SunPower (NASDAQ: SPWR ) appear to be winners in the solar industry, and they've even turned to China as a potential customer for their products. But they still have to fight off fierce competition from China. General Electric is using its sheer size to stay afloat in wind power and is still investing in solar. The sad truth is that most of the other large manufacturers in wind and solar have fallen by the wayside.
A solar stock to keep an eye on
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