Energy Policy:

Pew's Cuttino discusses new research on G-20 clean energy investments

How has stalled energy policy affected investments in the clean energy sector? During today's OnPoint, Phyllis Cuttino, director of the Pew Clean Energy Group, discusses new research focusing on private clean energy investments in G-20 countries. Leading the pack is China, followed by Germany and the United States. Cuttino discusses what is contributing to the United States' decline in investments and explains how policies in other countries have helped boost their clean energy profiles.


Monica Trauzzi: Hello and welcome to OnPoint. I'm Monica Trauzzi. With me today is Phyllis Cuttino, director of the Pew Clean Energy Group. Phyllis, thanks for coming back on the show.

Phyllis Cuttino: Oh, happy to be here, Monica. Thanks for having me.

Monica Trauzzi: Phyllis, Pew is out with a new report this week focusing on clean energy investment in G-20 countries and the U.S. has slipped from the top spot. What's happened here in terms of policy and action that's driven investments down?

Phyllis Cuttino: Well, that is really one of the findings of our report, which is that policy does matter to the competitive positions of G-20 nations when it comes to attracting private investments, because that's really what our report looked at, was private investment. And what we found is the United States is on a trajectory that is most unfortunate. We believe that there -- our competitive position is at risk in the G-20. In 2009, with our first report, we saw that China displaced the United States as the world's kind of leading attractor of clean energy investments. So we slipped to number two in 2009. And in 2003, now we are third with China and Germany both attracting greater amounts of clean energy investment than we have here in the United States.

Monica Trauzzi: And we're going to talk up it more about China and Germany in a moment, but globally we saw clean energy investments go up by about 30 percent. So how are the conversations different in other G-20 countries that are seeing an increase in investments, as compared to what's happening here in the U.S.? What are they doing differently?

Phyllis Cuttino: Well, in all cases most -- these countries have set a strong, ambitious goal for the amount of renewable energy they're going to have. In China, for instance, they have a goal of 150 gigawatts of wind by 2020, 20 gigawatts of solar by 2020, and it looks like they're going to meet and exceed those standards and strengthen them. In Germany we have not only a kind of renewable energy standard, but we also have feed-in tariffs. So these kinds of policies, most important kind of the signal to investors that there is a goal that has to be met, are what really impact the competitive position of nations. It's not just the United States that slipped, other G-20 nations that have had uncertainty regarding policy or weakened their policy, have also slipped. You look at the UK, the UK was fifth in 2009, attracting $13 billion of investments. With the election of the new government and uncertainty about the energy and environmental policy there, they've slipped to 13th, only attracting $3 billion in investment. So policy really matters, because investment follows policy.

Monica Trauzzi: It's not all bad news for the U.S. though. We're still the global leader in clean energy innovation. So, how do we keep that going and how do we maybe take that and turn it into some investments?

Phyllis Cuttino: That's right. Well, it's true, that's one of the indicators where the United States really leads. We attract more than 75 percent of all global venture capital funds, $6 billion in fact. But, you know, we really need to keep that innovative edge, but we also need to capitalize on it. So, our problem now is that we're seeing that our innovations are now going overseas to be manufactured. So China, Germany, both large manufacturers of both solar and wind turbines, so we really need to get in the game. We need to maintain our innovative edge, but we also need to capitalize on it by manufacturing and exporting, because we know that the real demand is coming from kind of the developing world when it comes to energy.

Monica Trauzzi: So China, how are they doing it? I mean sometimes we talk about China and it sounds too good to be true. Some of their goals and investments are astronomical.

Phyllis Cuttino: They are and they have been on -- it's staggering when you think that they'd attracted $2.5 billion in 2004 and today they've attracted $54.4 billion. So part of it is these policies that they have in place, but also they have the ability to make low-interest capital available to manufacturers and that's a big driver in this market. And that's something that the United States is struggling with, frankly.

Monica Trauzzi: And you mentioned that Germany has moved up as well. What have they been doing to get to that position?

Phyllis Cuttino: Well, the exciting thing about Germany is actually the small scale solar projects. So if China is about the installation of big wind projects, Germany's real story is the small-scale solar projects. So, really, the solar panels that you install on your house for instance, their investment is up 100 percent. So that is the combination of both this renewable energy standard and also a generous feed-in tariff for the installation of these projects. But it looks like it's going to continue.

Monica Trauzzi: Another interesting point in the report is that Italy has successfully achieved grid parity on solar energy. How did they get there?

Phyllis Cuttino: Well, same thing, they have a policy which they've strengthened over time and then they've had feed-in tariffs and, again, that's a policy mechanism that Europe has used largely because they've been an early adopter. As a region of the world, they still maintain an edge in attracting investments. So although Asia is a real comer, but -- so they've not only set these standards, but they've also provided kind of incentives for investment to really flow there.

Monica Trauzzi: Are there any particular technologies or one technology in particular that investors are really putting their money behind?

Phyllis Cuttino: No, it's been very interesting. In the last year we saw that wind was still the dominant investment and that's really the most mature sector of the clean energy economy, so that's no surprise. They attracted $95 billion in investment. But solar is the real comer. Part of that is because solar prices have come down by 60 percent over the last 30 months. So we've seen investments in solar really jump and then over the last year, as prices come down, we'll see more solar installed. Also interesting to note that biofuels is down, investments in biofuels is down at its lowest level since 2005, just 4.7 billion.

Monica Trauzzi: Why do you think that is?

Phyllis Cuttino: I think that part of that is first-generation capacity really exceeds demand at the moment and so I think people are -- investors are really waiting for that second generation.

Monica Trauzzi: OK, we'll end it right there. Thank you for coming on the show again.

Phyllis Cuttino: Great, thanks, Monica.

Monica Trauzzi: And thanks for watching. We'll see you back here tomorrow.

[End of Audio]

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