Has uncertainty about renewable energy tax extenders affected clean energy financing in the United States? During today's OnPoint, Phyllis Cuttino, director of the Pew Clean Energy Program, discusses a new report on clean energy financing in the G-20 countries. Cuttino explains how the United States managed to lead the pack, despite policy uncertainty. She also discusses the outlook for clean energy as policymakers shift their focus to unconventional sources of energy.
Monica Trauzzi: Hello and welcome to OnPoint. I'm Monica Trauzzi. Joining me today is Phyllis Cuttino, director of the Pew Clean Energy Program. Phyllis, thanks for coming back on the show.
Phyllis Cuttino: It's great to be here.
Monica Trauzzi: Phyllis, Pew has just released its annual report on clean energy funding in the G-20 countries and the report tells a surprising story about the United States surpassing China in the clean energy race. With all the focus that we've seen on China and with all the talk about the progress that they've made on clean energy, how is this happening?
Phyllis Cuttino: Well, I think the thing that we've seen is that with the expiring tax incentives and tax credits, we see investors have been rushing in to take advantage of those opportunities before they expire. And so we're in a little bit of a boom and bust cycle and we've seen that even with China having a story growth over the last several years, they've really maintained their growth or their level of funding. So their growth is up slightly, just 1 percent. The United States of course had this large surge bringing us to $48.1 billion, which is great news for American workers.
Monica Trauzzi: So, it's interesting that you talk about a search, because when we have folks from the wind energy industry, the solar industry on the show, they say that the lack of certainty on tax credits is going to stymie investments. Do you see that coming in the future then?
Phyllis Cuttino: Absolutely, we see this all the time around the world when we look at countries in the G-20, that investors do come in when subsidies or incentives are going to retire or diminish. And then investment drops off significantly. So we've seen this with the United Kingdom. We'll see it here in the United States. If you talk to wind producers and developers, what they'll tell you is there is very little if any wind scheduled for 2014 when we expect to have the production tax credit expire. So, that's not great news for America. But our report really looks at a couple of things. I think one of the key findings is that the clean energy sector globally continues to grow. It's up 6.5 percent, so it's outpaced growth in the overall economy once again. We saw investment reach $263 billion, so that's growth of 600 percent, excluding research and development dollars since 2004. So, this continues to be a sector of the global economy where countries are really competing to gain private investment, to create jobs and industry in their own countries. So, I think that's good news, whether or not you're a country in Asia or in Europe or here in the Americas, that there is opportunity that continues to grow.
Monica Trauzzi: So, after the United States, what do the rankings look like?
Phyllis Cuttino: Well, the United States is followed very closely by China and then by Germany and then finally by Italy is in the fourth, in fourth place. So we've seen investment grow in all of those countries. The other thing that I think is interesting about this year's report this we've seen historic levels of clean energy deployment. We now have 565 gigawatts of renewable energy installed around the world, so that's about 50 percent more than nuclear energy capacity. So that's quite a number. And it's been driven a lot by a sharp decline in solar prices. We've seen prices for solar products decline 50 percent over the last year, so that means that we've really seen consumers and customers take advantage of those numbers and deploy large numbers of solar around the world.
Monica Trauzzi: It's interesting that Italy is high up in the rankings, because they've had such a tough year economically. Europe overall has had a tough year. Have we seen a paring back of investments from those European countries at all compared to what you maybe would've expected when you were looking at the outlook in 2010?
Phyllis Cuttino: Well, what's very interesting is both Germany and Italy have seen very strong deployments. So Germany, once again for the second year in a row, deployed more than 7 gigawatts of small distributed solar capacity. Italy, 8 gigawatts. By comparison, the United States installed 1.8 gigawatts, which, for us, is a record of solar installations, and will fuel 800,000 homes. But you can see, by comparison, that Italy and Germany are just year-over-year deploying gigantic amounts of clean energy capacity.
Monica Trauzzi: So, with so many potential markets for investment, why does the United States remain such an attractive place for investors to come to?
Phyllis Cuttino: Well, I think, you know, the United States continues to lead in innovation. We attract 70 percent of all venture capital funds here in the United States, that we continue to be a center of innovation and that looks like it will continue for the foreseeable future. I think the thing that the United States is really missing is with this up-and-down policy, with this policy uncertainty, the thing that we haven't been able to do is we haven't really been able to convert to manufacturing in the way that both Germany and China have been able to do. We all know that energy demand is going to be coming from developing economies and so what we really need to do is get to a point where we are manufacturing in this country and exporting. So, you know, we need to continue our lead in innovation and in attracting private investment, but we certainly could do better on a number of other indicators.
Monica Trauzzi: The rhetoric here in Washington has sort of shifted from the last two years and right now there's a big focus on things like Keystone XL and LNG exports. So, with that focus, would you expect that there will be a shift away from renewables and clean energy talk and would that mean a decrease in investments?
Phyllis Cuttino: Right. You know, I certainly hope not. Whatever the composition is of the next Congress and whoever the next president will be, they're going to be facing the same issues of trying to create jobs and stimulate private investment in this country. And why would anyone want to give up on a sector of the global economy that is growing? So, I think there is fierce competition among countries. We are going to continue to need policy. I think both sides of the debate would say that we lack a national energy policy and we need one. And I think that there is certainly room for clean energy if you're someone that wants to create jobs and stimulate investments here in the United States. And we hope that the production tax credit will be extended. It's critical that it is. It would be great to have it happen sooner than later, but some folks are predicting it might be in a lame duck or next year, but it would be great to have that happen.
Monica Trauzzi: All right, we'll end it there. Thank you for coming on the show. Nice to see you.
Phyllis Cuttino: Thank you.
Monica Trauzzi: And thanks for watching. We'll see you back here tomorrow.
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