How does the relationship between the United States and China on clean energy trade affect international markets? During today's OnPoint, Phyllis Cuttino, director of the Clean Energy Program at the Pew Charitable Trusts, discusses a new report highlighting the differences between the United States and China on clean energy development and trade. She also explains how high-profile trade cases between the two countries have affected the dynamic of the relationship.
Monica Trauzzi: Hello, and welcome to OnPoint. I'm Monica Trauzzi. Joining me today is Phyllis Cuttino, director of the Clean Energy Program at the Pew Charitable Trust. Phyllis, it's nice to see you again.
Phyllis Cuttino: And I'm glad to be here.
Monica Trauzzi: Phyllis, you've just released a new report based on data compiled by Bloomberg New Energy Finance, and it's focused on the relationship between the U.S. and China on clean energy trade. At this point, who's leading the way on clean energy? Who's the bigger superpower?
Phyllis Cuttino: Well, that was really the surprising finding of our report, was that there is a clear advantage for the United States, that when it comes to looking up and down the value chain, not just in kind of finished products, we actually enjoy a trade surplus of more than $1.6 billion. So a very surprising find.
Monica Trauzzi: So news reports would maybe suggest the opposite, that China's leading the way, the U.S. needs to do more. So how do you account for that disparity?
Phyllis Cuttino: Well, you know, when we dug down on the data, what it clearly showed is that the United States has inherent strengths when it comes to clean energy economy, and the Chinese have inherent strengths. And actually, our relationship can be quite productive. So for instance, while we import more finished products, more solar panels from them, we actually export all kinds of capital equipment, specialty chemicals, polysilicon wafers, so that really means that we provide them with all the materials they need to make the finished product. So they're doing a lot of high volume manufacturing and assembly, and we're doing a lot of kind of advanced manufacturing and very kind of high margin, performance critical supplies to them.
Monica Trauzzi: And one of the negative things that could impact and has impacted the relationship between the two countries are these series of trade cases that we've seen over the last couple of years. How have those impacted the relationship, and how do you think businesses moving forward will look towards the other country when it comes to trading?
Phyllis Cuttino: Well, it's very interesting, because one of the things that we asked Bloomberg New Energy Finance, and one of the statistics that they provided back, was that if you look at the difference between 2011, and remember, our report just looks at 2011, which is the last year for which complete data is available, and compare it to 2012, we, China is not import, is not exporting as many solar panels into the United States, it's true, but what has happened instead Malaysia, Taiwan, the Philippines, other countries have just moved to fill that void. So it gets back to the point that I think that we need to have of course a fair and free trade relationship with China, but we have a stake in it being productive, and we're slightly interdependent upon one another.
Monica Trauzzi: What has China done on policy? Because that's one thing we hear a lot about here in the United States, putting together something we've talked about before, a clean energy policy. Do they lead the way on that?
Phyllis Cuttino: They absolutely do. China has very long-term, steady policies in place, ambitious targets for renewables. They're talking about, now we're hearing reports about possibly taxing carbon. So there's really, you know, when it comes to a target on electric vehicles, they are really leading the way on policy. And that, again, is another finding of our report, which is if we really want to nurture this sector of our economy, if we want to make sure it's competitive, here in the United States we have to have certain policy. We've had this very episodic, on again, off again, clean energy policy, and we need to provide investors and businesses and industry with certainty, and an internal demand signal. So that would mean a renewable energy standard, a clean energy standard, something of the like.
Monica Trauzzi: Clean energy markets are global.
Phyllis Cuttino: Mm-hmm.
Monica Trauzzi: So how greatly does the relationship between the U.S. and China then affect the rest of the world on clean energy?
Phyllis Cuttino: Well, it's true that China has become really the world suppliers of solar panels. So the market outside the United States is, as you know, much larger than the United States market. The European market, the Asian market, and these are markets that are going to continue to grow. And so if we can be the supplier of capital equipment, of specialty chemicals, of, you know, very high quality products to China, and they export to the rest of the world, that's good for us.
Monica Trauzzi: All right. We're going to end it right there. Interesting stuff. Thank you for coming on the show, as always.
Phyllis Cuttino: Thank you.
Monica Trauzzi: And thanks for watching. We'll see you back here tomorrow.
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