U.S. needs to play to win in the clean energy race

By Steven Chu, Secretary, U.S. Department of Energy

The Department of Energy's loan programs have been the subject of much public attention. As part of our commitment to being a responsible steward of public dollars, the Department has welcomed and cooperated with the requests of Congress to discuss our loan portfolio. We also welcomed the independent review by Herb Allison.

Mr. Allison released a thorough, thoughtful report. He made some important recommendations to strengthen the management and oversight of the loan portfolio. Even before the conclusion of Mr. Allison's review, we took steps—many of which are consistent with the report's recommendations—to improve the loan programs.

While the portfolio includes loans to a range of projects that carry different levels of risk, the report finds that the Department of Energy has reasonably estimated the costs of these risks.

The purpose of the loan programs is to provide low-cost financing to innovative clean energy projects that have a unique value to the U.S.—both in terms of providing the clean energy the U.S. needs and in spurring the development of new industries that can generate many more jobs down the line.

Overall, the loan programs have been successful in growing America's clean energy sector. The Department supports roughly three dozen clean energy projects that are expected to employ more than 60,000 Americans, generate enough clean electricity to power nearly three million homes, and displace nearly 300 million gallons of gasoline annually. And these are just the direct benefits; they do not include additional jobs and investment that come from supply chains.

Through active projects supported by loans and loan guarantees, our Loan Programs are spurring $40 billion in investment in clean energy and advanced vehicles and helping to unlock private capital.

Additionally, the success of these projects is generating additional private sector activity by serving as a model for other projects. Thanks in large part to the loan programs and other federal programs, last year—for the first time since 2008—the United States regained the title from China as the world's leader in total investment in clean energy.

Improvements in technology and dramatic reductions in cost are driving a global revolution in clean energy. Last year, a record $260 billion was invested globally in clean energy, and trillions of dollars more will be invested in the coming decades. The question is no longer when the clean energy economy will arrive, but whether America will lead it.

As the global clean energy opportunity grows, so does the competition. At least 10 countries have adopted renewable electricity standards, and more than 50 countries offer some type of public financing for clean energy projects. For example, Germany and Canada operate government-backed clean energy lending programs, and China has provided strong support to its clean energy industries.

These countries are determined to win the global clean energy race. And by any measure, they are already reaping rewards on their investments.

Americans invented the silicon solar cell, developed modern wind turbines for electricity generation, and developed lithium ion batteries, but we are no longer the leader in these industries. China has surged into the solar manufacturing lead. Denmark is home to the world's largest wind manufacturer, and Japan and Korea lead in advanced battery manufacturing, although the United States is making strong gains.

To win the clean energy jobs of the future, the United States must do more than invent technologies; we must also manufacture them, deploy them here at home, and sell them around the world. The production of energy technologies benefits from scale. Simply put, we cannot have a competitive clean energy industry without programs that help spur deployment and markets.

America faces a stark choice today. Will we play to win the clean energy race— creating U.S. jobs by making and selling clean energy technologies—or will we watch the rest of the world pass us by? We can invest in America's workers, industries, and innovations or we can send more money and jobs overseas to import the technologies of tomorrow.

Throughout our history, from aviation to agriculture, from biotechnologies to computer technologies, the federal government has supported the private sector to keep the United States at the technological forefront of important industries. In clean energy, other countries are running our plays. It's time for us to take a page from our own playbook. We can still win the clean energy race, but we must act now.

For the Record is an excerpt of a presentation by Steven Chu, U.S. Department of Energy Secretary, before the Committee on Energy and Natural Resources of the U.S. Senate in March 2012.

July/August 2012

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U.S. needs to play to win in the clean energy race