CleanTech Trends – Future Growth and Potential

An Opportunity for Modern Support of Fossil Fuels and CleanTech

Renewable electricity generation doubled from 2006 to 2011. The price of solar, wind, and other clean energy technologies fell. American manufacturers have regained market share in advanced batteries and vehicles.

Employment in the CleanTech sector grew by nearly 12% from 2007 to 2010. In fact, during the middle of the recession (2008 to 2009) the clean economy grew faster than the rest of the economy, expanding at a rate of 8.3%; the American Recovery and Reinvestment Act (ARRA) investment in clean energy projects likely spurred much of this growth.

The newer CleanTech sector made up of technology-heavy segments also adding jobs at elevated rates each year over the period. For example, establishments involved in fuel cell production created roughly 3,500 jobs while those working in smart grid added 7,000, with annual growth of 10.3 and 8.6% respectively

“After a record-breaking 2011, the U.S. has proved itself as a viable market for solar on a global scale,” says the executive summary of the report. “In 2011, the U.S. market’s share of global (photovoltaic) installations rose from 5% to 7% and should continue to grow. We forecast U.S. market share to increase steadily over the next five years, ultimately reaching nearly 15% in 2016.”

“What we are seeing in the U.S. is that policies are working to open new markets and remove barriers for solar,” said Rhone Resch, president and CEO of SEIA. “The industry is now poised for years of multi-gigawatt growth and the creation of tens of thousands of new jobs. But we face a number of challenges that have the potential to slow this growth.”

The U.S. wind market is the second largest in the world, for more than 22% of the world’s total installed wind capacity. 2010 was strong and 2011 saw difficulty. Pike Research predicts wind installations to pass 125 GW by 2017 – more than doubling from 2011 to 2017.

“However, the uncertainty surrounding the extension of the production tax credit in the U.S. continues to prevent the country from reaching its full potential,” says research analyst Dexter Gauntlett.  “The United States produces enough electricity from wind energy to power 10 million homes – but there is still plenty of room to grow.  Wind still accounts for only 2.3% of total electricity generation in the United States, compared with around 20% of total generation in some countries.”

However the U.S. CleanTech sector faces challenges without concerted and consistent policy. The era of increased clean energy spending supported by the American Recovery and Reinvestment Act of 2009 (ARRA) is ending, and this coincides with the expiration of 62 related policy supports. Federal CleanTech funding is predicted to decrease 75% by 2014. The CleanTech sector will have substantially less federal support going forward without a policy in place to invest and foster it. “Without timely and targeted policy reform, several sectors are likely to experience more bankruptcies, consolidations, and market contraction ahead” reports Mark Muro, a senior fellow and policy director at the Metropolitan Policy Program at Brookings.

Is this investment worthwhile? Consider that the U.S. clean economy encompasses 2% (2.7 million) of the total economy, while fossil fuels represent 1% of jobs (1.3 million) – these are jobs that directly support the production of fossil fuel-based energy, derivative manufactured products, and machinery. Fossil fuel subsidies have fostered solid companies and reliable energy for the U.S. economy for decades.

And while 2% sounds small, the CleanTech sector is an innovative force, and in some regions, like in Albany NY, it’s a significant local contributor. The potential of the industry to be a trillion dollar market worldwide means we need to keep our eye on the prize. We have an opportunity to develop a modern system of support that provides predictability for investors and is a catalyst for further innovation and technological improvement, for both fossil fuels and CleanTech. “The end of the present policy regime therefore offers the opportunity to implement smart reforms that not only avoid a potential “clean tech crash” but also accelerate technological progress and more effectively utilize taxpayer resources. Well-designed policies that successfully drive innovation and industry maturation could provide US clean energy sectors a more stable framework within which to advance towards both subsidy independence and long-term international competitiveness,” stated Muro.

Sources, and good all-around reading:

Brookings Institute: “Sizing the Clean Economy – A National and Regional Green Jobs Assessment”  

Metropolitan Policy Program – “Beyond Boom and Bust”  

Investments in North American Wind Energy Installations Will Total $145 Billion through 2017 – March 5, 2012