When New York City wanted to make the biggest purchase of subway cars in US
history in the late 1990s, more than US$3 billion worth, the only companies
that were able to bid on the contract were foreign. The same problem applies to
high-speed rail today: only European or Japanese companies could build any of
the proposed rail networks in the United States.
The US has also ceded the high ground to Europe and Japan in a broad range of
other sustainable technologies. For instance, 11 companies produce 96% of
medium to large wind turbines; only one, GE, is based in the United States,
with a 16% share of the global market. The differences in market penetration
come down to two factors: European and Japanese companies have become
more competent producers for these markets, and their governments have helped
them to develop both this competence and the markets themselves.
Take Germany as an example. Even though the sun is not so shiny in that part of
Europe, Germany has put up 88% of the photovoltaics for solar power in Europe.
Partly, this was the result of a feed-in tariff; that is, Germany guarantees
that it will pay about 0.10 euro (15 US cents) per kilowatt/hour of electricity
to whoever produces wind or solar electricity. The average for electricity that
is paid for nonrenewable sources is about 0.05 euro per kwh, so Germany is
effectively paying double for its renewable electricity in a successful effort
to encourage its production. Every year, the guaranteed price is lowered, so
that the renewable sector can eventually compete on its own, having gotten over
the hump of introducing new technology.
Germany's other advantage is that it is a world leader in manufacturing
renewable technology equipment - 32% of the solar equipment manufacturers in
the world are located in Germany. In addition, almost 30% of global wind
turbine manufacturing capacity is German.
In Denmark we can see the advantages of good policy plus competence in building
machinery. The world's largest wind turbine manufacturer, Vestas, is Danish.
According to the Earth Policy Institute, "Denmark's 3,100 megawatts of wind
capacity meet 20% of its electricity needs, the largest share in any country."
The Danes have created a fascinating experiment in democracy by building most
of their wind turbines through the agency of wind cooperatives, which may be
joined by individuals and families.
Spain has undertaken one of the most ambitious programs in wind, solar, and
high-speed trains. The Gamesa Corporation is the second-largest wind turbine
manufacturer, and Acciona Energy is the largest wind-park developer. The
Spanish government has very ambitious plans for wind production, and
occasionally wind power provides as much as 30% of the country's electrical
power.
Spain is also the world's fourth-largest producer of solar energy equipment and
is a leader in the development of concentrated solar power - a form of solar
power obtained by using a very large quantity of mirrors, typically, to
concentrate solar rays onto a tower that produces steam, which then turns a
turbine, generating electricity. They are often built in deserts and can spread
over several acres. These new solar technologies will probably result in
lower-cost electricity for long-distance applications than photovoltaics.
Asia is an important producer of renewable energy and train equipment as well.
As of 2006, Japan produced about 39% of the solar cells in the world and has
encouraged solar energy in Japan with subsidies for purchasing the equipment as
well as generous research budgets. Japan's Shinkansen high-speed rail network
covers much of the country. China is set to take off as one of the world’s
biggest producers of solar and wind equipment owing to its rise as a
manufacturing nation.
Europe sets the pace
But Europe and Japan's dominance in renewable technologies is really based in a
broader domain of competitive competence. They dominate the most fundamental
sector of the economy, namely the production of machinery for manufacturing
industries in general (often referred to as the mechanical engineering sector).
The European Union produces almost twice as much industrial equipment overall
as the United States, according to data compiled by the EU, Japan produces
almost as much as the US, with about half the population. The split among the
EU, US, and Japan, which together produce most of the world's machinery, is
52%, 27% and 21%, respectively.
A robust industrial sector is the infrastructure we need for building the tools
that will help us to avert climate catastrophe. Think of the industrial sector
of an economy as an ecosystem. Instead of the grass and leaves that feed the
plant-eaters that feed the meat eaters, a modern economic ecosystem contains
industrial equipment that makes production technology that creates the goods
and services that people consume.
The different niches of an economic ecosystem, such as the various machinery
and equipment sectors, thrive as a self-reinforcing web of engineers,
high-skill production workers, operational managers and factories. As of 2003,
Europe's manufacturing sector made up 32% of its nonfinancial economy, while
the manufacturing sector of the United States comprised only 13% of its
nonfinancial sectors. The decline of American machinery and manufacturing
sectors, in conjunction with the on-again/off-again nature of American
renewable energy policy, explains why Europe and Japan are so far ahead of the
United States in the transition to a more sustainable economy.
And America's decline can be traced to one overriding factor: a military budget
that comprises nearly half of the world's military spending. For decades, as
the late Professor Seymour Melman showed in many books (such as After Capitalism)
and in numerous articles, the Pentagon has been draining not just money but
also the engineering, scientific and business talent that Europe and Japan have
been using for civilian production. As Melman often pointed out, the US
military budget is a capital fund, and American citizens can use that fund to
help finance the construction of the trains, wind and solar power, and other
green technologies that will help us to avoid economic and environmental
collapse.
That economic collapse, if it comes, will be caused by two major factors: the
end of the era of cheap oil, coal and natural gas; and the decline of the
manufacturing and machinery base of the economy. Both problems can be addressed
simultaneously, as Europe and Japan are showing, by moving the economy from one
based on military and fossil fuel production to one based on electric
transportation and the generation of renewable electricity.
Jonathan Rynn, PhD, is a frequent contributor to the Grist environmental
blog and a contributor to Foreign Policy In Focus.
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