The report, Advantage America: The U.S.-China Clean Energy Trade Relationship in 2011, concludes that America's clean energy trade strength is derived from leadership in innovation and entrepreneurship, as well as the global presence of U.S. companies. China's clean energy industry has an advantage in large-scale manufacturing and high-volume assembly of certain clean energy products. However, tensions have been heightened in recent years by fiercely competitive market conditions affecting companies in both countries, as well as several high-profile trade cases.
Phyllis Cuttino, director of Pew's clean energy program said, "The report findings underscore the long-term economic potential for U.S. leadership in the clean energy sector. Advantage America demonstrates the payoff for our leadership in wind, solar, and energy smart technology innovation. U.S. companies are tapping into the growing worldwide demand for clean energy goods and services. But, to maintain our competitive edge, it is essential that policymakers recognize and enhance domestic policies that help position U.S. companies for success -- investing in research and development, encouraging domestic demand, and supporting overseas sales." Among the report's major findings:
- Solar EnergyThese products constituted the largest component of clean energy trade for both countries. Combined, firms based in the two nations traded more than $6.5 billion worth of products and services in 2011. Chinese firms sell large quantities of finished solar cells and modules to the United States, which led in sales of high value-added goods and services, such as polysilicon and wafers, as well as the high-tech materials and equipment needed in solar manufacturing. On a net basis, the United States enjoyed a $913 million surplus in the solar sector.
- Wind EnergyThis was the smallest of the three clean energy trade sectors examined in the report. Overall, more than $923 million worth of wind energy goods and services were exchanged between the two countries in 2011. As with solar, the U.S. wind industry excels in sales of relatively high-margin specialty materials (fiberglass) and sensitive electronic and other control systems. China's largest sales were in turbine towers and rotors. Overall, U.S. firms held a net trade surplus of just over $146 million.
- Energy Smart TechnologiesThis sector includes a suite of technologies, services, and products that can help improve energy performance and/or efficiency, store energy, and reduce carbon emissions. Energy smart technologies traded between the United States and China include smart meters, light emitting diodes (LEDs), advanced lithium-ion batteries, and electric vehicles. More than $1.1 billion worth of these products flowed between the two countries, with the United States held a net trade surplus of $571 million in the sector.
Hoil Kim, vice president and general counsel of GT Advanced Technologies said, "Clean energy technologies, such as solar PV and LED lighting, represent growing global markets for U.S. companies like GT Advanced Technologies with increasing competition from countries like China. In order to build on our country's strengths in innovation and advanced manufacturing, we need to establish a long-term, consistent energy and trade policies that will enhance research and development, grow exports and spur job growth in the United States." The report concludes that:
- The United States held a $1.63 billion trade advantage over China in 2011 across the three sectors. The United States enjoyed a surplus in all three major clean energy sectors, with solar energy accounting for 56 percent of the overall advantage and energy smart technologies accounting for 35 percent of the surplus.
- U.S. firms have an advantage based on national leadership in innovation and entrepreneurship. U.S. companies excel in production and sale of complex, high-margin, and performance-critical goods. They include capital equipment for manufacturing solar panels and LEDs, specialty chemicals and materials needed for production of solar and wind products, and controls for energy systems.
- U.S. companies are more active overseas than their Chinese counterparts, which have only small U.S. assembly operations for clean energy equipment. The U.S. trade advantage over China increased by more than $1.1 billion (to a total of $1.63 billion) when the global footprints of U.S. firms manufacturing products overseas were taken into account.
- China's strength is based on large-scale assembly and high-volume manufacturing. The data show that Chinese firms are relied upon for large-scale manufacture and high-volume assembly of finished products such as solar modules and LED fixtures.
- Uncertainties surrounding U.S. clean energy policies are likely to have the greatest impact on domestic manufacturing in the clean energy industry. In the United States, clean energy policy is in a state of flux. Much of the demand associated with state-based renewable energy goals and standards has been met. Several key Federal initiatives have expired or will soon expire, such as the Advanced Energy Manufacturing Tax Credit, the Department of Energy's Loan Guarantee program for renewable energy deployment, and the Department of Treasury's clean energy grants initiative. In addition, the Production Tax Credit and Investment Tax Credit face an uncertain future in ongoing tax and budget policy discussions. Policy choices, not China's exports, will determine the direction of the U.S. clean energy industry in the months and years ahead.