Thank you, President Hugh McKay, for the introduction. It’s great to be at the City Club of Cleveland as you celebrate 100 years of debate and discussion on the important issues facing the nation.
It’s fitting to give an energy speech in Cleveland, home of the country’s first wind turbine to generate electricity and a city at the forefront of the clean energy economy. Today, I want to discuss the choice we face as a nation when it comes to competing in the global clean energy race.
First, I want to go back in history to the birth of America’s aviation industry. There are many nuances to this story that have important lessons for us and the U.S. today.
My story begins with Samuel Langley, a distinguished scientist and Secretariat of the Smithsonian Institution. He was a pioneer in unmanned powered aircraft. It appeared that he was on the threshold of achieving manned flight and received a $50,000 grant from the War Department and $20,000 from the Smithsonian to make the first airplane. After the second crash on take-off from a barge on the Potomac River in December, 1903, Langley abandoned the project.
On December 17th, 1903, only nine days later, the Wright Brothers succeeded at Kitty Hawk. The two young brothers working from a bicycle shop came out of “left field” and triumphed over all competitors in the race to powered flight. It is a story of the great American entrepreneurial spirit. For the next several years, the Wright Brothers continued to lead the world in the development of the airplane. In a European tour several years later, they demonstrated how far ahead of the competition they had advanced.
Needless to say, some members of Congress were outraged by the funding of the Langley project. I can only imagine the criticisms. “American ingenuity doesn’t need taxpayer money to succeed. The government can’t pick winners, and should just stand back and let private enterprise find the path to success.”
However, our story doesn’t end here. In order to sustain their new business, the Wright brothers needed customers. Their first and most important customer was the U.S. military. The U.S. military also bought airplanes from Curtiss, an early competitor the Wright Brothers.
Despite our head start in aviation, within a decade, the United States lost the technological lead to Europe. By the time we entered World War I, in 1917, we were so far behind that our allies convinced us to manufacture European designed aircraft in our factories. We agreed.
What happened? Part of the reason is that the U.S. quickly fell behind in the government support of the fledgling aviation industry. Between 1908 and 1913, the United States ranked 14th in government investment in aviation. We were understandably behind countries like Germany, France, Russia, Italy, Austria and England arming for war, but we were also behind Japan, Chile, and Brazil.
After the war, the United States was determined to regain leadership. We saw it as an economic and national security imperative. The federal government launched an agency to support research and development, and passed legislation to allow private aviation companies to carry mail. Demand from the military and the postal service kept the industry alive during its early years, and paved the way for today’s domestic commercial aviation industry.
In 1930, then Postmaster General Walter Folger Brown, spoke about the government strategy. He said, “When, by reason of public patronage, it shall take its place among the other successful American industries, independent of government subsidy, an enduring contribution will have been made to the progress, prosperity and security of our country.”
The key point of the story is this: Even though the United States fell behind in aviation, our country recognized an economic opportunity, and mobilized to recapture the lead. The government was absolutely essential to this effort, from the early days by allowing the Wright Brothers to concentrate on designing and building airplanes instead of bicycles.
In all areas of manufacturing and technology development there is a continuous race. This is true of airplanes, automobiles, semiconductors and computers, and clean energy technologies. Once again, there is a huge opportunity before us. Dramatic reductions in cost and improvements in technology are driving a global revolution in clean energy. The question is no longer if clean energy will become competitive with conventional forms of energy; the question is, “When will it happen?”
Last year, investments in clean energy reached a record $260 billion. In the coming decades, the clean energy market is expected to explode. According to Bloomberg New Energy Finance, over the next 20 years, trillions of dollars will be invested globally in renewable energy alone. These investments will spur job creation as workers make, sell, and install clean energy products.
Yet, as the global clean energy opportunity grows, so does the competition.
China, Korea, Germany, and other countries have decided that energy technologies are critical to their national and economic security in the 21st century. They are establishing supportive policies and making major investments in clean energy – from renewables to electric vehicles to smart grids and the next generation of biofuels.
At least 10 countries have adopted renewable electricity standards, and more than 50 countries offer some type of public financing for clean energy projects. Germany and Canada operate government-backed clean energy lending programs. And the China Development Bank has offered more than $47 billion in credit lines to the country’s wind and solar manufacturers. China has also set ambitious targets for increasing installed wind and solar capacity which would far outpace the United States unless we significantly up our game.
These countries are determined to win the clean energy race. And by any measure, they are reaping rewards on their investments. The United States invented solar cells, wind turbines, and lithium ion batteries, but we are no longer the leading manufacturer. China has surged into the solar manufacturing lead, capturing roughly half the market in solar cell and module production. Denmark is home to the world’s largest wind manufacturer, and Japan leads the world in advanced battery manufacturing.
Although the clean energy competition is fierce, the United States is still in the game.
Just look at Ohio. A recent Brookings Institution report ranked Ohio as the sixth largest state in terms of jobs in the “clean economy.”
Ohio’s alternative energy portfolio standard is helping to grow its clean energy industries. The state is at the forefront of wind manufacturing, with hundreds of companies and thousands of workers in the supply chain. Ohio’s solar industry now includes almost 100 companies that are creating jobs producing, distributing, and installing solar systems. And universities across the state are spurring clean energy innovation and advancing education and job training.
The opportunity for continued growth is huge. The Great Lakes have a total of 742 gigawatts of offshore wind potential, and Ohio is leading the way in developing this resource. Manufacturers throughout the state can, and are, retooling to build fuel-efficient cars, wind turbine components, and solar panels. And while you might not think of Ohio as part of the Sun Belt – especially in January – the Buckeye state has more solar photovoltaic resources than Germany, a global solar leader.
Ohio has the natural resources, the skilled workforce, the manufacturing know-how, and the first-rate research institutions to lead in clean energy. Instead of watching clean energy jobs drift to Europe and Asia, we need to seize the opportunity to create more of them here.
That is why President Obama has been working since day one of his presidency to strengthen U.S. competitiveness in clean energy. Through the Recovery Act, we invested $90 billion in clean energy – including nearly $800 million in Ohio – to promote energy efficiency, modernize our electric grid, deploy renewable energy, support advanced vehicle manufacturing, and more.
We’re on track to double renewable energy generation in the President’s first term. The 1603 grant in lieu of tax credit program has provided much-needed capital to help deploy clean energy projects. In Ohio, the program has supported over 100 projects, and more than $80 million in payments has leveraged another $160 million in private sector investments.
To help families save money by saving energy, we have weatherized more than 750,000 low-income homes over the past three years. Ohio has been at the leading edge of this effort, weatherizing more than 40,000 homes. We’re also working to make our businesses and industries more competitive by reducing their energy waste and energy bills.
Through our loan programs, we’re supporting nearly 40 clean energy projects that are expected to employ more than 60,000 Americans, generate enough clean electricity to power nearly 3 million homes, and displace more than 300 million gallons of gasoline annually. This includes the world’s largest wind farm, the first new nuclear reactors in three decades, several of the largest solar photovoltaic generation facilities, and a landmark solar rooftop project.
It also includes more than $8 billion in loans to support companies that will make next-generation, fuel-efficient vehicles and parts in the United States that can compete in the international market. For example, we’re helping Ford to retool and modernize facilities in Cleveland and across the Midwest to produce higher-quality, more fuel-efficient vehicle technologies.
After years of decline, the American auto industry is making a comeback thanks to bold action taken by the President. Now, we’re helping the industry to compete in the years ahead, while also breaking our dependence on foreign oil. President Obama has set an ambitious, but achievable, goal of reducing oil imports by one-third by 2025. In the past few years, the President has announced landmark fuel economy standards that will save consumers $1.7 trillion at the pump, reduce our oil dependence by 12 billion barrels, and drive innovation to help U.S. auto manufacturers produce the fuel-efficient vehicles that consumers want.
The good news is: the United States is making gains in the clean energy race. Last week, Bloomberg New Energy Finance announced that the United States has reclaimed the title from China of global leader in clean energy investments.
This welcome news comes with a huge caveat though. Our comeback is due in large part to government programs that have expired or are set to expire soon. Last September, the 1705 loan guarantee program closed. The 1603 program ended a few weeks ago. And the Production Tax Credit is scheduled to expire at the end of 2012. At the same time, Recovery Act spending is winding down and we face an era of tight fiscal budgets.
America has reached a crossroads, and faces a stark decision: Do we play to win in the clean energy race, creating U.S. jobs by making and selling clean energy technologies, or do we bow out and follow our dependence on foreign oil with a dependence on foreign solar panels and wind turbines?
There are some in Washington who think we have already lost the clean energy race. They say we can’t compete with China. After World War I, we could have said we can’t compete in aviation technology with Europe.
Technological and manufacturing innovation is what Americans do best, and not many places do it better than Ohio.
Universities like Case Western are advancing research in solar cells and power electronics. Workers in Toledo who once made glass are making solar modules. In the greater Cleveland area, they’re producing the bearings, composites, and metal coatings that make wind turbines work. Entrepreneurs and community leaders are pursuing the next frontier in wind power based off of our shores. The workers, innovators, and businesses in Ohio and across the U.S. are the best in the world – and they are ready to compete.
America has what it takes to win the clean energy race. The question now is, “Are America’s leaders willing to do what it takes?”
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. To seize the clean energy opportunity, we must do so again – and we must act now.
We need a comprehensive policy that leverages our nation’s strengths to address the entire energy value chain – innovation, manufacturing, deployment, financing, and markets. Here are some things we need to do:
· First, we need to continue to nurture innovation through smart and sustained investments in research and development. America has the world’s greatest innovation machine, but we spend more on potato chips than government R&D in energy.
· Second, we need to provide long-term, predictable support for our entrepreneurs and businesses so that they can catalyze private sector investments to translate American innovation into American manufacturing and jobs. Improvements in manufacturing productivity will make our products less expensive and more competitive in the global market.
· Third, America’s entrepreneurs and businesses need access to low-cost, long-term, and large-scale capital to compete. The United States has the world’s largest capital markets. We need to find ways to leverage this strength by unlocking capital to finance clean energy investments in manufacturing and deployment.
· Finally, to encourage innovation, manufacturing, and deployment, we need domestic demand for clean energy technologies. Policies like a Clean Energy Standard can create demand in the U.S. for clean electricity from renewables, nuclear, and cleaner fossil fuels, and provide certainty for American entrepreneurs.
To create jobs and prosperity in the 21st century, we can’t invent technologies and watch them drift overseas. We need to fight to keep them here. Our motto should be, “Invented in America, Made in America, and Sold Worldwide.” Ohio can lead the way in making this slogan a reality.
We’re having a dialogue with some members in Congress – including Ohio’s tireless advocate, Senator Sherrod Brown – on how we can strengthen American competitiveness in clean energy. In these tough fiscal times, we’ll have to set priorities, make tough choices, and find creative solutions, but America has a lot of smart people and interesting ideas.
Our energy future is a serious issue that deserves a serious conversation. I hope that we can get past the sound bites, focus on the substance, and find a path forward. The stakes are too high for this issue to get stuck in D.C. gridlock.
Countries in Europe, Asia, and throughout the Western Hemisphere aren’t waiting for us to figure out our next steps. They’ve decided to compete and are moving ahead. So should we.
We can win the clean energy race and capture the jobs of the 21st century. But we must move with fierce urgency. Thank you.