Friday, June 10, 2011

U.S. Is Falling Behind in the Business of ‘Green’

LEICESTER, England — The Mark Group started hunting for a new untapped market when it realized that its core business — insulating old homes using innovative technology — would drop off in coming years. Based in this rust-belt city, the company had grown rapidly over the last decade largely because of generous and mandatory government subsidies for energy conservation that impelled the British to treat their homes.
Ryan Collerd for The New York Times
Pat O'Connor spraying insulation in the attic of a home in Flourtown, Pa.
Mark Group
Thermal scans of a house before, left, and after being insulated. In Britain, subsidies cover much of the cost of home insulation.
But as a result of those incentives, market saturation was nearly complete — more than 80 percent of the country’s older homes had been at least partly retrofitted by 2010, the company estimated. So the Mark Group recently opened its newest office in another country, one with a relative paucity of expertise in the company’s specialty of cutting home energy bills and greenhouse gas emissions.
The office is in Philadelphia.
“The United States was a nearly untouched market with 120 million homes, most of them very energy-inefficient — it was a massive opportunity,” said Bill Rumble, the company’s commercial director, who had recently returned from its new American headquarters.
Many European countries — along with China, Japan and South Korea — have pushed commercial development of carbon-reducing technologies with a robust policy mix of direct government investment, tax breaks, loans, regulation and laws that cap or tax emissions. Incentives have fostered rapid entrepreneurial growth in new industries like solar and wind power, as well as in traditional fields like home building and food processing, with a focus on energy efficiency.
But with Congress deeply divided over whether climate change is real or if the country should use less fossil fuel, efforts in the United States have paled in comparison. That slow start is ceding job growth and profits to companies overseas that now profitably export their goods and expertise to the United States.
A recent report by the Pew Charitable Trusts found that while the clean technology sector was booming in Europe, Asia and Latin America, its competitive position was “at risk” in the United States because of “uncertainties surrounding key policies and incentives.”
“This is a $5 trillion business and if we fail to be serious players in the new energy economy, the costs will be staggering to this country,” said Hal Harvey, a Stanford engineer who was an adviser to both the Clinton and the first Bush administration and is now chief executive of the San Francisco-based energy and environment nonprofit organization Climate Works. Although the 2009 stimulus bill provided a burst of funding — $45 billion — that has now tapered off, he said, “We’ve let energy policy succumb to partisan politics.”
The aggressive entry of Britain into the field over the last few years shows the power of government inducements to redesign a nation’s energy economy away from traditional fuel. The country’s Green Deal, as it is called, is currently being spearheaded by the Conservative-led coalition government. In Britain, reducing carbon dioxide emissions was one of the few policies supported by political parties of both the right and left, which both accepted that climate change was a serious problem and saw clean technology investment as a growth opportunity rather than an onerous obligation.
“We are determined to harness the industrial benefits of the low-carbon economy ahead of the rest of the pack — we see it as a competitive advantage,” said Gregory Barker, Britain’s minister of state for energy and climate change. Last month, Mr. Barker led the first British green trade delegation to the United States; it included a wind energy company and a battery maker, but also Adnams Southwold, a famed brewery that now makes beer using less energy and water, and the Mark Group.
President Obama has vowed a switch to cleaner energy, and some states, like California, have taken aggressive measures. But the current patchwork of government inducements remains generally insufficient as a draw for American companies and investors to jump into new fields like wind power, energy-efficient appliances or even mass-market insulation, because upfront costs are large and profits uncertain.
Energy Department officials express frustration that they cannot do more at a crucial juncture without the support of Congress. Dr. Arun Majumdar, senior adviser to Energy Secretary Steven Chu, said that the department’s $5 billion budget for research should be tripled as it currently financed less than 5 percent of proposed projects. He said the country needed better low-cost financing methods to bring companies into the market, as well as stricter energy-efficiency standards to stimulate customer demand.
“We want this ecosystem to grow and thrive like I.T. and biotechnology,” he said, adding he was “concerned” it would not. While he agreed the United States remained a hotbed of good ideas, he said, “in actual downstream deployment we are at risk of falling behind — we are falling behind already.”

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