The following article appeared in Foreign Policy in Focus, and was reposted at commondreams.org.
When New York City wanted to make the biggest purchase of subway cars in U.S. history in the late 1990s -- more than $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 can build any of the proposed rail networks in the United States. The U.S. has also ceded the high ground to Europe and Japan in a broad range of other sustainable technologies. For instance, 11 companies produce 96 percent of medium to large wind turbines (PDF); only one, GE, is based in the United States, with a 16 percent 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.
Let's take Germany as an example. Even though the sun is not so shiny in that part of Europe, Germany has put up 88 percent of the photovoltaics for solar power in Europe. Partly, this was the result of a feed-in tariff (FIT); that is, Germany guarantees that it will pay about 0.1 Euro per kilowatt/hour of electricity to whomever produces wind or solar electricity. The average for electricity that is paid for nonrenewable sources is about .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.
But Germany's other advantage is that it is a world leader in manufacturing renewable technology equipment. Thirty-two percent of the solar equipment manufacturers in the world are located in Germany. In addition, almost 30 percent 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 percent 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 percent 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 (CSP). CSP is 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 be 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 percent 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 solar and wind equipment producers, owing to its rise as a manufacturing nation.
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). According to statistics compiled by the European Union (PDF), the E.U. produces almost twice as much industrial equipment overall as the United States; Japan produces almost as much as the U.S., with about half the population. The split among the E.U., U.S., and Japan, which together produce most of the world's machinery, is 52 percent, 27 percent, and 21 percent, 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 percent of its nonfinancial economy (PDF), while the manufacturing sector of the United States comprised only 13 percent 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 U.S. 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.
‘Heretic’ battles straw man
Top 25 reasons to give a damn about climate change
Comments
View as Flat
Tim Hurst Posted 9:13 am
23 Jun 2008
We could be taking advantage of that same industrial infrastructure and history in the American Midwest where the lagging auto industry is not operating anywhere near full capacity. The Federal Govt needs to mobilize this sleeping industrial giant to start producing the trains, subway cars and the other infrastructure we need now.
Tim Hurst
ecopolitology
Red, Green, and Blue>
Permalink
Jon Rynn Posted 9:53 am
23 Jun 2008
Permalink
Colin Wright Posted 3:13 pm
23 Jun 2008
Also, I think Thom Hartmann is broadcasting from Denmark this week. I'm sure he'll have some renewable energy stories.
Permalink
MAD MAC Posted 4:17 pm
23 Jun 2008
Yes, Germany has invest heavily in renewables. At huge cost however. As the author points out Germany's investment in renewable sources of energy has been very expensive. They are hoping to recoup this when renewables increase in demand. In the meanwhile, though, it's the German citizenry that absorb the higher costs. I lived in Germany 16 years, just left last year to move to Thailand. Tax rates are brutal, and Germany foolishly went down the road of decommissioning their nuclear power plants. The result? Germany is now building the largest coal fueled power plant in the world (by a good margin) and it does not have the capacity to sink the CO2 produced.
The US military budget is very large, but the author ignores the fact that the US economy is very large and that the US has global military commitments (which is the heart of the issue the author ignores but which is the true agenda in the paragraph). The pacman eating the US budget isn't the military, but rather medicare. That's eating us alive.
Furthermore, numbers can be twisted anyway you want. For example:
"The United States spends 3.7% of its GDP on its military, more than France's 2.6% and less than Saudi Arabia's 10%.[9] This is historically low for the United States since it peaked in 1944 at 37.8% of GDP (it reached the lowest point of 3.0% in 1999-2001)."
The US is at war, France is not.
Victory in Pattani
Permalink
John former Marine Posted 11:24 pm
23 Jun 2008
How much money/blood has Germany spent in Iraq the past 5 years? Ok...so how much are they actually paying per KW of electricity then?
Shu pas a vende.
Permalink
amazingdrx Posted 1:05 am
24 Jun 2008
http://www.cattlenetwork.com/Content.asp?ContentID=231385 ...
stop the thieving "free marketeers" before we go the way of the UK, a has been super power.
http://amazngdrx.blogharbor.com/blog
Permalink
Jon Rynn Posted 1:19 am
24 Jun 2008
As for the necessity of a huge military budget, Mad Mac, first of all, I want to make it clear that criticism of the military budget in no way implies criticism of military service to this country that you or any one else has given us. That's a wedge that the Right tries to drive between veterans and progressives. As I argued here and elsewhere, however, a military-industrial complex is a very difficult thing to manage correctly. In particular, too much of it, and you lose the capacity to regenerate your economy industrially, as Seymour Melman spent his career arguing.
Medicare is hardly eating our economy alive, the entire health care system is, because it's private and not public -- more expensive by 50% than any other industrial country.
Amazin' -- I know people are trying to blame speculation, but a perusal of theoildrum.com and energybulletin.net will show some good arguments that speculation does not have that kind of power.
Permalink
amazingdrx Posted 8:08 am
24 Jun 2008
It's hedge funds again, like the mortgage crisis.
Re-regulation is needed, period.
The anti-gas guzzling eco frenzy likewise depends upon this gas price being a real supply crisis. they believe what they want, right andf left. the truth is that speculation has doubled the price of oil.
And is doing the same to everything else, food, electricity, coal...
http://amazngdrx.blogharbor.com/blog
Permalink
hapa Posted 9:05 am
24 Jun 2008
it will be very hard for us to answer the many questions about why guzzling gas went south in 2007. the combination of market pressure on oil price, housing-burst-escapee pressure on oil price, consumer debt implosion, housing-starts-drop-driven drop in pickup truck purchases, guzzler-depreciation knock-on effects, health-housing-education-tax inflation... wait where was i....
Permalink
Jon Rynn Posted 9:47 am
24 Jun 2008
Here's my main argument -- overshoot is the flip side of global warming/pollution. Overshoot occurs when an ecosystem is overused, or is used up. Pollution is what happens when an ecosystem is overloaded with certain elements. They both happen when some part of the ecosystem, generally of an organic source, that gets out of control.
Overshoot translates into massive ecosystem destruction, as in forests and fisheries. Peak oil and the agricultural problems are examples of overshoot. In the case of agriculture, water and soil have been destroyed, destroying the very basis of agriculture, in other words, the capital on which the production of food is based is being destroyed.
Peak oil is more difficult to explain, evidently, unless as I said you study the arguments made on sites such as theoildrum.com. But the thing you should realize is that there have always been "problems" in oil supply, such as temporary bottlenecks, speculation, manipulation, etc. etc., what's different now is that nobody can turn on the spigot, which in the past was used to wash away all problems. In other words, every time there was a supply problem, the US or Saudi Arabia or somebody could pump more oil.
They want to pump more oil, not less, because they (such as Saudi Arabia) realize that people will move away from oil if it becomes clear that oil will be expensive, forever. Why is oil soaring now? All of a sudden speculators and oil countries/companies have figured out how to manipulate the market? No, a much simpler explanation is that, like every other resource on this planet, oil is finite. The amounts of oil being used every day are unbelievable -- 82 million barrels per day. Just think about that -- only don't because I don't even know how to conceptualize it.
So problems with oil, fertilizer, food, etc. are perfectly understandable from an ecological perspective, as Catton pointed out over 20 years ago in his book, "Overshoot". There's that word again, and whatever else humans are doing to manipulate the market, you should think carefully about how the global economy is working as an ecosystem.
Permalink