W
ith the December 31 deadline for the extension of the wind power production tax credit (PTC) looming, the future of American green energy hangs in limbo. The US might to look to other countries that are dedicated to the development of the renewable energy sector and make the passing of the PTC extension — and support for clean energy in general — a priority.
China’s Sustainability Plans
In its twelfth Five-Year Plan, China places strong emphasis on boosting economic growth through the encouragement of the development of seven emerging industries: new energy, energy conservation and environmental protection, biotechnology, new materials, new IT, high-end equipment manufacturing and clean energy vehicles. It is no surprise that three of the seven priority industries revolve around sustainability, given China’s narrow miss of its eleventh Five-Year Plan target of reducing energy consumption by 20 percent. China is understandably more aggressive in its investments in a low-carbon economy. The country aims to reduce greenhouse gas emissions by 40 to 45 percent per unit of gross domestic product (GDP) by 2020, compared with 2005 emission levels.
China seeks to increase the use of non-fossil fuels as a percentage of total energy use to 11.4 percent by 2015 and 15 percent by 2020. Currently, 90 percent of China’s energy is powered by carbon-intensive fossil fuels such as coal, crude oil and natural gas. As part of the Five-Year Plan, China will turn to clean energy sources such as wind, solar or hydropower to meet its targets. We will likely see the country enforce low-carbon regulations, implement performance accountability, invest in energy-efficient technologies, improve policy measure on energy and natural resources pricing, promote green living, and introduce a carbon pricing scheme.
The focus on increasing non-fossil fuel use and strategic investment in alternative energy plays into the new-energy vehicles sector, which China deemed a priority industry. The transportation sector will no doubt be impacted by the low carbon emission targets laid out in the Five-Year Plan. In order to meet the goal of a 17 percent reduction of carbon dioxide emissions per GDP, China will likely spur development of clean vehicle manufacturing. This will result in an increased demand for alternative energy storage solutions and ultracapacitors for projects such as wind power and clean public transportation, including hybrid buses and light rail projects, in order to reduce carbon emissions and improve the air quality for China’s 1.4 billion citizens. In addition to the growth of clean public transportation, China will likely see increased adoption of micro hybrids, vehicles that use start/stop technology powered by ultracapacitors. Start/stop applications shut off the engine when stopped in traffic to allow for fuel savings and emissions reductions, as well as lower vehicle costs and increased efficiencies.
Japan Shifts from Nuclear Power to Renewable Power
As a result of the vulnerability and global scrutiny of nuclear power following the March 2011 earthquake in Japan and the resulting Fukushima nuclear disaster, Japan recently approved incentives for renewable energy, which will help the country decrease its dependence on nuclear power and increase clean energy programs, such as offshore wind farms. These incentives could result in billions of dollars in clean energy investment, expanding revenue from renewable generation and equipment, including wind turbine components such as ultracapacitors, to more than $30 billion by 2016.
Japan has historically relied on nuclear power for its electricity supply. Before the earthquake and tsunami, 60 percent of Japan’s electricity came from oil, coal and gas. Nuclear powered about 30 percent. After safety concerns shut down all of the country’s 50 nuclear reactors, 90 percent of Japan’s electricity supply now comes from oil, coal and gas. Just 1 percent of Japan’s power supply comes from renewable energy sources, apart from hydro-electric dams which account for most of the rest of the electric power.
Despite the low starting point, Japan has the potential to generate cleaner and safer energy from renewable sources such as the sun, wind and geothermal. Over the past decade, Japan’s wind power capacity has multiplied to 2.5 million kilowatts, and the Japan Wind Power Association estimates the country can generate 740 million kilowatts of wind power on a commercial basis on land and offshore. With worldwide estimates suggesting 118,000 wind turbines installations through 2015 and nearly 75 percent of new turbines using electric pitch control systems, wind turbine design teams will turn to ultracapacitors as a reliable and cost-effective option. The newly approved incentives aim to spur growth in the renewable energy industry in Japan, just as subsidies have driven substantial renewable energy growth in Germany.
Germany: A Paragon of Renewable Energy Commitment
Germany also announced a shift away from nuclear power last year with an ambitious plan to shut down all of its 17 nuclear reactors within a decade and replace the 30 percent of the energy currently generated by nuclear reactors with renewable power. The country pledged to obtain 80 percent of its power from renewable sources by 2050. While a lofty goal, the country has made strides toward meeting this target by offering subsidies for renewable power. This year, about $18 billion in incentives has generated a boom in the solar and wind power sectors.
Currently, Germany gets 17 percent of its electric power from clean energy sources, about half-way to its target of 35 percent by 2030. The aggressive energy policies have also stimulated the job market in the country with 382,000 new clean energy technology jobs, and this number expected to reach 600,000 by 2020. Germany has become a model for countries aiming to become greener economies, and the country still has more plans for continued growth, including the construction of 10,000 megawatts of offshore wind parks by 2020.
What This Means for the US
Whereas these three countries are examples of countries offering subsidies and incentives to boost the renewable energy industry, the US is about to let the PTC expire, essentially stunting the growth of the renewable energy sector, not to mention domestic economic growth. As President Barack Obama recently stated, “This isn’t just an issue for the wind industry.” The PTC affects all industries, including some of the largest American corporations, who are committed to renewable energy and who have called on Congress to extend the PTC. Without an extension of the PTC, the U.S. cannot compete and American jobs will be lost to foreign countries.
Extension of the PTC needs to be a priority for the US, if it hopes to remain competitive. If extended, the tax credit, similar to the renewable energy incentives offered in China, Japan and Germany, will help contribute to the growth and development of alternative energy across the nation.
Jeff Colton is vice president of sales, North America at Ioxus. He is responsible for managing and growing the company’s North American sales operations in multiple alternative energy sectors. Previously, Jeff held executive roles at companies including General Electric Corporation, Sanyo Electric Corporation and Saft Battery Corporation. Jeff can be contacted at jcolton@ioxus.com or 858-663-1609.