China Laughs, New England Cries, Over Attacks on Clean Energy

coal smoking power plant...
coal smoking power plant...

Last week, two next-generation battery manufacturers in the Boston area announced major investments from Chinese firms.

Good news?

Yes, if your goal is to grow the Chinese economy. The deals for A123 Systems and Boston-Power will result in major technology transfers to China and likely lost American jobs. The deals are the result of a campaign by Tea Party Republicans to kill the U.S. clean energy industry in its cradle. That's because the GOP Congressional leadership appears more interested in turning clean energy into a wedge issue than in having America win what energy market analysts see as a $2.3 trillion dollar global market within the next decade.

Don't take our word for it.

In late 2011, Rep. Cliff Stearns (R-FL), chairman of a powerful House Energy and Commerce subcommittee, said the U.S. "can't compete with China" on clean energy. Rep. Stearns was eventually forced to walk back this statement. But actions speak louder than words. His proposed "No More Solyndras Act" would not only end government support of emerging energy technologies, it is having a chilling effect on domestic private capital. That makes it difficult for promising American clean energy companies to secure funding. That's a problem American workers and entrepreneurs are experiencing first hand.

Stearns and fellow Republicans moved quickly to bolster their attack on clean energy with a self-contradicting condemnation of A123's announcement. Even at a time when politics is not known for having much regard for facts, the new salvos are stunningly illogical. In separate statements, the Republican National Committee and Stearns derided the government's $249 million investment in A123 and called the company a failure in one breath, and then bemoaned the government's failure to block the Chinese from gaining access to strategic American technology in the next.

Republicans can't have it both ways. Either the company was a bad investment or it created valuable technological advances. The Chinese obviously think it was the latter, and think those technologies are worth $450 million.

In a world where partisanship took a backseat to strengthening American entrepreneurship, we would be hailing A123 Systems as a success story; the company is inventive, determined and scrappy. When it struggled in 2003, A123 accidentally discovered a better manufacturing process that kept it going. When its batteries' cooling system failed earlier this year, A123 developed a battery that doesn't need cooling. And for every dollar of government funding the company received, it raised more than $2 in private funding.

The accomplishments of Boston-Power have been similarly impressive. The startup has built batteries for Saab and Mercedes Benz, and grew from 110 to about 500 employees in the last year. Despite that record, it couldn't secure funding in the U.S and was forced to look to China. Now, Boston-Power is building a new factory in China and expects to add another 800 jobs -- none of them in the U.S.

These companies serve as sobering reminders of how crass political gamesmanship can have a real impact on the marketplace. U.S. firms, like A123 and Boston-Power, perform the time-consuming, often frustrating labor of basic research, designing and building prototypes, and scaling up to demonstration projects. And then we pull the rug out from these companies to move an election poll by a point or two. This isn't so outside our borders. Other countries are encouraging and nurturing emerging sectors of the economy until they are mature enough to compete on their own. By gutting strategic government investment, too many Republicans are ceding clean energy to our foreign competitors.

The anti-Solyndra narrative obscures the facts about clean energy in the U.S. -- much of it is booming. Tens of thousands of homeowners every year are installing solar panels on their rooftops and paying for them with the money they're saving on energy bills. Solar may only make up a small percentage of US energy production today; but clean energy projects now represent roughly 50% of all of the new energy sources being added to the grid. That's real growth, and huge potential for profit. It's a compelling reason to invest more.

This is not like the 1980s and 1990s, when the U.S. electronics and manufacturing sectors departed for Asia to capitalize on its cheaper labor. In the case of clean energy, the Chinese have no inherent advantage when it comes to research and development; America can win these markets, as long as we stop prematurely abandoning our own technologies and entrepreneurs. This is not an example of market economics; it's an example of myopic politics.

Republicans may think it makes sense to walk away from a promising domestic industry to score political points. But those attacks have real world consequences that are being felt by American companies and American workers. If the GOP's efforts to undermine American clean energy continue, the economic pain will be felt much more widely.

Josh Freed is the vice president for Clean Energy at Third Way, a moderate think tank based in Washington, DC.