U.S. behind foreign competitors in manufacturing green technologies

The United States is falling behind other countries in developing and manufacturing green technologies and will continue to do so unless the federal government provides financial incentives to American companies and changes domestic trade laws, according to a panel of government and industry experts that testified before Congress on Wednesday.

The U.S. trade balance in green technologies fell from a $12 billion surplus in 1997 to an $8.9 billion deficit in 2008, according to the New America Foundation, a nonprofit public policy think tank.

Rep. Bobby Rush, D-Ill., chairman of the Subcommittee on Commerce, Trade and Consumer Protection, referenced the statistic in his opening statement during a hearing on Wednesday. He also noted that only six of the top 30 green technology companies worldwide are American.

"Through insufficient investment and lack of policy leadership, the U.S. continues to lose ground to countries willing to back their companies with capital and create incentives" that support the development of green technologies, said Andrea Larson, an associate professor at the University of Virginia's Darden Graduate School of Business Administration. "First we must get our own house in order. It is only then that we will have built the necessary platform for leadership in world trade."

Larson acknowledged that the United States declared in the 2009 American Recovery and Reinvestment Act to have 25 percent of the nation's energy demands supplied by renewable sources by 2025. But she said, "We come to the table late."

The United States also needs to create policies that include consumer protections to control costs, Larson said, and directly invest in or provide tax incentives to companies to encourage innovation and production in green technologies.

"U.S. policies currently in place to support renewable energy are insufficient to counter weak investor confidence, and they fall far short of incentives now being put in place by other nations," said Timothy Richards, managing director of international energy policy at General Electric.

Critical components of strong green technology policies include long-term renewable energy tax credits and binding national renewal energy standards with cap and trade legislation that sets an overall limit on emissions, he said.

To stimulate domestic investment and global leadership in green technologies, Richards said that the United States also must reduce trade barriers, including tariffs, import bans, buy American provisions, restrictive technical standards and government procurement restrictions. He also emphasized the need for strong intellectual property rights protection to encourage companies to develop and export green technologies.

"As the demand for green technologies grows, so do export opportunities for U.S. companies," said Mary Saunders, deputy assistant secretary for manufacturing and services at the Commerce Department. "And exports of green technologies, like any export, will also benefit the U.S. economy by creating and sustaining jobs here at home and by increasing revenues."

The Energy Department estimates the United States could increase its exports of green technologies by up to $40 billion a year, creating as many as 750,000 jobs by 2020.

The Commerce Department's International Trade Administration has begun efforts to encourage more American businesses to produce green products and services, with an emphasis on manufacturing, Saunders said. ITA's green technology promotion program plans to hold 90 trade events worldwide in 2010 and to provide services such as export counseling, access to international company profiles and partnership searches.

"The best thing we can do to encourage green technology exports is to build up our own market," she said. "You can't export what you don't manufacture."