Once a world leader in innovation and manufacturing of clean energy technologies, the U.S. now faces significant competitive challenges from Europe and Asia, and it lags behind other nations on measures that include renewables deployment, manufacturing, and innovation, a new report suggests.

The report, "Innovate, Manufacture, Compete," from Pew Charitable Trusts, a nonprofit nongovernmental organization, notes that clean energy investment worldwide has increased 600% from 2004 to 2011 to a record $263 billion. And the future looks promising: From 2012 to 2018, global revenue associated with clean energy installations is projected to grow at a compound annual rate of 8%, increasing from $200 billion to $327 billion in 2018—generating cumulative revenue of $1.9 trillion over that period. In the U.S. clean energy installations between 2012 and 2018 are projected to reach 126 GW, more than doubling nonhydro capacity. About $269 billion in revenue has been projected, representing about 14.5% of the global total (even with a compound annual rate of 14%).

But the U.S. already trails in deployment across a range of clean energy technologies, the report says. In the biomass sector, China’s installed capacity additions over the past three years have outpaced those in the U.S. by more than 4 to 1. In the wind sector, while U.S. capacity has expanded in an "erratic fashion," China put up 18 GW of wind capacity in 2011 alone. The U.S. solar sector has doubled in terms of capacity over the past two years, but deployments have been less than a third of those by Germany and Italy. China installed more solar energy than the U.S. for the first time in 2011, and it is emerging as a key market for solar capacity.

Meanwhile, it is unlikely that the U.S. will capitalize on economic opportunities offered by a renewable expansion because it is barred by policy uncertainty, Pew, which based this finding on a series of clean energy roundtables with experts across the country, says in its report. Though a production tax credit was recently extended at the last moment, several other policy impediments surround the sector. "Recent research has demonstrated that expiration of American Recovery and Reinvestment Act (ARRA) programs will create a ‘fiscal cliff’ for industry, with public sector support declining 75% in 2014 from 2009 levels," the report says.

Also holding back clean energy are "inequities within the energy arena," the report says. "There is a widespread sentiment in the clean energy industry that the current system tilts heavily in favor of conventional fossil fuels in terms of rules, regulations, subsidies, and health and environmental costs that are not accounted for. If these costs, ultimately borne by society, were fully quantified in the price of various energy options, clean energy sources would be cost-competitive immediately."

Suggested measures to increase U.S. competitiveness on the clean energy front include enacting long-term policies that are consistent with long-term economic security and environmental interests. The consensus among the report’s participating stakeholders is that a "relatively narrow, straightforward, and mutually reinforcing policy agenda" should be pursued. This should include a federal clean energy standard, increased investment in energy research, and a multi-year but time-limited extension of tax credits for clean energy sources.

Data in the report were compiled by Pike Research, a component of Navigant Consulting.

Sources: POWERnews, Pew Charitable Trusts