In the global clean energy race, China reclaimed the top spot from the United States in terms of attracting investment to its clean energy sector, "advancing its position as the epicenter of clean energy" according to a new report released by the Pew Charitable Trusts Wednesday.
Investors shoveled more than $65 billion into China's wind, solar, and other renewable energy projects in 2012, 20 percent more than in 2011 and 30 percent of total clean energy investment in G-20 countries.
The investment ramping up in China underscores a more fundamental shift in the global clean energy sector, Asia (and Oceania) are emerging as the leaders in renewable energy initiatives and installations. Investment in the region grew 16 percent, to more than $100 billion in 2012, accounting for about 42 percent of total global investment in the clean energy sector.
Meanwhile, investment in the Middle East, Africa, and even Europe declined 22 percent. Experts blame the lack of policy certainty for the pullback in clean energy progress in traditional leading markets such as Germany, Italy, the United Kingdom, and Spain, where the government has curtailed state-sponsored incentive programs in light of recent budget woes.
Likewise in the United States, the on-again-off-again nature of clean energy programs such as the wind production tax credit have made investors more hesitant to make large financial commitments in the sector.
"This is largely due to policy uncertainty," says Phyllis Cuttino, director of Pew's clean energy program. "We have no clean energy standard and while there are tax incentives on the books for oil and gas, there are none for clean energy. That makes investors a little nervous."
The decline is a double-whammy for the United States according to Cuttino, because it's the U.S. that has pushed clean energy technology the furthest.
"This is a sector of the global economy that we've traditionally led," Cuttino adds. "We have invented many of the clean energy technologies, so to see China come along and the United States fall back is very troubling."
But it's not just China gobbling up investment dollars – smaller countries outside the G-20 are growing their clean energy portfolios while larger economies scale theirs back, with investment increasing 52 percent among nations outside the G-20.
Non-G-20 countries accounted for about 8.5 percent of total global investment, its highest level since Pew began collecting the data in 2004. That trend is only more likely to continue with projected annual growth in clean energy of 10 to 18 percent in parts of Asia, Africa, the Middle East, and Latin America through 2020.
Those new and emerging markets present an important business opportunity for the clean energy industry in the United States, Cuttino argues. With more policy certainty, businesses in the industry will expand and manufacturing will pick up.
"These are markets in which we should be selling American innovations and products," Cuttino says.