The United States of America once dominated solar industry manufacturing. Then, through the 1980s and 90s, as the industry boomed, the American share of the global market dropped from 95 percent to less than 10 percent. In addition to the environmental consequences, tens of thousands of potential jobs went begging. A new study lays the blame on the way the industry was financed, with important implications for how to get future environmentally beneficial technologies off the ground.
Even the best technologies need money to bring them to market. Yet instead of investing in the science and engineering that might improve the world, “ever-larger amounts of credit have been created to trade existing assets such as real estate rather than productive investments,” Dr Max Jerneck of the Stockholm School of Economics notes in Science Advances. Jerneck argues that this explains why Japan was so much more successful at establishing a photovoltaic panel manufacturing industry than the US.
American solar pioneers were bought up by financial conglomerates, Jerneck reports, but their equivalents in Japan were not. When difficult times stuck, solar divisions had low priority and were shut down or sold internationally, leaving US manufacturing lacking champions.
With so much more sunlight, at least in some states, the US had a competitive advantage over most other industrial nations when the solar industry began, since manufacturers could be close to likely installation sites. Much of the early research and development was American as well, particularly to power satellites, but all this counted for nothing when the money dried up.
In recent years, China has come to dominate solar manufacturing, partly through low labor costs. In 2005, however, Japan had 50 percent of the global market. Jerneck attributes this to the Japanese industry being dominated by companies keen to make things, rather than “rent seekers” hoping to make money with little risk.
Jerneck's work is not just for those interested in how technologies emerge. It helps explain why solar power lacks the political muscle of competing energy sources.
The solar industry employs twice as many people as coal in the United States. However, these jobs are dispersed and lack the organizing capacity that comes when people in the same industry form the backbone of a regional economy. The absence of a concentrated manufacturing lobby has contributed to the situation where jobs in coal mining hold many times the political power of those in renewable energy.
This is part of the reason America is now seeing decisions like the repeal of clean air regulations, justified on the basis of saving jobs in coal mining and fracking, even though the consequence will be the loss of far more employment in solar and wind.