First Solar, Inc. (FSLR), General Electric Company (GE), Arch Coal Inc (ACI): Has U.S. Environmental Policy Fallen Behind?

China has a carbon tax! The U.S. is talking about reducing environmental restrictions on coal, and China has done a 180 on the environment and passed a carbon tax.

The U.S. has always had a love-hate relationship with the environment. Coal was one of the drivers of the industrial revolution, and oil fueled our development of the auto and aviation industries. But this approach led to pollution in industrial cities such as Pittsburgh and eventually the founding of the Environmental Protection Agency. More recently, Congress has tried to cut funding for environmental activities, arguing that a focus on the environment hurts the economy. For more than 100 years there’s been an ebb and flow to our environmental policy.

What’s shocking about the recent political discourse in Washington is that we’re falling behind the rest of the world. And most troubling is that we’re falling behind China.

China makes its move
The press agency in China says it will collect taxes on carbon dioxide emissions and is thinking about taxing high-energy-use products such as batteries and aircraft. This is a huge development for a country that has had little regard for the environment in its quest for economic growth. But like the U.S. decades ago, cities are now dealing with smog and health-related issues, and the government is forced to react.

When it comes to “green energy,” China has been ahead for years. China invested about $65 billion last year in cleantech industries, versus $45 billion in the United States. The country now dominates wind and solar, two industries we helped invent. With the carbon tax, something that has failed time and time again in the U.S., China takes another step ahead.

Well behind Europe
Compared with the U.S., Europe has always been ahead of the curve when it comes to the environment. Germany essentially built the solar industry singlehandedly in the early 2000s with a generous feed-in tariff. Wind turbines are more common in Europe than in most other parts of the world, and the continent is now focused on exploiting offshore wind. High taxes on gasoline have either kept people from buying cars or sent them toward more fuel-efficient vehicles than we prefer in the United States. When the Fukushima disaster took place in Japan, Germany said it would shut down all nuclear plants and replace them with renewable energy.