Subsidies and Clean Energy Competition

Sometimes there's a fine line between protectionism and promoting the domestic economy.  From Bloomberg:

The Obama administration today announced that 183 companies, including PPG Industries Inc. and Itron Inc., will get a total of $2.3 billion worth of tax credits for clean-energy manufacturing projects in 43 states.

The tax credits are part of the $787 billion stimulus President Barack Obamapushed through Congress last year, and announcement of the companies that got the credit coincides with a Labor Department report that the U.S. lost 85,000 jobs in December.

The projects getting the tax credit are forecast by the administration to create more than 17,000 jobs.

“Building a robust clean-energy sector is how we will create the jobs of the future -- jobs that pay well and can’t be outsourced,” Obama said in remarks today at the White House.

Obama said that, while the U.S. has “pioneered the use of clean energy,” it is being “outpaced” by countries including China, Germany and Japan.

“I don’t want the industries that yield the jobs of tomorrow to be built overseas,” he said. “I don’t want the technology that will transform the way we use energy to be invented abroad.”

Here is an excerpt from Obama's remarks noted in the article:

And unfortunately, right now the United States, the nation that pioneered the use of clean energy, is being outpaced by nations around the world.  It’s China that has launched the largest effort in history to make their economy energy efficient.  We spearheaded the development of solar technology, but we’ve fallen behind countries like Germany and Japan in producing it.  And almost all of the batteries that we use to power our hybrid vehicles are still manufactured by Japanese companies or in Asia -- though, because of one of the steps like the one we’re taking today, we’re beginning to produce more of these batteries here at home.

Now, I welcome and am pleased to see a real competition emerging around the world to develop these kinds of clean energy technologies.  Competition is what fuels innovation.  But I don’t want America to lose that competition.  I don’t want the industries that yield the jobs of tomorrow to be built overseas. I don’t want the technology that will transform the way we use energy to be invented abroad.  I want the United States of America to be what it has always been -- and that is a leader -- the leader when it comes to a clean energy future.

This all raises some questions for me:  How should governments approach the goal of clean energy?  Should they treat this as a national competition that they want domestic companies to win?  If so, how should they talk about the issue publicly?  Does talking about it as a competition cause trade conflicts?  Would it be better to promote the consumption of clean energy, rather than giving aid to specific producers?

It may be a mistake to make this too much of a national competition, as international cooperation seems to have an important role to play as well:

A U.S. solar power company said Saturday it will help build a series of solar thermal power plants in China, as the world's biggest emitter of greenhouse gases tries to decrease its heavy reliance on coal, imported gas and oil.

California-based eSolar Inc. will provide Shandong Penglai Electric Power Equipment Manufacturing Co. with the technology and information to build the concentrated solar thermal power farms with a capacity totaling 2,000 megawatts.