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<\/a>In the State of the Union Address last Wednesday, President Obama said \u201cthe nation that leads the clean energy economy will be the nation that leads the global economy and America must be that nation.\u201d\u00a0 At the same time, on the other coast, 75 clean energy investors, entrepreneurs, and researchers were debating whether the U.S. can gain this leadership position.\u00a0 They agreed that even though Silicon Valley leads the world in technology, it is not clear if it will ever lead in Cleantech. The Valley may develop some breakthrough technologies, but without government help these are unlikely to translate into global leadership. The technology world is rightfully allergic to government assistance and intervention. Cleantech is different, however, and we aren\u2019t dealing with a level global playing field.<\/p>\nThe Knowledge Economy Institute Leadership Summit, which I attended, was held at the Joint BioEnergy Institute (JBEI<\/a>), in Emeryville, California. The question posed: what will take for the U.S. to achieve global leadership in the clean-energy economy? The group concluded that the U.S., by far, has the strongest innovation platform in the world. But other countries may well reap the benefits of its research efforts. China, in particular, is making massive investments and has a huge advantage from focused policy and large markets.\u00a0 Even though China is not likely to produce its own innovation, it will continue to appropriate U.S. technology and gain a major advantage by combining this with its manufacturing prowess. \u00a0American firms which are increasingly choosing to build design and manufacturing operations in China will provide it with additional advantage.<\/p>\n What will it take for America to lead? Despite decades of dominance in technology innovation, America has a dilemma in the clean-energy economy.\u00a0Most entrepreneurs aren’t getting the support needed, and we are unable to translate research discoveries in our universities into profitable businesses that attract high levels of investment, make lots of money through manufacturing, and create jobs. <\/p>\n There are two problems with university research \u2013 the system for commercializing discoveries doesn\u2019t work well, and there is no clear path-to-market for new technologies which do make it out the door. I\u2019ve written about these problems<\/a> and I prescribed some workarounds<\/a>. JBEI is a bold experiment to fix some of these problems the right way. It brings together researchers from different disciplines with business. And it has a practical focus on solving real-world problems.<\/p>\n Centers like JBEI may produce major breakthroughs in technology. But that is when the next set of problems kick in both for university research and for entrepreneurs \u2013 clean-energy is different than other technologies.\u00a0 Startups typically need hundreds-of-millions of dollars to develop and scale up technologies.\u00a0 Investors don\u2019t see steady, strong and growing markets. So, few are taking the risks and making the big investments.<\/p>\n U.S. policy is not as aggressive as other countries in creating sustainable markets, investing in commercialization, or promoting manufacturing.\u00a0 Take, for example, Japan\u2019s Sunshine-Project and related initiatives that have consistently driven that country\u2019s clean-energy policy since 1974.\u00a0 Japan has succeeded in building infrastructure, markets, and technology companies that help meet national energy security goals for the long-term.\u00a0 The U.S. has not.<\/p>\n Contrast this with how U.S. government responded to challenges to its semiconductor industry by rallying behind it and keeping a significant value piece here.\u00a0 How do we keep our innovative clean-energy companies and their design and manufacturing operations in America?<\/p>\n We need to learn from other countries.\u00a0 In industries like Cleantech, success depends upon consistent and reliable government policy that links market supply and demand over the long-term.\u00a0 U.S. policy has been cyclical, unilaterally focused on petroleum, and unrealistic about the value of short-term subsidies and support.\u00a0 American startups suffer from inconsistent pricing-signals that make investors wary.\u00a0 As investment cycles wax and wane, small companies lose top talent and are unable to recruit it back when funding begins to flow with the next cycle upturn.<\/p>\n Policy makers need to look at things that affect pricing. Energy is a commodity and it is all about cost.\u00a0 The energy sector is undifferentiated.\u00a0 Startups compete with large incumbent firms.\u00a0 Moreover, clean-energy technology often has a deceptive fit with current industry and markets.\u00a0 Take biofuels, for example. The high ratio of bulk-to-fuel, distributed biomass sources, and inherent chemical variation dictate smaller-scale and more regional patterns of development and deployment than for petroleum.<\/p>\n Consumers are key.\u00a0\u00a0 Consumer perceptions of energy prices have potent effects on the market.\u00a0\u00a0 China figured this out.\u00a0 In addition to subsidizing manufacturing, it is training thirty-thousand sales-people to sell new clean-technologies to consumers. In the U.S. energy is just too cheap, so consumers don\u2019t see the benefits of Cleantech. Rebates and short-term subsidies just aren\u2019t creating long-term demand. As a result, entrepreneurs trying to build companies on energy efficiency are finding it hard to stay afloat.\u00a0 The demand and growing markets are just not there.<\/p>\n Will America meet President Obama\u2019s call for global leadership in the clean energy economy?\u00a0 Not likely if Congress and state governments don\u2019t make it a lot easier for startups to attract investment and a lot more attractive to manufacture here.\u00a0 Governments need to coordinate comprehensive, long-term energy policy \u2013 now.<\/p>\n Editor\u2019s note:<\/strong> Guest writer Vivek Wadhwa<\/a> is an entrepreneur turned academic. He is a Visiting Scholar at UC-Berkeley, Senior Research Associate at Harvard Law School and Director of Research at the Center for Entrepreneurship and Research Commercialization at Duke University. Follow him on Twitter at @vwadhwa<\/a>.<\/em><\/p>\n