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Report: Kyoto treaty rejection hurts U.S. businesses
by Stephanie Hemphill, Minnesota Public Radio
December 15, 2004

Mike LeBeau installs solar and wind energy systems. He has put in more generators this year than in the last 10 years combined, thanks to rebate programs offered by the state and local governments. (MPR Photo/Stephanie Hemphill)

Representatives of nearly 200 countries are meeting this week in Argentina to decide on the next steps in dealing with climate change. Seven years ago, many nations agreed to reduce fossil fuel emissions and greenhouse gases by signing the Kyoto treaty. The U.S. didn't. Now a report from the National Environmental Trust says that decision is hurting American business.

Duluth, Minn. — Mike LeBeau installs wind generators and photovoltaic solar collectors, including a 2-1/2 kilowatt system in downtown Duluth.

Two panels about the size of a dining room table stand on the top floor of a downtown garage. The only other equipment is an inverter -- a metal box the size of a shoebox -- that transforms the direct current from the solar panels to the alternating current we use in our homes.

"The electricity is produced by the sun, and it's fed into the building, and the excess is fed into the utility grid," says LeBeau.

The solar panels were made in Japan, and the inverter is from Germany.

	Wind power

LeBeau has been installing systems like this for 10 years. His company is called Conservation Technologies. Demand was slow until a year ago, when Minnesota started a rebate program. LeBeau has put in more generators this year than in the last 10 years combined.

With another rebate offered by the local utility, LeBeau says the cost of installing a typical system can be cut nearly in half. And he says the increased activity has persuaded some of the nay-sayers to help, rather than hinder, renewable projects.

"Now the electrical inspectors don't have any choice," he says. "It's being approved by the utilities, and by the state of Minnesota, so it's really changed the atmosphere and the climate we work in."

But LeBeau says the state rebate program is a drop in the bucket compared to what's being done in other countries.

Wind and solar and biomass and geothermal simply aren't ready for prime time. ... it would be cutting off our nose to spite our energy face if we turn our backs on fossil fuels. - Darren McKinney, National Association of Manufacturers

Christopher Reed agrees. He's an engineer who advises individuals and businesses on renewable energy projects. Reed says U.S. policy has been piecemeal and erratic. For instance, there's a federal tax credit for renewable energy production. But it's only in place for a year or two at a time.

"When the incentive is out there, everybody ramps up as fast as they can," Reed says. "We slam projects in to meet deadlines before the credit expires, and then everybody sits until the credit gets renewed again. This has happened three times now."

Reed says that discourages investment.

Reed's business is one of several American firms studied for the report from the National Environmental Trust. The report says Japan and most countries in Europe are providing major and consistent incentives to encourage production of renewable energy technologies. The report says this approach is saving money, adding jobs, and positioning businesses to export their new technologies and expertise.

Reed says he's frustrated to see European and Japanese companies thrive, using American inventions such as photovoltaic or PV technology, while American manufacturers fail.

"It's almost embarrassing," Reed says. "The photovoltaic technology came out of Bell Labs in the U.S. We should be the world leaders."

But some observers say the worry is overblown. Darren McKinney, a spokesman for the National Association of Manufacturers, says the U.S. has nothing to fear from German or Japanese businesses. He says fossil fuels are doing a good job of stoking the American economy.

"The fact of the matter is that wind and solar and biomass and geothermal simply aren't ready for prime time," McKinney says. "If someone wants to make an argument they could be ready for prime time if they received x amount of tax cuts, I won't necessarily argue against that because I don't know enough about the technologies. What I do know is it would be cutting off our nose to spite our energy face if we turn our backs on fossil fuels."

Right now, oil and natural gas get the lion's share of federal subsidies in the U.S. As other countries shift to new technologies, American companies could be left behind.

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