Memo to the President on U.S. Leadership in Next-Generation Energy

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Hello, I’m Ylli Bajraktari, CEO of the Special Competitive Studies Project. In this edition of 2-2-2, members of SCSP’s Future Technology Platforms team, Olivia Armstrong, David Lin, and Ben Bain, make the tech competition case for why we need a National Action Plan for Next-Generation Energy.

In this action plan, we highlight the strategic significance of energy generation, storage, and transmission/distribution as nations compete for geopolitical influence and innovation power. In line with previous SCSP technology action plans, we propose a series of ambitious tech-focused moonshots, complemented by a set of policy recommendations consisting of what we believe to be the minimal viable solutions necessary to accelerate American innovation and the scaling of next-generation energy technologies. While this plan is not exhaustive, it aims to foster a holistic approach to energy policymaking and innovation – essential elements for developing an energy technology strategy for national competitiveness.

To underscore the urgency of prioritizing technology competition in the energy domain, we present this Memo to the President on U.S. Leadership in Next-Generation Energy, where we assess areas within the energy domain that the United States or the People’s Republic of China (PRC) has the competitive advantage, and which energy sectors are being contested.

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The United States has had a rich and dynamic energy innovation ecosystem dating back decades, which has spurred numerous advances within the sector globally. Today, however, the People’s Republic of China (PRC) dominates many clean energy technologies, particularly in wind and solar power, through its ability to rapidly mobilize resources, produce materials and components, and deploy systems at scale. The PRC’s capacity for deploying energy technologies at an industrial scale is unmatched in spite of the fact that many of these energy technologies often originated from U.S. inventors and institutions.

U.S. vs. PRC Leadership in Key Dimensions of Clean Energy

America’s greatest technology strengths have historically emanated from the nation’s domestic innovation capabilities. This has been especially true in the energy domain. For instance, an American scientist – Charles F. Brush – created the first automatic wind turbine to generate energy. Some of the first solar cells were invented by another American scientist - Charles Fritts. Researchers at the New Jersey-based Bell Laboratory expanded upon Fritt’s initial research and began using silicon in solar cells to form the basis of today’s solar PV technology. Japanese company Sony played a critical role in the research & development (R&D) of lithium batteries, but the underlying R&D for lithium-ion batteries originated in the labs of American company Exxon. Today, the PRC dominates virtually all aspects of the lithium-ion battery supply chain.

This dynamic is apparent as we look across the energy domain at other energy generation, transmission/distribution, and storage technologies. Below, we share our comparative analysis of U.S. and PRC competitive advantages in the energy domain:

PRC-Led Energy Technologies

Critical Mineral Mining and Processing: The PRC controls 60 percent of worldwide mining and 85 percent of the processing capacity of critical minerals, which are key to energy technology manufacturing, a daunting lead over the United States.

Batteries: The PRC controls the manufacturing of 77 percent of the world’s batteries. Last year, the United States took a significant step toward narrowing China’s lead with the passage of the Inflation Reduction Act (IRA), which, among other energy initiatives, aims to boost domestic battery manufacturing, but there is a long road ahead.

Solar Photovoltaics (PVs): The United States’ cumulative solar PV capacity is 141.5 gigawatts (GW) compared to the PRC’s cumulative solar PV capacity of 414.5 GW. China’s solar capacity advantage could power the entire city of Los Angeles for over a year with electricity remaining. Additionally, China leads the United States in solar PV generation, with six percent of its electricity coming from solar compared to the United States’ five percent.

Wind Power: In 2021 and 2022, the PRC’s wind sector achieved unprecedented growth at a rate 3.6 times greater than the United States during that same period. The PRC dominates in newly installed wind power capacity at 37,661 megawatts (MW), whereas the United States’ newly installed wind power capacity is 8,612 MW. The difference in installed wind power capacity could provide enough electricity to power roughly 7.2 million U.S. homes for a year.

Contested Energy Technologies

Space-Based Solar Power (SBSP): Though still a nascent technology, SBSP would enable a nation to beam solar power from space to any location on Earth – a capability that would carry tremendous strategic implications. The PRC is moving to achieve dominance in this developing sector, having announced plans to build a space-based solar power plant by 2028. Meanwhile, in the United States, several small-scale SBSP initiatives are underway but have yet to garner strong ecosystem-wide support.

Grid Storage/Long-Duration Energy Storage (LDES): The development of commercially viable LDES solutions would address one of the critical pitfalls of intermittent energy sources like wind, solar, and hydroelectric power generation, allowing energy produced by those sources to be stored over days, weeks, and even months. There are several potential pathways to LDES, including mechanical, electrochemical, and thermal engineering solutions, but neither the United States nor the PRC holds a significant advantage in this potentially game-changing technology. However, the PRC currently leads in grid-scale storage additions, emphasizing the need for the United States to continue developing grid storage technologies.

Hydrogen: The United States and the PRC are both working to commercialize hydrogen energy production. The United States can draw hydrogen from its natural gas deposits and freshwater; however, the PRC’s lack of access to these resources means that it must draw hydrogen from seawater through electrolysis. At the moment, this electrolysis process is incredibly energy intensive, posing several technical problems that must be solved before it may become commercially viable.

U.S.-Led Energy Technologies

Geothermal: The United States leads the world in installed geothermal power capacity, with a total of 3,794 MW. The PRC’s use of geothermal does not significantly rank among the world’s top countries in terms of installed geothermal power capacity.

Fission: The United States leads in fission energy, with 93 operable reactors that generated approximately 18.2 percent of the country's electricity in 2022, though national-level fission power capacity has flatlined over the past several decades. Conversely, the PRC has 55 operable nuclear reactors, which generate five percent of the PRC’s electricity as of 2022. As the United States and the PRC compete in the next generation of nuclear technologies, such as small modular reactors, the United States risks ceding advantage given the PRC’s more permissive regulatory and commercialization environment.

Fusion: Both countries are competing to make deployed fusion a reality. The U.S.-based Lawrence Livermore National Laboratory achieved scientific ignition at least three times in 2023 while, as of the time of writing, China has not achieved ignition. While the United States has the largest number of fusion companies and has attracted the most private investment, China is setting up the organizational infrastructure to move fast as fusion becomes commercially viable.

A Call to Action for the United States to Lead in Next-Generation Energy

As artificial intelligence converges with more and more industrial sectors, and the technology competition between the United States and the PRC tightens in the energy domain, it is increasingly important for Washington to embark on a holistic approach to secure American leadership in next-generation energy. We propose that the nation undertake six key moves to gain the strategic advantage in this important sector:

Launch strategic moonshots in space-based solar, fusion energy, and long-duration energy storage technologies.

Train the next generation of energy talent to maximize U.S. energy sector efforts.

Organize the domestic and international energy innovation ecosystem to encourage more coordination and supercharge energy R&D.

Bolster the manufacturing and processing capabilities of key components within the energy supply chain to support the energy transition.

Address key barriers preventing the commercial scaling of groundbreaking energy technologies.

Secure and modernize the power grid to meet the needs of the future energy landscape.

Ultimately, the United States must harness its existing innovation advantages to spur more rapid scaling and deployment of next-generation energy technologies to compete with the PRC. To learn more about U.S. global competitiveness in the energy sector, see SCSP’s National Action Plan For U.S. Leadership In Next-Generation Energy.