Two days ago here in China, I listened attentively to President Obama's State of the Union address, where he set forth an ambitious new economic agenda based on innovation and clean energy. Notably, the President proposed a goal of obtaining 80% of America's electricity from clean energy sources by 2035.[1]

"Instead of subsidizing yesterday's energy, let's invest in tomorrow's," he said.

NRDC's Frances Beinecke has applauded this agenda, calling on the U.S. to follow through on this agenda, for the sake of our environment, health and economy. It is now more important than ever that the U.S. government take a strong role in promoting a robust global transition to clean energy.

Last year at the opening of China's National People's Congress, Premier Wen Jiabao, in the closest Chinese equivalent to a State of the Union address, also put front and center the need for a low-carbon economy. He emphasized stepping up development of new and renewable energies as well as smart grid technologies.

$243 billion and growing

Just two weeks ago, Bloomberg New Energy Finance (BNEF) released its 2010 clean energy statistics on new investments. Globally, the clean energy market was $243 billion in 2010. This is an increase of 30% from 2009 (revised to $186b), a doubling over the last four years, and a five-fold increase over the last six years.

The Chinese market was the largest by far, at $51 billion, which was a 30% increase over 2009. This should come as no surprise given the progressive policies China has put in place to encourage innovation, manufacture and deployment of clean energy technologies, which it has continued to strengthen.

As my colleague Jake Schmidt wrote about last year when China overtook the U.S. in total clean energy spending, the opportunities for countries that pursue clean energy as a major driver of economic and innovative growth are increasing every day. There's a $13 trillion clean energy market over the next two decades for those countries that capture this opportunity.

In the 12th Five-Year Plan (2011-2015) that China is currently drafting, the government will continue to reduce the energy and carbon intensity of its economy through binding targets; establish seven new strategic industries, including new energy and other areas crucial to its development; and begin experimenting with carbon markets.

BNEF reported that global wind investment grew 31% in 2010, to $96 billion, with investment in China and large offshore wind farms in Europe accounting for 38% of this total. In addition, the American Wind Energy Association just released its 2010 report on the global wind industry, indicating that China has surpassed the U.S. in cumulative wind energy installations, increasing capacity by 62% last year (after four years of consecutive doubling). China had 41,800 MW, and the U.S. 40,180 MW, as of the end of the year.

The U.S. and China teaming up

In the midst of this race to a clean energy future, one aspect President Obama did not highlight in his speech but that resounded last week during Chinese President Hu Jintao's visit is clear: we need to enhance bilateral cooperation on energy and climate issues. Whether in the areas of energy efficiency, clean energy or the climate talks, the tangible benefits of working together are great.

I wrote about the many significant clean energy cooperation initiatives that were announced at the summit last week. These include government MOUs (such as an EV demonstration project between the U.S. DOE and the Chinese Ministry of Science and Technology), government-facilitated partnerships (such as the work plans for the joint Clean Energy Research Centers), and a host of new business ventures on clean energy.

The BNEF report Joined at the Hip released last April articulated the new reality clearly: the U.S. and China rely on each other to achieve their respective carbon and energy goals. The U.S. has laid out an ambitious target of 80% clean electricity by 2035. Similarly, China has a target to obtain 15% of its total energy from non-fossil fuel sources by 2020. To reach these – and make even deeper commitments – both will need to build public and private clean energy partnerships across the Pacific.

Over the last five years, China has achieved a lot, but there is still more work to be done. For example, the 11th Five-Year Plan set a goal of achieving 10% of total energy from non-fossil sources by 2010; earlier in the month China Change Department Director Su Wei noted that only 8% was achieved (Chinese only).  China is likely to set a clear interim target for 2015 in the 12th Five-Year Plan to help put it on the path to achieving its 15% non-fossil goal by 2020.  The US-China clean energy partnerships and commercial deals are helping China to realize this potential.

As I wrote last year, it is no longer a question of who will win and who will lose, but how we will continue to move forward together. With both Presidents Obama and Hu championing clean energy-based economic growth, the United States, China and the whole world are moving in the direction needed to realize the benefits of a clean energy future.

(This post was coauthored with NRDC China Climate Fellow Michael Davidson.)

[1] The President defined clean energy to include solar and wind as well as "clean coal", nuclear and natural gas.