Earlier in September, accounting firm Earnst & Young said China has succeeded the U.S. as the most attractive location in which to invest in renewable energy projects. Their latest Renewable Energy Country Attractiveness Indices study ranked countries on such things as regulatory risk, access to finance, grid connection, and tax climate. After holding first place since 2006, the U.S. dropped two points in the indices after a federal Renewable Energy Standard was not enacted this summer. The firm attributes the fall to this lack of legislation, which leaves investors uncertain.

“China’s steady rise to pole position has been underpinned by strong and consistent government support for renewable energy,” Ringo Choi of Ernst & Young explains. “This, together with substantial commitment from industry and the sheer scale of its natural resources, means that its position as top spot for renewable energy investment is well-merited.” Although the U.S. market also has energy potential, he says, it lacks consistent legislative support to provide investors with the long-term confidence they need. The firm expects construction of new renewable energy facilities to further slow following the December 2010 expiration of an important deadline in the Treasury grant program.

With government support, China has recently completed its first offshore wind farm five miles off the coast of Shanghai — a project completed before construction of offshore projects in the U.S. has even begun.

According to a recent article on CNN, China has also surpassed the U.S. in wind turbine and solar panel production. China is also catching up to the states in terms of how much of their energy comes from renewable energy sources. Because of this activity, it is attracting investment dollars and creating jobs.

According to research firm Bloomberg New Energy Finance, in 2009 almost $35 billion in private money was put into Chinese renewable energy projects, including factories that make wind turbines and solar panels. Yet, the United States attracted less than $19 billion. With investments come jobs. In wind power, New Energy Finance says China-based companies are on track to make 39% of the turbines sold worldwide in 2010, while U.S.-based companies will manufacture 12%. In solar, China-based firms will make 43% of the panels and U.S. firms will make 9%.

China requires 3% of its electric power to come from renewable resources by 2020. More than half of U.S. states have such requirements too — many in the form of Renewable Energy Standards — with even larger targets. But a national policy is still in progress. In September 2010, a bill suggesting a national standard was introduced in the Senate with bipartisan support, but analysts say with the Senate’s busy schedule the bill probably won’t pass this year, according to CNN. However, those analysts stress that it’s not the U.S. and China in the ring. Solar panels and turbine components come from all over the world. An expanded market and lower costs benefit everyone.  And even though the U.S. got knocked, it’s still second.  And that makes it still a pretty good place to invest.

Ernst & Young www.ey.com

CNN www.money.cnn.com