Robert E. Scott is senior international economist for the Economic Policy Institute.

The U.S. cannot compete in clean energy and other green technology industries without fundamental changes in our support for these industries and our approach to trade.

Finance a U.S.-made purchase program through the Defense Department and train workers.

Take solar cells, for example, whose production is capital intensive. Evergreen Solar, which had received $43 million in state subsidies for a solar panel factory in Massachusetts that opened in 2008, has announced plans to close that factory and move to China. Chinese banks offered Evergreen financing for two-thirds of the cost of their new plant at rates “as low as 4.8 percent” with no principal payments or interest payments due until the end of the loan in 2015.

Cheap labor is beside the point. U.S. clean energy loan guarantees can’t compete with the Chinese loan subsidies.

China recognizes that solar cells are semiconductors, subject to Moore’s Law, which holds that the number of transistors on an integrated circuit board double every 18 to 24 months, and the prices of semiconductors fall about 30 percent each time output doubles. The rapid growth of demand for solar cells (and China’s huge investment program) has made Evergreen’s Massachusetts plant obsolete in two years. China accelerated the process by building farms for solar cells and subsidizing new plants.

Moore’s second law holds that the capital costs of semiconductor plants rise exponentially over time. Thus, China’s capital subsidies are critical to building the next generation of solar plants. We can’t afford to stand idle. The Obama administration should move boldly to end China’s illegal industrial policies and its illegal currency manipulation.

Here's where the U.S. Department of Defense comes in. Congress should finance a program to purchase U.S.-made solar cells, for use in Defense Department facilities around the world. Because integrated circuits for Defense purchases are exempt from all World Trade Organization government procurement restrictions, the Defense Department can use its contracts to nurture development of this critical national industry.

Other states, and the federal government, can learn from Ohio’s wind energy programs in Lake Erie. Great Lakes Wind, a network of manufacturers and supply chain experts, is seeking to increase the domestic content of North American wind turbines. And the Apollo Alliance and Policy Matters Ohio have developed a three-pronged approach to promoting wind development through renewable and efficiency standards for utilities combined with training programs to prepare workers for these jobs.

China has opened a rapidly growing trade surplus with the U.S. in solar panels, windmills and components. The U.S. needs new strategies to recapture the lead in production and use of solar cells, windmills and other clean energy technologies. If we fail, 10 years from now we may be just as reliant on China for renewable energy technology as we are on imported oil today.