The oil-rich countries of the Middle East have some advantages in pursuing the “green” energy market. First, they have pools of investment capital they can turn to this purpose. Possibly more important than access to money is that the funding sources may be willing to take a longer term horizon and lower returns than US investors.
Second, diversifying out of oil is a strategic imperative for the Gulf, and energy is a logical target The US may aspire to leadership in this field, but it does not appear that we have a Manhattan Project or Sputnik response level of urgency.
Offsetting this is the fact that the area is not known as a breeding ground of innovation, but if the Gulf States can attract a critical mass of talent, they might be able to turn that around. The New York Times article describes that they are forming relationships with top schools such as MIT.
From the New York Times:
….even as President-elect Barack Obama talks about promoting green jobs as America’s route out of recession, gulf states, including the emirates, Qatar and Saudi Arabia, are making a concerted push to become the Silicon Valley of alternative energy.They are aggressively pouring billions of dollars made in the oil fields into new green technologies. They are establishing billion-dollar clean-technology investment funds. And they are putting millions of dollars behind research projects at universities from California to Boston to London, and setting up green research parks at home.
“Abu Dhabi is an oil-exporting country, and we want to become an energy-exporting country, and to do that we need to excel at the newer forms of energy,” said Khaled Awad, a director of Masdar, a futuristic zero-carbon city and a research park that has an affiliation with the Massachusetts Institute of Technology, that is rising from the desert on the outskirts of Abu Dhabi.
These are long-term investments in an alternative energy future that neither falling oil prices nor the global downturn seems likely to reverse….
This new investment aims to maintain the gulf’s dominant position as a global energy supplier, gaining patents from the new technologies and promoting green manufacturing. But if the United States and the European Union have set energy independence from the gulf states as a goal of new renewable energy efforts, they may find they are arriving late at the party.
“The leadership in these breakthrough technologies is a title the U.S. can lose easily,” said Peter Barker-Homek, chief executive of Taqa, Abu Dhabi’s national energy company. “Here we have low taxes, a young population, accessibility to the world, abundant natural resources and willingness to invest in the seed capital.”…
To hedge their positions, then, an increasingly sophisticated generation of largely Western-educated leaders in the Middle East are seizing on green business opportunities, by seeding research in faraway nations.
The crown prince of Abu Dhabi, the wealthiest of the seven emirates that make up the United Arab Emirates, announced last January that he would invest $15 billion in renewable energy. That is the same amount that President-elect Obama has proposed investing — in the entire United States — “to catalyze private sector efforts to build a clean energy future.”
Masdar, the model city that will generate no carbon emissions, is tied to the crown prince’s ambitions. Designed by Norman Foster, the British architect, it will include a satellite campus of the Massachusetts Institute of Technology, as well as a research park with laboratories affiliated with Imperial College London and other institutions.
In Saudi Arabia, the new state-owned King Abdullah University of Science and Technology, or Kaust, gave a Stanford scientist $25 million last year to start a research center on how to make the cost of solar power competitive with that of coal. Kaust, now in its first grant cycle, also gave $8 million to a Berkeley researcher developing green concrete.
And it has other agreements as well, with Caltech, Cambridge, Cornell, Imperial, La Sapienza, Oxford and Utrecht, to name just a few.
In November, the Qatari government signed an agreement with Britain’s visiting prime minister, Gordon Brown, to invest £150 million, or more than $220 million, in a British low-carbon technology fund, dwarfing the fund’s investments from home…
“The impact has been enormous,” said Michael McGehee, the associate professor at Stanford who received the $25 million Saudi grant. “It has greatly accelerated the development process.”
Deeringothamnus 
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That’s okay. As we stand at the gas station, filling our tanks and wondering how the US will remain a wealthy country, we’ll come up with ideas. We’ll sell them T-bonds! And then default! Yeah, that’s the ticket….
And if they stop falling for that one we’ll convince them they need advanced military arms. They might believe that. Unless the world collectively asserts that they will defend the source of their energy…. Hmmmmmmmm.
Okay, if they don’t fall for that, we’ll sell them our daughters. The blonde ones will fetch a good price….