Bioenergy, Hydropower

Extinction or Innovation? U.S. Government Must Enact Clean Energy Policy

The United States, often the world’s leader in technological innovation, could be about to cede the next wave of business breakthroughs and wealth creation — those that come from clean energy and other clean technologies — to other nations if it doesn’t act soon. The nation desperately needs an aggressive, comprehensive clean-energy package, including a national renewable portfolio standard (RPS), if it is to remain relevant on an increasingly competitive global playing field.

While the Senate, House and President get caught in a web of accusations, filibusters, back-room manipulation, and threatened vetoes, the future of our commitment to innovation and economic competitiveness suffers. It’s time that Americans get an energy policy that moves the nation into the future, not one based on the technologies and energy sources of the past.

In recent energy legislation passed by the Senate, opponents succeeded in preventing inclusion of a national RPS calling for 15% of electricity to come from clean energy sources by 2020 and dropping $32 billion in clean-energy tax incentives that would have supported the development of solar, wind, and other new energy resources. Now it’s up to the House to see if it can move any of these initiatives forward.

Since the start of the new millennium, as a clean-tech leadership vacuum persisted at the U.S. federal level, it’s been U.S. states and cities that have picked up the ball. Two dozen states—both blue and red, comprising well over half the country’s population—now have RPS’ that require their utilities to generate a specific percentage of their power from clean and renewable sources by a specified date. Hundreds of U.S. cities have signed on to meet or beat the targets outlined in the Kyoto Protocol. But such local- and state-level actions, by themselves, are no longer adequate.

Policies to grow the use of clean energy are not simply an environmental aim, they are an economic imperative.

Industries such as solar energy, wind power and biofuels are growing at 30% annually or more, and they are creating quality jobs and becoming cornerstones of economic development from the plains of Iowa to the R&D centers of Shanghai. Germany, Japan, Denmark, Spain, Brazil and many other nations are vying for clean-tech leadership; even China has a national RPS and fuel efficiency standards that are currently more aggressive than those in the U.S.

If the U.S. is to compete effectively in this new global environment, now is the time for the federal government to get serious about a consolidated, all hands-on deck, committed clean-energy policy—including a national RPS. At a recent  conference of global clean-energy financiers in New York, California Energy Commissioner John Geesman called our lack of an RPS “a national embarrassment.”

As Tokyo, Beijing and Frankfurt continue to plot their clean-tech futures, the U.S. must take a leadership role in the creation and deployment of clean energy, transportation, and efficiency technologies.

Just look at the numbers. According to research firm New Energy Finance, approximately $70 billion is now being invested globally in clean energy technologies by corporations, governments, venture capitalists, and the public stock market. Our firm, Clean Edge, estimates that the current market for solar power, wind power, biofuels, and fuel cells now exceed $50 billion globally. And Clean Edge and Nth Power, which each year track clean-energy venture activity in the U.S., report that energy-tech venture activity alone has increased from less than one percent of the total venture pie in 1999 to nearly ten percent in 2006.

And one look no further than such corporate leaders as Google, IBM, GE, Applied Materials, and even Wal-Mart—all U.S. companies seriously working to deploy clean technologies and push the innovation envelope. So what can the Federal government do? In order to guarantee a leadership role and smart policy, we believe the national government must:

• Stay focused. Don’t confuse the issue by saying that nuclear power and so-called clean coal are clean technologies. They are not, and the Senate wisely defeated an amendment by Sen. Pete Domenici (R-New Mexico) that would have put them under the RPS umbrella. Focus on the industries that use proven technologies to produce power cleanly and more efficiently.

• Shift subsidies from fossil fuels to clean energy technologies such as solar, wind, biofuels, smart grid, and energy efficiency. Make sure these commitments are long-term, reliable, and consistent.

• Get serious about carbon. Our global counterparts have already begun to put a price on carbon and are building robust markets. In 2006 alone, the World Bank reports that the carbon trading market in Europe was worth approximately $20 billion. The U.S. must join this global imperative, and leading U.S. companies such as DuPont, Duke Energy, and PG&E are already calling for federal action.

• Provide guidance to the states. To paraphrase the famous line from Tip O’Neill—”All Energy is Local.” But the federal government can and must do its part with nationwide standards and financial commitments, along with national clean energy and renewable fuel targets. Clean-tech leadership is in our national interest; it can’t all be left up to the states in isolation.

Detractors and naysayers, of course, will say that clean energy is subsidy-dependent and therefore can’t compete in the marketplace. But this is disingenuous double-speak. Close observers of the energy industry know that there is no such thing as a subsidy—and policy—independent energy source. The oil, coal, and nuclear power industries have all relied heavily not only on government policy, but also on rich and lucrative subsidy programs.

Others will argue that clean technologies can’t scale up. But this is misguided thinking. Spain and Denmark, for example, already generate about 20 percent of their nation’s electricity from wind power and leading states like California are targeting around 30 percent of their grid electricity from new renewables before the end of the next decade.

The U.S., known for its innovation in earlier tech revolutions such as computer chips, telecom, and the Internet can lead once again. But it will take a concerted effort by an army of corporate innovators and startup entrepreneurs—and, like any revolution—it will require supportive government policies. Sure, we’re big supporters of the American free-market economy but it’s unrealistic to act as if government policy and leadership doesn’t matter. In today’s increasingly competitive global marketplace, you either innovate or die—and government has a critical role in this process.

Now is the time to push the envelope on the development of 21st century clean technologies. We need to embed silicon, like we have in our communication networks, into the electric grid. We need cars that don’t just get 30 or 40 miles per gallon, but a new breed of plug-in hybrids that get up to 100 miles per gallon or more. Google.org recently awarded $1 million in grants and announced plans to provide $10 million toward the development, adoption, and commercialization of plug-in hybrids and fully electric cars.

We believe that we are in the midst of one of the greatest shifts in human history. Within 50 years, we’ll look back at the beginning of the 21st century and see it as the tipping point for clean technology.

The choice for investors, companies, governments, and individuals is simple. Be part of one of the greatest business and economic shifts in recorded human history, or become extinct like the dinosaurs whose fossils fueled the last great industrial revolution. The opportunity for wealth creation and economic leadership stands on one side of the equation—and the very real threat of the collapse of civilization as we know it on the other.

Shouldn’t the federal government of one of the most forward-thinking, innovative, and technologically savvy nations on earth be leading that effort?

Ron Pernick and Clint Wilder are coauthors of The Clean Tech Revolution and co-founder/principal and contributing editor, respectively, of Clean Edge, Inc.