Since I’m writing this over the holiday season, the spirit of Charles Dickens is very much present. I’ve even seen some observers noting the Dickensian flavor of the infamous names — Madoff and Blagojevich — dominating the news headlines in late December. So forgive me, in looking at what the New Year is likely to bring for the clean tech industry, for indulging in that oft-quoted line once penned by Dickens:
“It was the best of times, it was the worst of times.”
The best of times, as in the dawn of a new U.S. presidential administration pledged to support the development and growth of clean energy as never before. The worst of times, as in the direst economic climate in decades. It’s such an incongruous feeling — the bright promise of supportive federal policies after (at least) eight years in the darkness, accompanied by the doom and gloom of recession, locked-up credit and plummeting investment trends. We had a taste of these mixed emotions even before the election, when Congress finally passed extensions of the investment and production tax credits for wind, solar and other clean energy technologies — but it took an economic meltdown and subsequent US $700 billion bailout package to get it done.
In the six years that I’ve been covering clean energy, the phrase “despite inaction or opposition at the federal level” has become a tired-but-true line applying to everything from climate policy to clean-tech R & D support. At least I’m tired of writing it. How ironic, or something, that when we finally get the national leadership we need to embrace and support clean tech, it comes along with the worst economic downturn in decades? (And oil at around $40 a barrel). Some sort of Zen balancing of good and bad, perhaps.
So let’s take a look at this cosmic balance sheet for clean tech as the new year begins. It’s a long ledger, but here’s a small sampling.
Best of Times:
Secretary of Energy-designate Dr. Steven Chu. Nobel prize-winning “brainiac,” seemingly not beholden to any entrenched energy interests, and committed to technology innovation as well as supportive policy. Outstanding choice.
Incoming climate and energy “czar” Carol Browner. Experienced, well-connected, and tough. Brings strong hope for a more level energy playing field.
Barack Obama’s pledged support for carbon cap-and-trade regulations. There’s a long list of Obama pledges to feel good about, but this one tops my list. The sooner there’s a price on carbon, the better – Obama’s vision of a new energy economy stands little chance without it. Major caveat: cap-and-trade is one of the most complicated schemes politicians will ever tackle. Brace for a lobbyists’ feeding frenzy.
California’s recent passing of the nation’s most aggressive greenhouse gas reduction law. A 30% cut by 2020, signed by a Republican governor in the throes of a state budget crisis and a recession, no less. It’s California’s signal to the nation and the world that good climate policy makes good business sense – and the “Governator” has been one of the nation’s best spokesmen for that convenient truth.
Worst of Times:
Credit as dry as the Mojave Desert. Project finance hit especially hard, threatening the building of new wind farms, concentrating solar plants in the aforementioned Mojave, geothermal facilities, biofuels refineries and more. Stimulus dollars, anyone?
Venture capital slowing to a trickle. Ninety-two percent of VCs in the U.S. expect overall VC dollars to fall in 2009, with 61% predicting venture levels to drop more than 10% from 2008, according to a National Venture Capital Association survey released in December. Some say clean tech will still fare better than other sectors, but others disagree with that, predicting that the downturn will cause a ‘correction’ in the recent-years flood of funding into overheated niches like thin-film solar. Either way, I think the VC good times are over for a while.
State and city budgets under the knife. So many city and state governments have led the way in clean tech implementation, from hybrid and biodiesel vehicle fleets to green building mandates and retrofits. Budget crunches across the U.S. will put many of these programs in jeopardy. Let’s hope that enlightened governors, mayors and other local leaders will view clean tech initiatives as job-creating, energy-saving investments in the future, not just budget line items facing the fiscal scalpel.
Plummeting oil prices. Actually, this isn’t as bad as many people think. It certainly doesn’t help the biofuels industry in the short term, but smart, forward-looking investors and technologists know that all long-term trends point to oil alternatives, particularly electricity, for vehicle power. Electric and plug-in hybrid development efforts, at least those not based in Detroit, should continue to have strong momentum.
“We can’t afford clean energy right now.” This is potentially the worst outcome of all — an ill-advised meme that the transition to a new energy economy must be put on hold until the overall financial picture brightens. I would counter with a favorite phrase that’s been making the rounds since September: “A crisis is a terrible thing to waste.” The FDR-and-the-New-Deal analogy is not a perfect fit — the world was a very different place in 1933 — but does bring some useful lessons about quick action and dramatic changes in thinking.
We are certainly in the painful throes of a transition to something new, and fortuitously happen to have new national leadership on the way this month to help point the way. During the presidential campaign some months ago, Obama said, “Together we will write the next great chapter in the American story.” Much has happened since then, but the words apply now more than ever. On balance, I’ll take the current bad along with the good. It’s a very, very bumpy road ahead for clean tech and our energy transition, but we will finally have a federal government steering in the right direction.