For the past eight years, in absence of real leadership from Washington, state governors have been leading the charge on climate change. In the Governors Global Climate Summit hosted by Gov. Schwarzenegger, which took place last week in Beverly Hills, they were rewarded by a personal video address from President Elect Barack Obama:
When the 5-minute standing ovation subsided, attendees of the Summit knew that a new era of energy independence was about to begin. Obama pledged $60 billion over the next four years to fund the development of wind solar and next-gen biofuels. He made it clear that this investment will be critical both for the survival of the planet and for the future security and prosperity of the country. As he said, the investment will "... help us transform our industries and steer our country out of this economic crisis by generating 5 million new jobs that pay well and can't be outsourced."
This money is history-making in its own right, but it now packs a much bigger punch than it would have just one month ago when Congress passed the long-awaited 10-year extension of the PTC (Production Tax Credit) . Federal backing of private investments in the cleanteach field has been a critical challenge facing the industry since 1999, when the PTC was allowed to sunset. The PTC gave investors a huge incentive to invest by allowing them to incorporate tax rebates into their business projections.
But since 1999, thanks largely to heavy lobbying from the oil and coal lobbies, it has been subject to a nearly annual vote, making it impossible for Venture Firms to project the feasibility of their investments.
Despite that fact, billions of dollars have been pouring into cleantech -- $6 billion last year, and it will likely top over $8 billion this year ($6.6 billion by 3rd quarter). Now that the federal tax credit is there to back up these investments, there should be an even greater influx over the next four years. Economic recession or not, it is a rosy time for clean tech.
Almost unthinkable in a Bush administration, Obama stated, "Any company willing to invest in clean energy will have an ally in Washington." But many environmentalists are concerned by that now too familiar reference to the pursuit of "clean coal" and nuclear. With all the new clean technologies that have proven themselves both cost-effective and safe for the environment (solar, wind, geothermal) we would have to continue the mythological (and oxymoronic) pursuit of a technology that does not yet exist.
The Clean Coal myth is an attempt by Big Coal to siphon off dollars for R & D that it should have funded itself a decade ago. As a result coal has lost its competitive edge in the market. Like its two cousins, Off-shore drilling and Nuclear generation, these energy technologies would require extraordinary government subsidies to get them to market safely, providing only theoretical benefits that we would be lucky to see 10 years from now.
It's probable that Obama will throw Coal and Nuclear a few symbolic bones, but if they become the centerpiece of the $60 billion federal commitment, there will enormous backlash from the environmental community.