Federal spending on clean tech dives, report says

Apr 19, 2012 By Dana Hull

A report released Wednesday by scholars at the Brookings Institution and the Oakland, Calif.-based Breakthrough Institute warns that federal spending on clean technologies is drying up, with little sign of additional help coming from Congress.

As a result, more clean-tech companies are likely to go bankrupt or be consolidated, the study warns.

In 2009, on renewable sources of energy reached an all-time high of $44 billion as one-time stimulus funding, part of the American Recovery and , pumped additional millions into clean technologies, according to the study, "Beyond Boom & Bust: Putting Clean Tech on a Path to Subsidy Independence."

But as the stimulus funding and other policies wind down, federal spending dropped to $30.7 billion in 2011 and will fall to $16.1 billion this year. By 2014, federal spending on clean technology is expected to be just $11 billion, amounting to a 75 percent drop in five years.

"We're falling off the cliff," Mark Muro, a senior fellow at the Brookings Institution, said in an interview in advance of the report's release.

The federal wind energy production tax credit, for example, which provides incentives for wind farms, is scheduled to expire at the end of this year. Wind developers are racing to finish construction projects, and the uncertainty over the credit's future has stalled many other projects in the pipeline. The wind industry is lobbying to extend the credit for another four years.

While California has aggressive renewable-energy goals, including a law requiring state utilities to get 33 percent of their electricity from renewable sources by 2020, the lack of a nationwide energy policy has created a boom-bust cycle that needs to be radically changed, the report says.

"Clean-energy policy in America is at a crossroads," it says. "Federal support for clean tech is now poised to decline precipitously - unless policymakers and industry work together to enact smart reforms that can ultimately free clean energy from subsidy dependence and put sectors on a path to sustainable, long-term growth."

The waning federal investment comes as clean-technology market subsidies are being cut in Europe and as renewables face increasing competition from low-cost natural gas. Meanwhile, Wall Street has turned cool toward solar stocks.

Last week, Oakland-based BrightSource Energy, a developer of utility-scale solar power plants, canceled its planned IPO due to tepid interest from investors. Earlier this week, San Jose-based SunPower, Silicon Valley's dominant solar manufacturer, announced it was closing a factory in the Philippines in an effort to cut manufacturing costs. On Tuesday, Tempe, Ariz.-based FirstSolar said it would close its German factory, reduce manufacturing in Malaysia and cut nearly a third of its global workforce.

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3.7 / 5 (3) Apr 19, 2012
This article is a perfect example of where many people have misunderstood the role of government in the marketplace. The government needs to set standards for which the marketplace must comply, not pay for companies to make things. The government should be regulating, creating standards, etc. that are worthwhile and protect whatever the public deems worthy of protection. This week its global warming. A few years ago it was baby seals. A government of the people, by the people, and for the people. Isn't that how the saying goes?

An example of how gov't should behave: there are minimum GPM and emissions standards that must be met by car companies by certain years. Ford has a 300 Hp car that gets 35 mpg on the highway. The gov't did not fund the research for this car, the company who performs in the free market did.
2.3 / 5 (6) Apr 19, 2012
AWaB I have to disagree with you. Government shouldn't be "regulating, creating standards, etc. that are worthwhile" as government's role is to protect our freedoms (from criminals, foreign enemies and especially those in government who'd like to take them away for power or money). Who's to say what's "worthwhile"? The free market allows individuals to decide what's worthwhile to them, government dictates and limits our choices regardless if something is worthwhile.

The government MPG requirements are a joke, they don't apply to pickup trucks or large trucks. And to achieve higher MPGs, auto manufacturers make less safe cars. Should you decide how to trade off safety and economy, or should government make the decision and force it on you?

This report is nothing but liberal political hacks complaining that Obama won't be able to waste taxpayer money on boondoggles like Solyndra, in the name of energy independence and leadership, but in reality just to generate campaign cash.