This week on Capitol Hill, it appeared as though the House and Senatewere finally seeing eye-to-eye on the issue of clean energy. In twoseparate hearings—one on the Global Clean Energy Race held by the House Select Committee on Energy Independence and Global Warming and one on the U.S. Department of Energy’s Loan Guarantee Program (LGP) held by the Senate Energy and Natural Resources Committee—thecase for re-establishing the U.S. as the leader in clean energymanufacturing and deployment was well argued. During the House hearing,witnesses from venture capital firms, investment banks, renewabletechnology developers and financial analysis providers all came close to consensus on identifying the reason for why America continues to fallfurther behind in the clean energy race: the lack of a consistent policy framework.
Mark Fulton, the Managing Director and Global Head of Climate ChangeInvestment Research at Deutsche Asset Management, gave the audience amemorable policy prescription for how to fix the current impasse inCongress: Transparency, Longevity and Certainty (TLC). In other words,for investors to feel comfortable assuming the risk to financiallysupport clean energy projects, they will need to be assured of the transparency in a country’s clean energy policies, the longevity of those policies, and the certainty that the recommended incentives will be trustworthy and financeable.While Mr. Fulton did highlight existing U.S. policies that partiallyfulfilled the TLC criteria, such as state-level renewable portfoliostandards, without a complementary Renewable Electricity Standard at the federal level, he doubts whether investors would feel confident enoughto pony up the necessary funds on a large scale basis. Ravi Viswanathan, General Partner at the VC firm New Enterprise Associates, also calledfor an “effective” RES in his testimony, in addition to other policiesthat Applied Materials has been advocating for, notably a Green EnergyBank and the permanent extension of the Advanced Manufacturer’s TaxCredit (Section 48c). The Chairman of the Committee, Rep. Edward Markey(D-MA), described our country’s current state in pretty stark terms.Referring to China’s meteoric rise in the clean energy domain, Markeyremarked: “China is no longer coming. They are here. They ate our lunch, and they are moving on to our dinner.”
The Senate hearing, while more narrow in scope, had the sameoverarching message as the House hearing: without the right incentivesin place, our country’s global competitiveness in the clean tech arenawill only continue to diminish. One of the witnesses, Jonathan Silver,the Executive Director of the Loan Programs Office at DOE, succinctlyexplained how loan guarantees enable promising technologies to get offthe ground and to market: “Loan guarantees lower the cost of capital for projects utilizing innovative technologies, making them morecompetitive with conventional technologies, and thus more attractive tolenders and equity investors.” To date, they have been used effectivelyin 14 projects, which will ultimately create 17,000 jobs and producenearly 4 GW of clean energy capacity. However, since its launch in 2009, LGP funding has been cut almost 60 percent, with $3.5 billion of itsappropriation rescinded and diverted to other programs. Moreover, it isexpected to expire in the relatively near future, which will only add to investor uncertainty, especially if this move is coupled with theexpected sunset of the Treasury Grant Program (Sec. 1603) by the end ofthis year. A failure to extend Sec. 1603 alone would put more than100,000 jobs across the U.S. at risk, according to a recent study by the American Council On Renewable Energy (ACORE).
What both hearings boiled down to is this: the U.S. is at a criticaljuncture. We can either choose to wait “to do the right thing once [we]have exhausted all the alternatives,” as Winston Churchill oncedescribed the way America responds to challenges, a quote that wasreiterated during the House hearing. Or we can remember the America ofthe past, the America that launched the Manhattan Project and the Apollo Program, as Rep. Markey mentioned, and act boldly and decisively toensure that the next great industry happens on our soil, not China’s orEurope’s. In the absence of swift action, we run the risk of not onlycontinuing our addiction to fossil fuels, but perhaps, one day, cleantechnologies as well.