On Wednesday, Bloomberg reported that hedge funds are increasing short selling in U.S. renewable energy stocks to an annual high as firms like Goldman Sachs trim their clean-tech positions. These steps have already damaged the U.S. wind industry, and hedge funds are rallying against First Solar, Tesla Motors, and other firms, potentially endangering a strategic national industry and thousands of American jobs.
As we've previously reported, support for the U.S. clean energy industry is teetering on the edge of a federal funding cliff as stimulus investments dry up. Unfortunately, that cliff just became substantially steeper. A lack of public support is sending ripples through the financial world, magnifying the impact of a lack of action in Washington as major financial institutions hedge against the predicted fall:
"In the run-up to this week's global climate talks in Mexico, short sellers targeted makers of wind turbines, solar panels and electric cars whose sales also were undermined by cash-strapped European governments cutting subsidies. Goldman Sachs Group Inc. and BlackRock Group trimmed long positions in renewable-energy shares in the third quarter, filings show.
..."We are just coming off a period of strong fundamental performance and we expect demand to weaken sharply," Robert Clover, global head of clean power research at HSBC Plc in London, said in an interview. Clover forecast that global panel demand will drop 50 percent in the first quarter of next year from the previous three months.
The inability of Congress to extend even some of ARRA's tax breaks and grants is putting clean tech funding on dangerous ground. Past failures are being compounded by large Republican gains in the mid-term elections, which in terms of finance are classified by Bloomberg analyst Krishan Shkkottai as "a huge deal."
While President Obama's chief science advisors call for federal energy technology investment, these developments highlight a seriously inadequate national strategy and the problem with relying on speculative Wall Street-led investment. Even as many of these firms profited from helping create a clean-tech bubble, they are now pushing for its rapid decline, which will further damage U.S. economic competitiveness.
In an increasingly globalized world such a flight of capital from U.S. clean energy companies will mean a distinct advantage for American competitors who are moving rapidly to corner the market. By failing to commit to these crucial industries we risk wasting the money already invested in making our clean energy companies competitive. Days after Secretary Chu warned of a "Sputnik moment" it looks like some of America is already betting against itself.