The global clean energy industry is set for a major crash. The reason is simple. Clean energy is still much more expensive and less reliable than coal or gas, and in an era of heightened budget austerity, the subsidies required to make clean energy artificially cheaper are becoming unsustainable.
Clean tech crashes are nothing new. The U.S. wind energy industry has collapsed three times before, first in the mid 1990s and most recently in 2002 and 2004, when Congress failed to extend the tax credit that made it profitable. But the impact and magnitude of the coming clean tech crash will far outstrip those of past years.
As part of its effort to combat the economic recession, the federal government pumped nearly $80 billion in direct investment and tax credits into the clean energy sector, catalyzing an unprecedented industry expansion. Solar energy, for example, grew 67 percent in the United States in 2010. The U.S. wind energy industry also experienced unprecedented growth as a result of the generous Section 1603 clean energy stimulus program. The industry grew by 40 percent and added 10 GW of new turbines in 2009. Yet many of the federal subsidies that have driven such rapid growth are set to expire in the next few years, and clean energy remains unable to compete without them.
The crash won't be limited to the United States. In many European countries, clean energy subsidies have become budget casualties as governments attempt to curb mounting deficits. Spain, Germany, France, Italy and the Czech Republic have all announced cuts to clean energy subsidies.
Such cuts are not universal, however. China, flush with cash, is bucking the trend, committing $760 billion over 10 years for clean energy projects. China is continuing to invest in low-carbon energy as a way of meeting its voracious energy demand, diversifying its electricity supply and alleviating some of the negative health consequences of its reliance on fossil energy.
If U.S. and European clean energy markets collapse while investment continues to ramp up in China, the short-term consequences will likely be a migration of much of the industry to Asia. As we wrote in our 2009 report, "Rising Tigers, Sleeping Giant," this would have significant economic consequences for the United States, as the jobs, revenues and other benefits of clean tech growth accrue overseas.
In the long term, however, clean energy must become much cheaper and more reliable if it is to widely displace fossil fuels on the scale of national economies and become a commercially viable industry.
Breaking The Boom-Bust Cycle
Why is the United States still locked in this self-perpetuating boom-bust cycle in clean energy? The problem, according to a new essay by energy experts David Victor and Kassia Yanosek in this week's Foreign Affairs, is that our system of clean energy subsidization is jury-rigged to support the deployment of only the least risky and most mature clean energy technologies, while lacking clear incentives for continual innovation that could make clean energy competitive on cost with conventional energy sources. Rather, we should "invest in more innovative technologies that stand a better chance of competing with conventional energy sources over the long haul." According to Victor and Yanosek, nearly seven-eighths of global clean energy investment goes toward deploying existing technologies that aren't competitive without subsidy, while only a small share goes to encouraging innovation in existing technologies or developing new ones.
This must change. Rather than simply subsidize production of current technologies, we need a comprehensive energy innovation strategy to develop, manufacture and deploy riskier but more promising clean energy technologies that may eventually compete with fossil energy at scale. Instead of rewarding companies for building the same product, we should reward companies who continuously improve designs and cut costs over time.
Such a federal strategy will require major federal investments, but of a different kind than the subsidies that have driven the clean tech industry in years past. For starters, we must dramatically ramp up funding for early-stage clean energy research and development. A growing bipartisan group of think tanks and business leaders have pushed an investment of at least $15 billion annually in energy R&D, up from its current $4 billion level. Targeted funding is needed to solve technology challenges and ensure that innovative technologies can develop and improve. One key program that helps fulfill this need is ARPA-E, which funds a portfolio of innovative technology companies and helps connect them with private investors. But ARPA-E's budget has continually been under assault in budget negotiations, hampering its ability to catalyze innovation in the energy sector and limiting its impact.
We also need to invest in cutting-edge advanced manufacturing capabilities and shared technology infrastructure that would help U.S. companies cut costs and improve manufacturing processes. As the President's Council of Advisors on Science and Technology wrote in a report released last week, manufacturing is vital to innovation, "because of the synergies created by locating production processes and design processes near to each other." Furthermore, bringing down manufacturing costs, such as by supporting shared infrastructure for small firms, or offering financing for the adoption of innovative technologies in manufacturing, will be a key component of reducing the costs of new clean energy innovations.
Lastly, the nation's hodgepodge of energy deployment subsidies is in dire need of reform. As Breakthrough and colleagues wrote in "Post-Partisan Power," we need an energy deployment regime that demands and rewards innovation, rather than just supporting more of the same. Brookings' Mark Muro (a co-author or PPP) explains, "[T]argeted and competitive deployment incentives could be created for various classes of energy technologies that would ensure that each has a chance to mature even as each is challenged to innovate and locate price declines." Rather than create permanently subsidized industries, such investments would "provide the opportunity for opportunity for all emerging low-carbon energy technologies to demonstrate progress toward competitive costs," while speeding commercialization.
It is clear that the current budgetary environment in the United States presents challenges to the viability of the fast-growing clean energy industry. But it also presents an opportunity. By repurposing existing clean energy policies and investing in clean energy innovation, the United States can be the first country to make clean energy cheap and reliable, a distinction that is sure to bring major economic benefits in a multi-trillion dollar energy market.
Follow Devon Swezey on Twitter: www.twitter.com/devonswezey
Hemp BIO-ENERGY
Hemp 6X more BTUS than Corn
Hemp uses less water no herbicides and little pesticides and fertilizer.
Subbituminous coal is common in the US. It has an energy content of about 18 million Btu per ton, and is used mostly in coal-fired power plants
Coal generates about half of the electricity used in the United States. ... Each person in the United States uses 3.8 tons of coal each year.
Some 965 million tons of coal were consumed for the generation of electricity. This amounted to 86% of total U.S. coal production
U.S. soybeans 76.6 million acres
U.S. corn 90 million acres
Half of the acres 83.3 million acres
Hemp yields an average of nine dry tons per acre
(more in southern areas)
749 million tons hemp fiber
Bio-diesel Hempoline can be made from leaves and stalks.
You would also have the hemp seeds as a food source too.
U.S. annual anhydrous ammonia 22.90 million tons used.
U.S. ROUND-UP use100 million pounds
Contaminated with 1,4 dioxane
HERO-INSECTIDE SYNGENTA INSECTICIDE Soybeans and corn
It's possible that they might release less carbon than petrofuels, but this question depends on questions of land use, the processes in question, etc.
On the whole, while they are a contributor to fuel security for the US, I don't think they help much with the climate issues.
So no, it's not really funny, not particularly.
Here is some food for thought. Suppose the Chinese continue their apparently unfair practices. There is one thing that we would get from their bargain basement pricing for solar panels and the like that we can't get from imported consumer goods -- cheap energy. It seems to me that the Chinese would unwittingly subsidize our build-out of alternative energy. The only way they could avoid this effect would be to revert to fair practices in consumer goods production.
Our government could still strive to push us forward, perhaps via drastic efficiency improvements, and still define the next generation of energy use. In the meantime, the considerable labor of installing cheap alternative energy infrastructure still belongs to Americans. The alternative energy component of our own manufacturing could probably not be any cheaper, and we could also proceed with the shift from Middle Eastern oil. I don't have the data, but I suspect that the labor content of solar cells is not that great a loss anyway. The same might apply to batteries.
The only answer is to make the solar infrastructure HERE.
Sunergy Offers 5 Cent Solar Billing With No Credit Check: Scientific American
Once a state runs on, say, 30% renewable energy, ending oil subsidies or (heaven forbid) a carbon tax equal to the marginal environmental damage done by pollution will cost 30% less. You will have far fewer objections to requiring cleaner energy if your energy is already 30% cleaner. For example, Washington State gets 3/4 of its electricity from hydroelectric (dams). It's no wonder their Senators spearheaded much of the climate change work in 2009. From a Washington perspective, the damage from climate change is much more meaningful than the price of abating carbon emissions.
The reason they want it in the Gulf is not because of excess demand in the Southern states, it's because Mexico will buy the refined oil (gas), but doesn't have the ability to refine the dirty oil sands.
Absolutely ridiculous.
All over the railroads and highways I see PV panels. They are not using them because of subsidies, they are doing it for obvious logistical reasons. I understand the military is exceptionally green these days as well, right?
Can we stop with the it just can not compete in the free market without being 100% subsidized Bull.
The omitted crucial details is, the market has already been rigged against renewable energy by the bottom side of a 1 to 100 ratio of subsidization, justified circumvention of capitalism, due to the public need for energy.
Quit giving the beast in the earths crust cash steroids and the sun and wind will kick its $$$$
Once it's plain old "tech", and has been integrated into our way of doing things, it will survive. "Green" is still a brand; it needs to become part of the everyday world.
Any time you allow the Government to lay out such a plan . . .
We end up with things like corn ethanol.
This pretty much sums it up, green energy is 100% built upon subsidies . . .
If they dry up, the industry will disappear in 6 months.
We (the GOP) will continue to distrust non-military science, and promote endless wars in the parts of the world that still have the dwindling supply of, and ever increasing profitable reserves.
Drill baby drill, regardless of the facts will win elections when gas passes $5/gln.
Without some big changes, we are heading full bore back to the 1800's and either a feudal or fascist theocratic oligarcy.
-AJB
For instance. The coal lobby not only pushes coal. It fights putting scrubbers and other commonsense already in existence pollution suppressing technology into its smokestacks. Coal is bad, but it could be a little better if congressmen weren't bribed to let them pollute carte blanche.
For instance. A proper energy solution must not only include renewables, it must put conservation at the top. Conservation is already proved, often low-tech and cheap, and inarguable.
For instance: A proper energy solution is de- I said de- centralized. Not big solar and wind farms. Solarcells and windmills and heatpumps built right into the structure of buildings. Small turbines set into every millrace and pond and stream in the falllines of all 3 mountain ranges. Retrofitting of each individual factory into a smart building that thrives on its own waste energy.
For instance: http://www.sustainablebusiness.com/index.cfm/go/news.display/id/21158
Everything must be done all at once. No tr... can argue with everything. It is a steamroller.
If you De-Centralize it, they you also De-Centralize the PROFIT from it.
Monopolies are the logical end-game of Capitalism, that is why most industrialised countries have a form of mild socialism in place (to regulate the large corporations and keep them from becoming Monopolies.)
This lesson was learned the hard way in the USA in the 1880's and it took a Teddy Rooseveldt to "Break the Trusts". For his "crime against Capitalism" he was kicked out of the Republican Party.
With the stranglehold on today's Media by the Multi-Nationals, I don't see another Teddy on the horizon.
Welcome to the new Oligarchy. If you want to see what the USA will look like in 20 years, look at Russia today.
I sympathize with this writer's frustration and suspect he's right that there is something wrong with subsidizing technology that you know going in isn't competitive, but I don't think his policy prescription is right.
It's frustrating to Huffington Post readers, I know, but I wonder if you really can forcibly impose a non-economic technology on the country, just because you want to.
There can be plenty of argument about how far off such an eventuality is, but they'll become moot at a certain point in time. If we're not ready when they do, it won't be pretty, and the economic - and other - consequences will be devastating.