Earlier this week, I sat down with Monica Trauzzi of E&E TV about the future of federal support for clean tech in the United States. This appearance follows the release of a recent report, Beyond Boom and Bust: Putting Clean Tech on a Path to Subsidy Independence, that I co-wrote with experts at the Brookings Institution and the Breakthrough Institute. The report documents a 75 percent drop in federal support for clean tech between 2009 and 2014, barring new action by Congress. Just between 2011 and 2012, support dropped 50 percent. This comes as U.S. solar and wind industries, in particular, face intense international competition and record-low natural gas prices. Here are the key questions we discussed:
Can clean tech stand on its own?
These clean energy technologies are competing with well-subsidized, very mature fossil fuel technologies that have been able to shape the energy system to suit their needs. Reforming— or even eliminating— fossil fuel subsidies would help, though it would not "level the playing field", given the decades of federal support for the fossil industry. However, wind power is already competitive with gas in some windy locations with good access to the grid. McKinsey just released a report suggesting solar photovoltaics are on track to meet the Department of Energy’s Sunshot goal of competing with wholesale fossil-fueled electricity prices by 2020.
What’s the next step?
Clean tech support is facing considerable challenges, including the likely end of the production tax credit for wind, unless Congress acts. But the potential expiration of federal support in the United States is arbitrary— driven by dates written into legislation rather than by the progress the technologies have made or other developments in the energy markets they are competing in. We should extend the existing support and retool it to efficiently and effectively reward entrepreneurs that reduce costs or improve performance.
Like other global players in this market, namely China and Germany, we should also invest in building a highly-effective innovation system, building on the existing strengths in U.S. universities, regional clean tech clusters, and advanced manufacturers. This two-pronged strategy is crucial to develop a robust, subsidy independent, domestic industry that can compete in the growing, global clean tech market.
Read my blog post on the Boom & Bust paper.