This post originally appeared on Forbes.com.
Now that the election is over, elected officials need to return to the important act of governing. Building a low-carbon energy future will be essential for the country’s continued prosperity and security.
Yet in recent months, we have witnessed a heated national debate—and significant misinformation—about public investment in clean energy and the government’s role in America’s energy future. Below, we seek to inform a path forward on this critical issue by separating fact from fiction.
Myth 1: Funding Renewable Energy Is a Waste of Taxpayers’ Money
In fact, federal investments in solar, wind, and geothermal companies, largely through stimulus funds, proved to be a success. Of the 26 companies and projects that received clean energy loan guarantees under the 2009 American Reinvestment and Recovery Act (ARRA), only three have failed – an impressive record given that venture capitalists cite a 70 percent failure rate as typical for start-ups.
Much has been made of solar manufacturer Solyndra’s collapse; yet this one, high-profile example misses the point. According to a Bloomberg Government study, 87 percent of the companies that received loan guarantees were at low risk of default, as they were required to line up electricity buyers in advance. So the risk of a domino effect is slight.
Myth 2: The Clean Energy Market Is Failing
Many experts and investors, among them Warren Buffet, forecast a bright future for the clean energy market. Yet over the past year the U.S. solar and wind companies have struggled. So, what’s going on?
Looking at the big picture, wind and solar power are now close to cost competitiveness with fossil fuels. As wind turbines and solar panels have dropped in price, global demand has risen rapidly for renewables, driving double-digit market growth. Global investment in clean energy generation capacity reached a record high of $260 billion in 2011 and almost overtook investment levels in fossil fuels. Further, McKinsey & Co. is expecting that solar PV deployment could increase 50-fold between 2005 and 2020, rivaling that of natural gas.
Yet, over the past year, the rapid growth in the U.S. solar and wind industries has stalled and investment fallen sharply. Why?
A major culprit is uncertainty over government incentives for renewables. Public support for clean tech in the United States dropped nearly 50 percent from 2011 to 2012, and will likely plunge 75 percent between 2009 and 2014 unless Congress acts, according to analysts at WRI, the Breakthrough Institute, and the Brookings Institution. They project that the failure to renew the wind production tax credit, which is set to expire on December 31, could cause the wind turbine market to contract by 80 percent, putting tens of thousands of jobs in jeopardy.
Continued federal support is badly needed for the fledgling renewables industry to reach its potential of a $2.3 trillion market by 2020. Emerging energy sources traditionally receive federal support until they reach maturity. In fact, fossil fuels still receive U.S. taxpayers’ money despite the fact that seven of the world’s 10 largest corporations are oil companies. (U.S. government support for fossil fuels reached $15.4 billion in 2010.)
Nor are renewables getting special treatment. A report by DBL Investors found that the first 15 years of federal subsidies for oil and gas, adjusted for today’s prices, were five times greater than support for renewables over the past 15 years.
Myth 3: Environmental Regulations Are Destroying the Coal Industry
This concern is frequently voiced vociferously by industry, most recently over EPA standards that would cut dangerous carbon and mercury pollution from coal plants.
Yet fears of harmful impacts of environmental standards on business are grossly overstated. Environmental standards typically end up costing much less than industry predictions, and even than EPA’s own projections. Overall, environmental costs generally fall below 2 percent of total business costs.
Some companies have blamed the recent shutdown of several U.S. coal plants on new or planned EPA standards. However, the evidence shows that regulations are not the primary driver behind these plant closures. Rather, these business decisions are heavily influenced by market forces, such as lower natural gas prices, declining growth in electricity demand, rising coal prices, and the increased cost-competitiveness of renewables.
What should we conclude from all this? First, clean energy remains a good public investment, serving as the foundation of America’s future low-carbon economy. Second, the time is ripe for business leaders and U.S. policymakers to re-commit to America’s role in the emerging global clean energy market.