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Sunday, August 8, 2010

Making money without relying on politicians

Rob Day of Cleantech Investing raises the exact point that I’ve been making for years:
Now that Harry "Lucy" Reid has pulled the climate legislation football away at the last minute, cleantech investors can be forgiven for taking a big sigh and forgetting about climate policy for a while. After all, until a couple of years ago most cleantech VCs were adamant about purposefully ignoring policy efforts and effects, because of the randomness factor it would imply for their investments.
With Obama’s election, I think some cleantech investors and entrepreneurs assumed that Cap-N-Trade, a carbon tax or some other policy change would come along that would make their businesses more profitable.

Like any other special interest, these businesses are certainly free (at least for now) in advocating policies that support their special interest. But then they’re special interests and not real businesses.

I think it’s rational to plan a business based on existing policies that are unlikely to change. In California, RPS is the law of the land and even a Republican governor is unlikely to roll them back.

On the other hand, AB 32 (or the Prop 23 that would repeal it) is a measure that has passionate supporters, passionate opponents and a fairly large middle group that could go either way. So while I don’t agree with Rob Day that Prop 23 passing would be a disaster, I certainly agree firms for the next 90 days have to make long-term investing decisions based on the possibility that it might.

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