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Sunday, October 31, 2010

America's RE problem: consistency, not dollars

Over the weekend, the NY Times ran an article summarizing the great building boom of utility-scale solar projects for the Mojave desert that has been approved in the past 60 days.

It minimized the difficulties the developers have faced getting federal, state and local approvals, and instead focused on the gun to their head: the looming expiration of federal subsidies.

As reporter Todd Woody wrote:
The Ivanpah plant is the first of nine multibillion-dollar solar farms in California and Arizona that are expected to begin construction before the end of the year as developers race to qualify for tens of billions of dollars in federal grants and loan guarantees that are about to expire. The new plants will generate nearly 4,000 megawatts of electricity if built — enough to power three million homes.

But this first wave may very well be the last for a long time, according to industry executives. Without continued government incentives that vastly reduce the risks to investors, solar companies planning another dozen or so plants say they may not be able to raise enough capital to proceed.

“I think we’re going to see a burst of projects over the next two months and then you’re going to hear the sounds of silence for quite a while,” said David Crane, chief executive of NRG Energy, on Wednesday after he announced that his company would invest $300 million in the Ivanpah plant.

With both Democrats and Republicans promising to rein in the federal budget, it is unclear whether lawmakers will extend the programs in any form. “That could stall a number of projects and even lead to the failure of some,” said Ted Sullivan, an analyst with Lux Research, a consulting firm in New York.
Reading this in my Sunday Merc was eerie, because it exactly echoed what I read Saturday night about the beginning and end of the first wave of Mojave solar thermal development during the 1980s, where the nine plants of the Solar Electricity Generating Systems developed by Luz International once accounted for 95% of the world’s solar electricity generation capacity.

Writing in a technical report for Sandia National Laboratories, Luz’s former business development VP, Michael Lotker, summarized how the company was repeatedly forced to plan its projects in between the institution of subsidies (such as RE tax credits) and their expiration. Often this meant that a 18 month project had to be completed in ten months — and in one case seven months — as the company was squeezed between knowing that the credit was available and the deadline for generating electricity before the credit expired.

Knowing that Luz had a gun to its head, investors, suppliers and even the unions exploited the company’s desperation knowing that it had to agree to almost any terms to make the project happen. As a result, the company ran out of money, which helped discourage any future company from taking the risks that it did.

If the government is paying for something — whether directly via procurement contracts or indirectly via tax subsidies — it has a strong interest in helping its suppliers (in this case of renewable energy) improve their efficiency. More efficiency is a win-win — either the government can get more of it supplied or it can get the same quantity at a lower price. So with the unpredictable, irregular or erratic policy — such as “temporary” credits renewed one year at a time — pushes up costs both for the firms and the society that is subsidizing those firms.

Both Woody’s story and the earlier report by Lotker highlight an important point for US renewable energy policy: the most important thing (as with any policy that impacts business) is consistency and predictability.

Thursday, October 28, 2010

GE: green energy or greenwashing?

For more than five years, GE has been branding its green/environmental/sustainability efforts as ecomagination. It has custom domain, a Twitter feed and a prize contest (using open innovation ideas). It event spent nearly $3 million for a 2009 ecomagination SuperBowl ad.

When GE rolled out the campaign, a grad student writing in Monthly Review (which proclaims itself an “Independent Socialist Magazine”) was more than a little skeptical
As environmental degradation continues to expand in tandem with global capitalism, environmental consciousness becomes a new marketing strategy. GE's newest invention is to present itself as an environmental crusader. "Ecomagination" is its latest moniker, proclaiming that one of the world's largest corporations has gone green, embracing environmentally-friendly policies and promising to provide the world with solutions to environmental problems. All we have to do is trust the company and continue our lives, preferably as its customers, and it will bring us the clean, pure world shown in its advertisements.
An anti-envirnomentalist’s op-ed in the New York Sun was equally skeptical:
Environmental activists are cheering General Electric's new "Ecomagination" initiative. That's a hint that the rest of us should beware of the gimmicky-sounding program.

"Ecomagination is GE's commitment to address challenges such as the need for cleaner, more efficient sources of energy, reduced emissions and abundant sources of clean water," CEO Jeffrey Immelt said. "And we plan to make money doing it. Increasingly for business, 'green' is green."
Skepticism or not, there is a substance behind the ad campaign of the $150 billion/year conglomerate.

After selling its first turbine in 1901, GE quickly moved into renewable energy by selling a turbine for hydroelectric power generation. Its turbine expertise also led to its involvement in nuclear plants, as well as a range of fossil fuel power generation systems. Its decades-long experience with power transmission has also made it one of the most aggressive corporate backers of smart grid — the subject of the 2009 Super Bowl ad.

GE’s position in wind is more recent. In 2002, it spent $358 million to buy the wind energy assets of the bankrupt Enron Corporation, which had bought the business five years earlier. Founded in 1980 by Jim Dehlsen, Zond Energy shipped its first turbine in 1981. (Early on, Zond also purchased turbines from Vestas to install in its pioneering Tehachapi wind farm).

While GE’s wind business is the market leader in the US, 80% of its sales are in the US — perhaps a legacy of the lack of global focus by Zond or Enron. In its home market, it seems to be losing share to foreign competitors like Siemens of Germany and Suzlon of India. Like other Western makers, it has minuscule share in China due to trade barriers, and so last month formed a 51/49 joint venture with a Chinese partner.

GE also entered the PV industry via acquisition, with its 2004 purchase of the bankrupt AstroPower and its process for thin-crystalline silicon cells. More recently it has invested in various thin film processes, including CdTe and CIGS. A year ago, a GE R&D exec said solar was “the next wind for us.”

GE mentions solar thermal as a line of business but doesn’t say much about it publicly.

The contribution of these RE efforts to GE are a mystery, as it doesn’t break out wind or solar financials. Overall, the energy infrastructure segment of GE accounted for 24% of its $155 billion in 2009 revenues — but 62% of its $11 billion in profits. In mid-2008 it predicted $1 billion in solar revenues by 2011, but no progress report on how close it is to reaching that milestone.

Monday, October 25, 2010

To nuke, or not to nuke?

Nuclear power’s disadvantages — technical, economic, social acceptability — will probably prevent it from making much difference in solving climate change problems. Energy, both literal and metaphorical, spent on nuclear power is energy not spent working on other parts of the menu of choices for addressing climate change issues.”
— Lee Clarke, “The Nuclear Option,” in Routledge Handbook of Climate Change and Society
In a countries like France and Japan, the lynchpin of efforts to reduce carbon emissions (and imports of fossil fuels) is electricity generated from nuclear power. Overall, Clarke says that fission reactors generate 14% of the world’s electricity, and 20% of that in the US.

In the US, proponents of nuclear power argue that it’s a proven technology, it substitutes directly for the dirtiest of electric sources (coal), and the greenhouse gas emissions are zero. This option is particularly salient for moderate environmentalists (or at least liberal Republicans) who worry about GHGs but consider the nuclear question long since settled.

Of course, opposition to nuclear power in the US dates back more than three decades. I recall rock concerts and traffic jams in a futile effort to block PG&E from building the 2.2 gigawatt plant in the isolated Diablo Canyon — opening in 1985 as one of the last new nuke plants in the US.

Some of the environmental opposition is dispassionate and logical, focusing on the lack of political will (and technical uncertainties) regarding storage of spent nuclear fuel. Other opposition is hysterical, right up there with the anti-vacinnation campaigners who worry about imagined mercury risks (from vaccines that no longer use mercury as an antibacterial).

Similarly, some of the economic arguments are more sound than others. Nuke plants have huge capital budgets, long approval processes, and require complex and expensive technical and security training to operate safely. As with all economic policy arguments, the arguments against (or for) plants are subject to the usual lies and distortions because no one checks who was right 30 years later.

Some try to combine the approaches. Just as death penalty opponents claim (rightly or wrongly) that death penalty litigation is more expensive than 40 years of room and board, some environmentalists say that whether or not the plants are safe, they put too much of a rate burden on ratepayers.

Routledge Handbook of Climate Change and Society (Routledge International Handbooks)In his chapter from the Routledge Handbook of Climate Change and Society, sociologist Lee Clarke is openly skeptical of environmentalists (such as Stewart Brand) who believe the threat of global warming is greater than the threat of nuclear power. While not anti-corporate like some authors in this edited volume, he clearly has the same objections to nuclear power today as did leading environmental groups 20 years ago long before IPCC, Kyoto and “An Inconvenient Truth.”

Still, one doesn’t have to agree with the motivations of people like Prof. Clarke to agree with his conclusions. Even if nuclear power is the right solution, is it a feasible one? Even with a major push, given the restrictions on where plants can be placed American voters and regulators are unlikely to approve more than a modest increase in the number of reactors. Another complication is the need to replace 40+ year old reactors as they come up for decommissioning, perhaps (as in Southern California) building them alongside the old ones.

Meanwhile, US (and IAEA) policy is not going to promote putting up fission reactors across South America, Africa, Asia and the Middle East.

If politics is the art of the possible, then the reality is that nuclear power (at best) will make a small difference. While those who want to reduce manmade global warming might want to support any proposed nuclear projects, they can’t be counted on to solve the entire problem.

Meanwhile, from a business standpoint, the stagnant industry already concentrated with four manufacturers consolidated to three: GE Hitachi, Westinghouse and Areva NP of France. What business there is will go to incumbents, not new entrants.

And even these companies recognize the long odds: none are placing all their eggs in a nuclear basket. GE has leveraged its turbine skills to remain (for now) the dominant seller of wind turbines in the US market, one of five major players overall, while Hitachi is concentrating on turbines for the Japanese niche market. It also has a solar business, as does Westinghouse (through its partnership with the company formerly known as Akeena) and Areva (which bought the SV firm Ausra in 2009).

Friday, October 22, 2010

Apollo metaphor: crash and burn

The Merc’s website (but not the dead tree paper) had a story Thursday afternoon about the California branch of the Apollo Alliance, a lobbying effort by “business, labor, community and environmental leaders” for policies to support cleantech companies and cleantech jobs. The story wasn’t picked up by other outlets because there isn’t much new: the Apollo Alliance is based in San Francisco, already had a rollout effort in California in October 2008, and the group issued a press release three weeks ago supporting AB32 and attacking Prop 23.

The Merc story highlighted the support of cleantech businesses, but the website and the group’s publications suggest that the Apollo Alliance is more of a political group run by an alliance of labor and environmentalists. The New Apollo Program manifesto lists a 14-member board chaired by longtime legislator (later state treasurer) Phil Angelides, and the board also includes the head of three environmental groups, two labor unions and noted environmental activists Van Jones and Robert Redford.

While the Alliance seems intended to win clout through its big name backers, it seems an otherwise unremarkable example of the three factions to lobby for government regulation and spending to support cleantech companies and onshore jobs. For example, the Merc story says:
"We've seen energy policies stall at the federal level, and it makes what's happening in California all the more important," said Cathy Calfo, executive director of the Apollo Alliance. "It's important to have a comprehensive strategy to move toward a clean energy future."
However, there is the matter of the name. To the question of “Why do we call it the Apollo Alliance?” the group’s website says:
Like JFK’s Apollo Project, which put a man on the moon in under a decade, an Apollo project for energy freedom must be big, bold and fast. Here’s the speech President Kennedy gave when he announced his Apollo project at Rice University in Houston, September 12, 1962 …
The problem is, renewable energy or energy efficiency are not suited to an Apollo-like project. That’s not my conclusion, but that of three of the world’s leading innovation economists — David Mowery of Berkeley, Dick Nelson of Columbia and Ben Martin of SPRU — in an article they wrote just to rebut such policy silliness, who share the goals of the Apollo Alliance but explicitly reject its policy metaphor (if not its specific policies).

As they begin:
Many supporters of government action argue that the problem is so great, the need for new environmentally friendly technologies so urgent, and the time remaining for implementation of solutions so limited, that a “Manhattan Project” or an “Apollo Program” is needed.
and then note how the two metaphors have been around for more than a decade. From that, they summarize four reasons why the metaphors not only are wrong, but will lead to policies that won’t work
We emphasize at the outset that we share the broad concern of these authors about the immense risks of global climate change, and we agree that strong, well-resourced government technology policy is part of the solution. However, proposals to model such a policy explicitly on the Manhattan or Apollo projects are, as this paper will argue, wrongheaded, and if adopted could waste resources and limit the prospects for success. Although the prospect of global warming raises technical and economic issues that are, if anything, even more daunting than those posed by a lunar landing or the crash wartime program to develop an atomic bomb, the nature of these challenges is quite different. Most importantly, both the Apollo and Manhattan projects were designed, funded, and managed by federal agencies to achieve a specific technological solution for which the government was effectively the sole “customer”.

By contrast, technological solutions to global climate change must be deployed throughout the world by many different actors, and these deployment decisions will require huge outlays of private as well as public funds. Both the industries developing and producing these solutions and the sectors in which the technologies will be deployed comprise a very heterogeneous group, ranging from wind power to internal combustion and from electric-power generation to dairy farming. …

Another point of contrast between the R&D programs that will be needed to combat global warming and these earlier federal “models” is the relatively high degree of administrative centralization in both the Manhattan and Apollo projects. As we note below, the tension between centralization and decentralization in large-scale R&D programs is an important issue in program design for which broad prescriptions are likely to be unrealistic or vacuous. But government R&D programs to combat global warming will involve numerous organizations, and consequently mechanisms for the coordination of priorities, resource allocation, and performance evaluation will be essential.

Lastly, unlike the development of an atom bomb or of a manned space vehicle, halting or reversing global warming almost certainly cannot be achieved solely through ‘supply-side’ policies and the development of technological ‘solutions’. Indeed, one of the largest dangers created by the Manhattan or Apollo metaphor is that it may be adopted by politicians seeking to avoid the far more painful demand-side policies aimed at changing human behavior and halting the ever growing demand for energy previously regarded as a prerequisite of ‘human progress’.
I can’t possibly summarize a 14,000 word research article in a brief blog post, and I encourage people to read the article in its original — either the official version at the Research Policy or the working paper published by Britain’s equivalent of NSF.

However, this is yet another reminder (as if we needed another one) that innovation policy is too important to be left to politicians or lobbyists, but instead needs to be handled by people who know something about the subject.

Tuesday, October 19, 2010

End to solar thermal? Not so fast!

September and October have been great months for utility-scale solar thermal projects in California, as the state (with cooperation from the Feds) approved six projects with 2.8 gigawatts of capacity in the Mojave desert. Five of these are proven trough systems, while the sixth plans to use a Sterling engine.

However, Michael Kanellos and Brett Prior of GTM speculate it’s the beginning of the end for solar thermal. Their argument is sound in principle, but I wonder if their timing is premature.

Most of the advantages of the solar trough systems are also its disadvantages: it's low tech, decades-old proven technology that works well at scale. For years, the world’s largest solar facility — and California’s entire utility scale solar capacity — consisted of the nine SEGS sites totaling 354 MW in Eastern Mojave. The GTM argument is that the main solar thermal systems — both trough and tower — are about to lose to PV on cost per watt and LCOE, and that the price of PV technology will continue to improve more rapidly than that for thermal.

I think the latter is certainly true — PV costs have been coming down for decades, while many of the thermal parts are mature and proven. Also, the moving parts on heating water and running turbines guarantee significant operating costs that are not seen by PV, which are essentially semiconductors covered by glass windows that need to be washed.

Has it crossed over yet? I think the crossover is coming, but the fact that all six utility scale systems are thermal rather than PV suggests it’s still a ways off — or at least that PV manufacturers can’t ramp up production capacity quickly enough to generate gigawatt-capacity plants.

While the costs are attractive, PV clearly has more risk in the short term than the proven thermal technology. That (as they argue) other utility scale systems plan to use PV suggests the crossover is coming, but I don’t think we’re there yet.

The other thing about the argument is that it says little about the economic viability of thermal systems either operating or under construction. If utilities have signed a PPA with the RPS gun to their head, they still need the contracted capacity at the agreed-upon price.

In fact, if both Jerry Brown gets (re) elected (even odds) and Prop. 23 fails (it’s outspent 3:1), then utilities are going to need whatever capacity they can get to meet the RPS standard of 33% by 2020. Keeping the 33% requirement will give an extra 2-5 years of life to the solar thermal market (beyond whatever its natural lifespan is) as buyers wait for PV manufacturers to ramp up capacity to meet a global — not just California — demand for renewable energy.

Renewable energy is a capital-intensive commodity business. At some point solar thermal companies will have a hard time competing for the bulk of the market, but for now they can — in best Monty Python fashion — note that “I’m not dead [yet].”

Saturday, October 16, 2010

Lessons from greening Google's billions

Although I don’t follow wind all that closely — if for no other reason that it will make a relatively small contribution to increasing California’s use of renewable energy — it was hard to miss news this week of Google’s investment in a planned $5 billion wind transmission line off the Mid-Atlantic coast.

The “Atlantic Wind Connection” (as it’s called) is interesting on several levels. The ownership is split between Google (37.5%), an investment company called Good Energies (37.5%), and the Japan trading company Marubeni (15%). The deal came about from a chance meeting between developer Trans-Elect Development and Good’s desire to find new projects to invest in.

The announcement is interesting on many different levels.

One is that this is a sizable bet among a series of ongoing RE investments by Google. It appears that it fits nicely with the founders’ philosophical support for renewable energy, as announced by Larry Page three years ago (and reflected in their personal investments in Tesla among other cleantech startups.) The announcement also reflects Google’s strengths at mass communications in web-enabled world, as much of the press coverage was just a paraphrase of the key details provided by Google and its partners in its posting and press conference. (A rare exception was the National Geographic story.)

The second point is that, as the Heritage Foundation noted, this is a rare example of a large RE project being funded by private investors rather than hefty government subsidies. They quote approvingly from the official announcement by Google’s “Green Business Operations Director”:
We believe in investing in projects that make good business sense and further the development of renewable energy. We’re willing to take calculated risks on early stage ideas and projects that can have dramatic impacts while offering attractive returns. This willingness to be ahead of the industry and invest in large scale innovative projects is core to our success as a company.
Third, this is a reminder of the importance of transmission infrastructure for any large-scale renewable energy projects: where the power is generated (wind coastal shelves, sunny deserts) is not where it needs to be consumed. The 350 mile transmission line would be built about 22 miles offshore, and come ashore in four places: Northern NJ, Southern NJ, Delaware and Southern Virginia. It would eventually have a capacity of 6 gigawatts of power. The project construction would take from 2013-2021.

Fourth, as an April paper in the Proceedings of the National Academy of Sciences points out, a wide geographic dispersion of wind farms can ameliorate one of the biggest disadvantages of wind power — dramatic fluctuations in output — by smoothing that output over a broader geographic base. The law of averages may make large scale wind generation more useful than the existing wind farms concentrated in a few localized areas like the Tehachapis and the Altamont Pass.

Fifth, the unique advantages of the Mid-Atlantic region point out the limitations of offshore wind more broadly. As the NYT article summarized:
The lure of Atlantic wind is very strong. The Atlantic Ocean is relatively shallow even tens of miles from shore, unlike the Pacific, where the sea floor drops away steeply. Construction is also difficult on the Great Lakes because their waters are deep and they freeze, raising the prospect of moving ice sheets that could damage a tower.
So if the plants have to be located far enough offshore to avoid objections over aesthetics but in shallow enough water to operate a fixed platform, there are limited opportunities to do so.

Sixth, it appears that local and state governments have conflicting motives between NIMBYism and a desire for local jobs — to the point of discouraging East Coast use of renewable energy generated in the Midwest. (A similar dynamic has occurred here in California). Again the NYT captured it nicely:
Nearly all of the East Coast governors, Republican and Democratic, have spoken enthusiastically about coastal wind and have fought proposals for transmission lines from the other likely wind source, the Great Plains.

“From Massachusetts down to Virginia, the governors have signed appeals to the Senate not to do anything that would lead to a high-voltage grid that would blanket the country and bring in wind from the Dakotas,” said James J. Hoecker, a former chairman of the Federal Energy Regulatory Commission, who now is part of a nonprofit group that represents transmission owners.
Finally, the construction of a transmission line does nothing to solve the daunting cost problems of offshore wind energy. Parochial governors aside, the cost of building and operating wind turbines in the ocean is higher than on flat dry ground: 50% higher is the estimate provided by the NYT.

More generally, the prices of wind generation are not falling as quickly as solar, and in fact ticked up last year at the height of a deep recession. (What’s up with that?) Blogger Tom Fuller argues that wind has a fundamental problem of lack of competition — where a cartel of a few large manufacturers controls the supply of generating equipment — and predicts an eventual triumph for solar:
There are a lot more [solar] manufacturers, and they are increasing capacity continuously. Each new generation of fab provides 20% performance gains, and the next generation of wafers is longer, wider, thinner and less likely to break. Innovations for their balance of system peripherals come from a variety of outside companies in their supply chain, and the inexorable march to grid parity is nearing its goal.

They both get the same level of subsidies, which amount to a pittance overall. So what’s the difference?

Solar sells to consumers, too. Residential, small business, offices and plants. Solar scales down as well as up. And their customers are you and me–cranky and demanding if things don’t work, unwilling to sign long term contracts, wanting to see bottom line improvements rather than brochures showing acres of installations.

So solar will win. Not because they’re nicer guys, but because their industry is more fragmented and they have more demanding customers.

Which, I believe, is the way the system is supposed to work.
So perhaps offshore wind will be the only local supply of RE available to the Northeast, but — as with everything else over the past 40-50 years — the region will remain an expensive place to live and work. In other words, not a good place to put a Google server farm.

Thursday, October 14, 2010

Can we win the clean energy race? Should we?

Browsing the WSJ.com website, I found an advertorial that proclaimed
China Becomes “Clean Energy Powerhouse”

China, determined to be on the forefront of green technology, “is emerging as the world’s clean energy powerhouse,” according to a recent study from The Pew Charitable Trusts, an independent non-profit organization based in Washington, DC

For the first time ever, China topped all nations last year in investments in low-carbon energy like wind and solar power. Over the past five years, environmentally friendly energy finance and investments in China grew from $2.5 billion to $34.6 billion, almost double the $18.6 billion in investments attracted by the United States.

And that is only one part of the country’s growing emphasis on environmentally friendly products and practices. Along with ambitious targets for wind, biomass and solar energy, China aims to spend 34 percent of its $586 billion stimulus package on green projects.
The advertorial, sponsored by Hong Kong-based Cathay Pacific, went on to note the airline’s involvement in carbon offsets and the other customary forms of greenwashing used by big businesses. (I don’t take the dead tree WSJ anymore, so I didn’t see when/if it ran in the real paper.)

Pew is an environmental advocacy group that got a lot of coverage when their study of G-20 countries (entitled “Who's Winning the Clean Energy Race?”) came out in March. A well-orchestrated PR campaign — tied to legislative hearings in Congress — brought the issue back to the forefront last month.

The numbers in the report compiled by Bloomber New Energy Finance seem accurate. However, the conclusions seem intended to stampede US public sentiment towards greater Federal spending (or mandated ratepayer spending) to subsidize the sale of RE equipment in the US. To quote from the executive summary:
This report documents the dawning of a new worldwide industry—clean energy—which has experienced investment growth of 230 percent since 2005. Demonstrating its strength, the clean energy sector declined only 6.6 percent in 2009 despite the worst financial downturn in over half a century. In 2009, $162 billion was invested in clean energy around the world. …

Within the G-20, our research finds that domestic policy decisions impact the competitive positions of member countries. Those nations—such as China, Brazil, the United Kingdom, Germany and Spain—with strong, national policies aimed at reducing global warming pollution and incentivizing the use of renewable energy are establishing stronger competitive positions in the clean energy economy. …

There are reasons to be concerned about America’s competitive position in the clean energy marketplace.

Relative to the size of its economy, the United States’ clean energy finance and investments lag behind many of its G-20 partners. For example, in relative terms, Spain invested five times more than the United States last year, and China, Brazil and the United Kingdom invested three times more. In all, 10 G-20 members devoted a greater percentage of gross domestic product to clean energy than the United States in 2009. Finally, the Unites States is on the verge of losing its leadership position in installed renewable energy capacity, with China surging in the last several years to a virtual tie.

The U.S. policy framework for reducing global warming pollution and promoting renewable energy remains uncertain, with comprehensive legislation stalled in Congress. On the other hand, America’s entrepreneurial traditions and strengths in innovation—especially its leadership in venture capital investing—are considerable, giving it the potential to recoup leadership and market share in the future.

Policy, investment and business experts alike have noted that the clean energy economy is emerging as one of the great global economic and environmental opportunities of the 21st century. …

Nations seeking to compete effectively for clean energy jobs and manufacturing would do well to evaluate the array of policy mechanisms that can be employed to stimulate clean energy investment. This is especially true for policymakers in the United States, which is at risk of falling further behind its G-20 competitors in the coming years unless it adopts a strong national policy framework to spur more robust clean energy investment.
In other words, the Pew argument is that there is a “race” and the US is losing. This is a proven rhetorical device: The “missile gap” was used during the Eisenhower administration and the Space Race during four administrations to build support for massive Federal spending on aerospace technology.

But perhaps the argument is less effective today. Some of a libertarian bent would argue against Pew by saying (roughly) “if other countries want to waste their money renewable energy, let ’em.” This is probably preaching to the choir — those who buy this argument weren’t going to listen to Pew and vice versa.

My own concern is: is it reasonable to believe that US mandates for RE will create jobs and a self-sustaining US industry? The success of Vesta and other Danish wind turbine companies is the best case. The NYT reported Wednesday about similar hopes by Silicon Valley companies using advanced technology to efforts to keep up with Chinese manufacturing costs.

Worst case is the ongoing collapse of the German solar industry (after years of the world’s best solar incentives). Another is the one-way shift of solar jobs by US designers to Chinese factories — in parallel to most other medium-technology manufacturing moving to China or other offshore locations.

But suppose we can win the race: Should we? The leading academic journal on innovation policy, Research Policy, ran a series of four articles this month on how innovation policy should respond to the global warming threat. The lead article by three of the world’s leading innovation economists emphasized the broad dissemination of clean energy technology to reduce global carbon emissions rather than hoarding to help domestic energy producers:
In recent years, the threat of global climate change has come to be seen as one of the most serious confronting humanity. To meet this challenge will require the development of new technologies and the substantial improvement of existing ones, as well as ensuring their prompt and widespread deployment.

Combating global warming, as we noted earlier, requires that technological solutions be deployed on a global scale as soon as possible. … Much more than “technology transfer” will be required, although support for the global dissemination of information and, potentially, subsidies for other nations to stimulate the adoption of technological solutions may be important parts of the international scope of such a program.
To put it in plain English: technological solutions to climate change must be shared and perhaps even subsidized for the rest of the world.

So for any US policy, I see at least a four-way tug-of-war of competing goals: helping the business growth and profits of US companies, providing US jobs, spending government (or ratepayer) money most efficiently, and saving the planet. When the US DoD invented the Internet we could have all four, but that outcome seems unlikely for today’s challenges due to both the capital investment and large number of foreign competitors and countries chasing these same clean energy jobs.

I don’t know which goal (or goals) will win out, and without knowing the specifics I can’t personally say which one should win out.


David C. Mowery, Richard R. Nelson, Ben R. Martin, “Technology policy and global warming: Why new policy models are needed (or why putting new wine in old bottles won’t work),” Research Policy, Volume 39, Issue 8, (October 2010), Pages 1011-1023. doi: 10.1016/j.respol.2010.05.008

Pew Charitable Trusts, “Who's Winning the Clean Energy Race? Growth, Competition and Opportunity in the World’s Largest Economies,” Pew Charitable Trusts, March 2010