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Tuesday, December 22, 2009

After Health Care, Good Luck Energy Policy

Immediately following the Copenhagen climate change summit, former governor of Alaska Sarah Palin effectively used Twitter’s 140-character limit to ridicule climate change legislation:

"Copenhgen=arrogance of man2think we can change nature's ways.MUST b good stewards of God's earth,but arrogant&naive2say man overpwers nature," said Palin to the world.

In a recent Op-ed for the Washington Post, she was more specific:

"The last thing America needs is misguided legislation that will raise taxes and cost jobs – particularly when the push for such legislation rests on agenda-driven science," Palin wrote. "Without trustworthy science and with so much at stake, Americans should be wary about what comes out of this politicized conference. The president should boycott Copenhagen."

I don’t want to enter into ideological debates in any country, with any faction, with any member, on any issue. And, I’m not an expert on current US politics and the legislative process. I care about policy--and these comments by Palin illustrate to me why any meaningful and effective energy policy in the US for the foreseeable future will be impossible.

This isn’t good news for SEMI PV Group members serving the solar industry. It isn’t good news for high-technology companies in Silicon Valley and other areas looking to transition from semiconductors, biotechnology, materials sciences, IT, and a host of other segments into Clean Tech. In my opinion, it isn’t good news for higher education, for job creation, US growth stocks, and US innovation.

I presume that energy policy will follow much of the same course as the recent health care legislation. Republicans will fight any comprehensive bill attempting significant change in fossil fuel demand or government spending on renewable energy. They will do so whether or not they agree that reducing reliance on foreign oil is a good thing, whether they believe climate change is a reality, and whether the possibility that US technology companies can lead the world in emerging Clean Tech markets.

Republicans will fight major energy legislation primarily because the dysfunctional political environment forces them too. Because leaders like Sarah Palin make it impossible for them to support solar power and renewable energy (except biofuels, of course). Tragically, good policy is always the first victim of bad politics.

The fact is there is a global renewable energy industry rapidly developing. Leaders in this industry will invariably come from countries that have developed an aggressive public-private partnership supported by appropriate renewables demand incentives in the local market. It’s no surprise that leaders in wind energy come from Denmark, and leaders in solar power and PV equipment often come from Germany. One can argue from a philosophical perspective on the value of free-markets and limited government, but the reality is that companies from Europe and Asia are getting a head start on an industry that likely will be among the fastest growing, lucrative industries of the next generation. While the rest of world is thoughtfully investing in the future, the US is pouring trillion of dollars into classic 19th century industries like banking, agriculture and war.

For those US companies fortunate enough to have reached scale in the past two years (many taking advantage of European subsidies), congratulations, you probably have a great future ahead of you. For those emerging, transitioning and other US companies who will need to leverage a local market and competitive developmental infrastructure to survive on the global stage, best of luck. Maybe policies in states like California can help close the gap.

Health care reform took nearly 50 years to accomplish—and there were easy benchmarks to follow in every developed country in the world. There are also good benchmarks to follow in renewable energy (see the PV Group position paper on solar power). But effective renewable energy policy--with its guaranteed costs, uncertain outcomes and long-term justifications—seem unlikely to emerge from Congress in the next year.

And by then, well, we’ll see…