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What is it?
“A category of alternative technologies in energy, water and transportation that delivers environmentally friendly products at lower costs than do current offerings,” says the Institutional Investor.”
A way to use energy, water, raw materials more efficiently and productively; create less waste or toxicity; deliver equal or superior performance; improve customer profitability through cost reduction and/or increased revenues,” says another investor guide.
And yet, while it sounds perhaps too good to be true, Clean Tech is perhaps the only zeitgeist that will lead renewable energy from being a tax-credit-supported-fringe-supplier of energy to a valuable contributor to the solution of our nation’s problems. That is, if it does not become a kind of financial markets South Seas Bubble leaving disillusion in its wake.
One important premise of Clean Tech is that there can be breakthrough technologies that reduce alternative energy source costs to the level of what Tom Friedman has called the “Chinese price”: the level at which the Chinese will accept a renewable energy technology as an alternative to carbon-polluting coal as a power source. The second important premise is that this can be done without stirring up even worse, unintended, environmental damage. A third important premise is that, just as Silicon Valley was able to financially drive ultimately whole new companies that have changed communications and information processing, so too can it work its mojo on clean energy. A fourth implicit premise is that it is possible for venture capital to be “disruptive” in a field where the most embarrassingly disruptive breakthrough project finance ever promulgated was “merchant plants” supported by long term contracts. A fifth implicit premise of Clean Tech is that it goes hand-in-hand with Green House Gas regulation schemes. As The Economist recently put it: “Cleaner energy means new technologies and new money to be made. Business people concerned to position themselves well for a new carbon constrained future. . . need to invest in technologies.”
For reasons we generally don’t acknowledge, the U.S. needs these Clean Tech premises to be right. Government does not have much staying power, and has demonstrated itself to have limited wisdom in carrying out the fundamental kind of effort we are talking about. If you have been around Washington long enough you will remember that Richard Nixon appointed Donald Rumsfeld the head of the ongoing War on Poverty he inherited from LBJ; George Bush appointed him to lead the War on Terror which festered under Bill Clinton. Democracies have a hard time pulling together “Wars” under “Czars.” All the more so demonstrably, policies in energy/environment, where different regions and different industries and companies have conflicting interests. It takes financial breakthroughs to make lasting change.
But to praise the importance of Clean Tech is to highlight also two possible flaws in pinning national hopes on the relentless pursuit of the super-multiple Clean Tech breakthrough company. Such a company has to butt heads, not in the marketplace of ideas but of commerce, with established technologies and businesses and ways of doing things. Energy has never experienced (even at least temporarily) the freeing up of markets that telecom and IT did. Energy is also, for the most part, given to incremental improvements that have to be bought into by larger players to achieve commercial success. Energy regulation is among the most fragmented of forces and seldom long maintains breakthrough ideas, cf., RIP deregulation. So in betting on Clean Tech, the U.S. may be pinning its faith to a chimera, unless it becomes a driver of larger established players.
And, in betting on GHG regulation as a driver for renewables, we overlook the fact that carbon emission regulation is not another name for Resource Performance Standard “RECs.” There are more effective clean technologies to reduce carbon - notably energy efficiency; to avoid carbon emissions - notably nuclear power; to contain carbon emissions - notably agricultural emissions control; or, if nothing else, to present the possibility that if enough R&D money is spent, emissions from fossil fuels can be controlled - notably coal to liquids.
But if we do not make a significant Clean Tech renewable energy best, our system of regulation and modest incentives cannot long justify still non-competitive (though geopolitically necessary) Clean Tech renewables energy initiatives. Unless the time horizon for renewables extends long enough to reach the breakthroughs that may be possible, the U.S. is headed for a relapse or a disillusioned abandonment (accompanied by a minor dot.com blow-up as well).
Development of energy as part of the Clean Tech sector also can prove to be a locomotive pulling along innovation in non-energy areas where progress has been impeded by the institutional attitudes of traditional players. In the sluggish water and wastewater treatment industry example.) Clean Tech offers prospects in two very different types of markets: in developed countries, on-site water/environmental treatment and energy solutions may be packaged and financed together; in emerging country markets, more receptive to the need for Clean Tech innovation to solve problems, deployment of packaged water purification/energy solutions on a distributed basis are beginning to gain traction. In both markets, desalination undertaking may be a beneficiary of linkage with energy development.
In order to avert disillusioned abandonment of Clean Tech the U.S. must get serious about support for “Clean Tech” – It must define it not through green-tinted granny glasses but in terms of targeted achievement levels of innovation for which there is sustainable public support. It must avoid tying support for Clean Tech to carbon reduction without corresponding clean energy production – lest we simply grant green indulgences by pumping carbon into the ground or in other energy non-beneficial ways. We must not assume all Clean Tech technical solutions are created equal in terms of their ability to vault into the marketplace – that their ability to survive the commercialization “valley of death” is the sole criteria by which they should be fostered by the American energy marketplace. We need a “Clean Tech War,” but it must be a strategic campaign and not a self-deluding public relations campaign, which diverts capital investments and principally contributes to sentimental expressions of a romantic return to nature to deal with the all too real challenges facing the United States.
What a work of wonder it can be if Clean Tech is channeled into a solution rather than a slogan.
