Getting Serious About Clean-Energy Stimulus
Ron Pernick
2008 was another
record year for clean energy. According to Clean Edge’s just-released
Clean Energy Trends 2009 report, the three major clean-energy
sectors — solar photovoltaics (PV), wind power, and biofuels — kept up a
blistering growth rate, increasing 53 percent from $75.8 billion in 2007 to
$115.9 billion in revenues in 2008.
This significant increase in revenue was due to continued growth in solar
PV, wind, and biofuels deployment globally. For example, solar PV expanded
from 2.8 GW installed in 2007 to 4.2 GW in 2008. Over the same time frame,
biofuels increased from 15 billion gallons to nearly 20 billion gallons,
with Brazil using more gallons of ethanol than petrol-based gasoline for the
first time. Wind power expanded from 20 GW installed in 2007 to 27 GW in
2008, with the U.S. becoming the largest generator of wind in the world
after bringing on nearly a third of last year's global total (8 GW).
We don't expect to see a repeat performance of such installation or revenue
growth in 2009. We project that clean-energy revenues will remain level or
decrease slightly, until several key factors begin to turn around. The
initial public offering (IPO) market must regain steam -- last year saw only
43 total IPOs in the U.S. that raised at least $50 million, compared with
272 a year earlier. As in most other sectors, the credit crisis needs to
ease for money to start flowing again for project deployment and new
manufacturing facilities. And stimulus-related monies and policies must
start to have a direct impact on the market.
As many businesspeople, homeowners, and others can attest: 2009 will be a
year to "get through."
The clean-energy industry has primarily been a good-news story -- what other
industry has sustained annual global growth rates exceeding 30 percent for
the past decade? But clean tech, as noted above, isn't immune to or isolated
from the forces impacting the broader economy. Yet new government spending,
regulations, and policies should help the sector weather the current
economic crisis better than most. On balance, we believe that clean energy
and energy intelligence will be seen as a means to help economies around the
world pull out of the current economic malaise, and we project that our
three tracked sectors (solar PV, wind, and biofuels) will expand to $325
billion in global revenue by 2018.
Indeed, contrary to concerns that a depressed economy would negatively
impact government investments in clean energy, many political leaders around
the world are making clean energy a central tenet of their economic recovery
efforts. A recent Deutsche Bank Group DB Advisors report entitled
Global Climate Change Regulation Policy Developments counted more than
250 climate-change-related policy developments between July 2008 and
February 2009 by governments around the globe. In that same period,
governments committed approximately $200 billion in stimulus spending for
clean- energy and climate-related activities such as green buildings, grid
improvements, renewables, and public transportation, according to the
report.
So where do we go from here? What will it take to keep clean energy on its
growth track?
The U.S. stimulus package, named the American Recovery and Reinvestment Act
of 2009, is a good place to start. It includes more than $70 billion in
direct spending and tax credits for clean-energy and transportation
programs, including $11 billion towards “smart grid;” $4.5 billion to make
federal buildings more energy efficient; $2 billion in grants for advanced
batteries for electric vehicles; $8.4 billion for mass transit; and $20
billion in tax incentives and credits for renewable energy, plug-in hybrids,
and energy efficiency.
To back up these investments, a number of recently passed U.S. policies are
poised to support the growth of clean-energy sectors in the U.S. These
include an 8-year extension for the investment tax credit (ITC) for solar; a
3-year extension for the production tax credit for wind; new rules that
allow utilities, for the first time, to participate in ITCs; and a new
provision that allows renewable energy developers to receive up to a 30
percent government grant instead of a tax credit. The U.S. is poised for
additional supports, including the likely passage of a national renewable
portfolio standard and the potential for a cap-and-trade system for
greenhouse gasses.
Another promising development: clean-energy prices are starting to come
down. In the past year, we've seen PV module prices drop by more than 15
percent for some manufacturers' offerings -- and we could see prices drop
another 20-30 percent this year. Just this month, thin- film leader First
Solar announced that its production costs had dropped below the $1 per watt
barrier. And wind power, in many instances, is now the lowest priced and
most easily deployed low- carbon energy source available. Indeed, the
long-held promise of clean energy being price-competitive with conventional
offerings is no longer a pie-in-the-sky dream, but an awakening reality.
"We know that the country that harnesses the power of clean, renewable
energy will lead the 21st century," exclaimed President Barack Obama in his
address to Congress in February. And he isn't alone in this sentiment. Heads
of state, regional government leaders, financial titans, and corporate
leaders all increasingly view clean energy and clean tech as our best hope
for economic recovery.
In a mythical sense, out of the burning ashes of our crumbling post-
industrial economy is emerging a new phoenix. Times of unprecedented chaos
and crisis (which we are undoubtedly in) call for serious, purposeful
response, vision, and action. While it won't be easy, we believe that
cities, nations, businesses, investors, and individuals will rise to the
challenge of forging a new clean-energy economy.
-------
Ron Pernick is co-founder and managing director of clean-tech research and
publishing firm Clean Edge, Inc. and co-author of the highly acclaimed
business book The Clean Tech Revolution (Collins Business). He is also
Sustainability Fellow at Portland State University's School of Business
where teaches a course on clean-tech innovation and entrepreneurship. Clean
Edge’s annual Clean Energy Trends 2009 report is available for free download
at www.cleanedge.com.
© Clean Edge, Inc. To subscribe or visit go to:
http://www.cleanedge.com
|