Date: 02-Feb-10
Country: US
Author: Poornima Gupta and Laura Isensee
 

LOS ANGELES - Clean technology companies welcomed hundreds of millions of dollars for the sector in the Obama administration's proposed budget released on Monday, but called for more long-term support from the U.S. government for the emerging industry.

U.S. President Barack Obama's new budget includes nearly $2.4 billion for energy efficiency and renewable energy programs, an increase from $113 million in the previous budget.

The renewable energy sector, which includes solar players such as Suntech Power Holdings Co Ltd and SunPower Corp and wind turbine makers Vestas Wind Systems and Suzlon, struggled in 2009 amid the credit crisis and a dearth of available financing for new projects.

The emerging industry still leans heavily on government incentives. A bill to tackle climate change is stalled in the Senate amid opposition from lawmakers from coal-and oil-producing states, and many companies hope the United States will adopt a renewable electricity standard requiring more power from resources like wind and solar.

J.P. Morgan analyst Christopher Blansett said that measures in the budget such as $500 million in credit subsidies for energy efficiency and renewable energy projects do not account for much in the "big picture perspective."

"I don't think people realize the scope of how much money really needs to be spent to make big structural changes in either our energy consumption, use or production," J.P. Morgan analyst Christopher Blansett said.

Blansett estimated that it will cost between $158 billion to $445 billion if the United States adopts a national electricity standard requiring 15 percent of all electricity in the country to come from renewable resources by 2020.

The range of needed investment would depend on the mix of renewable resources, he added.

CAP-AND-TRADE

In the budget, the White House called for a "market-based" policy to fight climate change, but dropped prospects for revenue from a climate cap-and-trade system opposed by many lawmakers.

An absence of cap-and-trade legislation would force renewable energy companies to be more creative in working with local governments, said Chief Executive Amit Chatterjee of Hara, which provides online software to help companies reduce their carbon footprint and is backed by Silicon Valley venture capital firm Kleiner Perkins.

"That means states and municipalities will have to step forward and really provide some of the backstop that I think they were hoping will happen in the cap-and-trade," Chatterjee said.

In Webcast remarks, Obama defended his support for the nuclear industry, which is slated to receive an additional $36 billion in loan guarantees for a total of $54 billion, and said there was a need for clean coal technology.

"Unfortunately no matter how fast we ramp up those energy sources we're still going to have enormous energy needs that will be unmet by alternative energy," he said.

POSITIVE STEPS

Still, renewable energy trade groups, chief executives at clean tech companies and environmental groups welcomed some of the measures proposed by the White House.

The budget "conveys the administration's commitment to the continued growth of the solar industry," said Rhone Resch, president and chief executive of the Solar Energy Industries Association, an industry group whose members include both U.S. and foreign solar power companies.

Resch noted in a statement that the budget includes $302.4 million -- a 22 percent increase -- in funding for solar power programs.

The American Wind Energy Association echoed positive reaction, citing that the budget reflected a commitment to the wind industry, but called for the U.S. Congress to pass a renewable electricity standard with strong near-term targets.

(Reporting by Laura Isensee in Los Angeles and Poornima Gupta in San Francisco; additional reporting by Steve Holland in Washington)