Why We Have Failed Again

For all the talk about a new "Clean Energy Economy," federal action on the issue has been downright pitiful this year. It's easy to simply blame Congress, but it's more complex than that. The renewable energy and environmental community need to share some of the blame as well.

Let's set the stage, shall we?

Renewables are still the fastest growing form of energy globally. But the United States – the large, powerful nation that it is – has slipped behind in the increasingly-heated competition to build this new industry. In the last few years, the renewables industry has done a great job navigating the scattered, stop-and-start nature of the U.S. market. But the lack of consistent federal support has finally caught up.

For example, China is now the world's fastest growing wind market. Chinese producers are starting to give American companies like GE some serious competition. Competition is a wonderful thing. But when a long-time technology leader like GE starts feeling the pressure from companies that have grown practically overnight, you pay attention.

China is a big country, of course. So its sheer size gives it an advantage.

Then you look at Italy, a country three fourths the size of California. Italy installed more solar PV last year than both California and the U.S. as a whole. This year will be the same.

And don't forget about cloudy Germany, a country that will install around 6.5 GW of solar PV in 2010. The U.S. will install around 800 MW. God bless the Germans. Even though solar is probably not a great investment for the country given its resources, the leaders crafted a national strategy, acted upon it and helped create a solid foundation for the global solar industry. If it weren't for the German push, the solar market wouldn't be where it is today.

Now over to the U.S. where leaders still haven't been able to pass a national target for renewable heat and electricity or even extend the production tax credit and Treasury grant program to give investors some clarity. Wind installations are down to 2007 levels, new small hydro development is extremely slow, geothermal developers are worried about not qualifying for tax credits, and solar, while definitely moving at a steady clip, doesn't compare with the massive amount of capacity smaller countries are putting online.

Analysts have been calling America a "sleeper" market for years. Well guess what: It hasn't yet begun to wake up.

To be fair, the drag in the market has also been caused by factors like lower demand for energy and falling natural gas prices. Policy is only one piece of a larger picture. But when a strong national signal to the market is there, the other pieces tend to fall into place.

2010 was supposed to be a defining year for renewables. An international climate change conference. A supportive president. A coal mine explosion and a massive oil spill. Instead, the industry ends the year with more uncertainty. Why? The irony may be that those factors contributed to the inertia and partisanship in Washington.

For far too long, environmental advocates and renewable energy interest groups pushed for a comprehensive climate bill. It was clear this spring that Congress wasn't going to act. But rather than focus on smaller things that could have an immediate impact – principally an extension of the Treasury Grant Program or the production tax credit – they kept focused on the politically-volatile carbon cap and trade during an election year.

President Obama, who was trying to score some political points after the Gulf oil spill and show his support for "green jobs," announced a few large loan guarantees to some sexy solar companies. However, he was completely silent about the things that would benefit the entire industry: Again, long-term tax credits or a renewable energy target.

Everyone – Congress, the President and the advocacy community – failed to recognize the politically expedient steps that needed to be taken. Instead of creating certainty for developers and investors, all we got in 2010 were some great photo-ops and a lot of partisan bickering. Once again we've proven that all the talk about a clean energy economy has been just that: Talk.

We still have many more months before the year comes to a close. But with the mid-term elections coming up, getting something passed looks less likely by the day. Let's hope that Congress pulls it together and has the sense to give the industry some clarity for 2011.

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Scott's Contracting
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http://www.stlouisrenewableenergy.blogspot.com
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scotty@stlouisrenewableenergy.com