Green Tech Doesn't Need Taxpayer 'Investment'

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Google logoPresident Obama said in his State of the Union speech last month that he would not “walk away from the promise of clean energy,” and according to a Politico report, he “doubled-down” on the promise by highlighting (more) commitments to federal grants and incentives for wind energy, solar power and natural gas vehicles in quasi-campaign speeches out West.

“We’re not going to cede the wind industry or the solar industry or the battery industry to China or Germany because we’re too timid to make that same commitment here in the United States,” the president said at another appearance at Buckley Air Force Base in Colorado. “We’ve got to double down on a clean-energy industry that’s never been more promising.”

The president speaks as if these energy technologies would wither without government support. But last year USA Today reported that big companies were “aggressively” jumping into clean technology, with one venture capitalist boldly proclaiming, “It’s not alternative: We think of it as mainstream.” So NLPC’s response was, “Why does it need taxpayer subsidies, then?”

We are a month into a new year, and reports continue to confirm that there is plenty of investment in alternative energy. According to a release last week by Ernst & Young, “cleantech” venture funding in the U.S. reached $4.9 billion in 2011. The amount was down slightly from 2010, but saw a 29 percent increase from the amount raised in 2009.

“Cleantech is still in the early stages of a long-term journey,” said Jay Spencer, E&Y’s Americas Cleantech Director. “We’ve reached a point where new products and services are ready to be launched, and as these products come to market, we’re seeing renewed interest, innovation and opportunity in cleantech.”

E&Y reported that 30 percent of the investment, or $1.5 billion, came from the energy/electricity generation sector, which includes wind and solar. Energy storage companies, which include manufacturers of batteries for electric vehicles and utilities, accounted for $932.6 million in “green” technology investment – a 253 percent increase in dollars over the year 2010.

Besides those eye-popping private investment numbers, alternative energy is being adopted by major corporations on a large scale, as has been documented regularly by NLPC. First Solar expanded greatly thanks to an infusion of $150 million in the late 1990s by the late John Walton, one of the Walmart heirs. Duke Energy leads a parade of power companies in buying up wind and solar projects, and also the electricity that other providers generate. And despite realizing the folly of its “Renewable Energy Cheaper Than Coal” project, Google and an investment partner poured $189 million into four California solar plants. 

Many large companies are also expanding their use of renewable-generated power. Over a period of three months late last year, Walmart rose from 15th to 3rd on EPA’s list of the top green power purchasers, buying up 872 million kilowatt-hours. Computer chip manufacturer Intel ranked first, using 2.5 billion kWh. Other top Fortune 500 companies embracing “cleantech” on a large scale include Kohl’s Department Stores, Whole Foods Markets, Johnson & Johnson, Starbucks, Staples, and Lockheed-Martin.

Despite the billions of private, non-coerced dollars flowing to technologies such as wind and solar, advocates for those industries and the politicians who pander to them are upset that government grants, loan guarantees, and tax breaks have, or will, disappear. The Treasury Department’s cash grant program, which gave developers 30 percent of costs in lieu of a tax credit, expired December 31. Also, a 2.2 cent-per-kWh production tax credit for wind is due to expire at the end of 2012.

“Wind energy is one of the few sources of agreement in a divided Washington,” said Denise Bode, CEO of the American Wind Energy Association. “But with an expiration of wind’s key federal incentive, the Production Tax Credit, looming at the end of the year, these good manufacturing jobs are in peril.” 

“The wind power movement is providing us with a unique opportunity to advance energy as industry,” said Republican Gov. Chris Christie of New Jersey. “By doing so, we have the ability to leverage our tremendous resources with ground-breaking technologies, allowing New Jersey to increase its use of renewable energy sources while advancing an industry that will lead to long term job creation.”

Despite the huge amounts of private investment, and the same from public subsidies, renewable energy is failing. Solyndra, Beacon Power and Ener1 went bankrupt. First Solar and A123 Systems have laid off employees. BP quit the solar business. International wind power companies Iberdrola and Vestas have threatened massive layoffs and the discontinuation of new projects if the Production Tax Credit in the U.S. is not renewed. General Electric expects a downturn in projects in the future.

“There’s going to be a lot of casualties in the wind and solar businesses, there already are in solar,” John Krenicki, who leads GE’s energy division, told Reuters in an interview last Monday.

It’s clear that the alternative energy industry – primarily wind, solar, energy storage and electric vehicles – are not about the viability of their businesses, but about grabbing as much public money while the spigot is open. John Rowe, the outgoing CEO of Midwest utility Exelon Corporation, adds a dose of reality about renewables.

“A dinosaur cannot save itself from extinction by mating with a rodent,” he told the Chicago News Cooperative, explaining why Exelon has not invested more aggressively in new-energy technologies like wind and solar.

Alternative energy companies have plenty of money at their disposal from private investors, and don’t need to extract more contributions from taxpayers. If they can't survive with the large infusions they already get from venture capitalists, plus sales of their own products, then they don't deserve to survive.

The truth is, most of those investors are involved in alternative energy schemes because of the public money, which is the real reason that government incentives should be ended.

Paul Chesser is an associate fellow for the National Legal and Policy Center.