This link has been bookmarked by 8 people . It was first bookmarked on 27 Jun 2009, by Todd Suomela.
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04 Oct 09Josh Calder
[pcif] "any effort to engineer change on such a grand scale will be an unprecedented feat of business and government, and the spotty results of earlier attempts might give pause were they better known."
energy solar wind venturecapital US greentech climatechange policy environment
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01 Oct 09
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30 Jul 09
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14 Jul 09
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07 Jul 09
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30 Jun 09
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29 Jun 09M S
It feels like 1977 all over again: economy in the doldrums, crisis in the Middle East, and a charismatic new Democrat in the White House preaching the gospel of clean energy. Can Obama succeed where Carter did not? Yes—but only if we’ve learned the lessons of three decades of failure.
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27 Jun 09
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Exhilaration over clean energy has so thoroughly swept Silicon Valley that it has transformed the local culture. Conspicuous consumption has given way to conspicuous conservation. The favored status symbol is no longer the giant yacht or the sprawling mansion but the home designed to be so ruthlessly energy-efficient that it generates its own power and produces a surplus that can be selflessly fed back into the grid. One top venture capitalist who showed me his Portola Valley home had embarked on such a project and then, after choosing the reclaimed stone and composting toilets, had succumbed completely to environmentalist fervor and kept right on going, contracting with a local nursery to grow the flora necessary for a “native play meadow” and bringing in a team of wildlife biologists, equipped with motion-sensitive night-vision cameras, to lure back to their natural habitat the elusive riverine tortoise and dusky-footed wood rat that once roamed the property. A documentary film is in the works.
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The nut of the problem traces all the way back to Jimmy Carter’s choice of tax credits as the vehicle for subsidizing renewable energy. Direct grants would have been simpler. But Congress had recently changed the federal-budget process to keep closer track of how much money was being spent. It suddenly became easier to spend indirectly, by manipulating the tax code. Although no one realized it at the time, Carter’s decision to use tax credits lit the very long fuse on a bomb that detonated last fall and nearly took down the entire renewable-energy industry in America.
The trouble with tax credits is that in order to make use of them, you must owe taxes, and most start-ups struggling toward profitability do not. So while a company looking to build a wind or solar facility would qualify for valuable benefits, it had no means of realizing this “tax equity.” The work-around was to partner with someone who did, someone large enough to finance a $500 million facility and profitable enough to incur a large tax bill. Having witnessed two decades of busts and bankruptcies, traditional U.S. banks wanted no part of this. European banks, going by their more positive experience, were comfortable funding large renewable projects, but didn’t qualify for U.S. tax credits. The perversity of the government’s incentives demanded a big balance sheet, huge profits, and an indifference to risk.
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American capitalism—even when it’s working—is not without its limitations, one being that promising ideas rarely get funding if their commercial potential lies beyond venture capitalists’ 10-year investment horizon. The Energy Department research budget has never recovered from Reagan’s cuts. And the private industry that would seem to have the most at stake in finding and controlling clean-energy advances—electric utilities—has never seriously pursued them, since a century of government policy has made the hard path so easy. People in cleantech circles often point out that the electric utilities spend a smaller portion of revenue on research and development than pet-food companies do. Here, too, the stimulus fills a gap. For years, Silicon Valley dreamed that government would cultivate nascent but potentially transformative energy ideas by creating an equivalent of the Pentagon’s famous Defense Advanced Research Projects Agency ( DARPA ), which pioneered such things as the Internet and GPS. With an eye toward similar breakthroughs, the stimulus allots $400 million to the Department of Energy for just such an agency.
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