We’ve seen this movie before: The federal government spends billions of dollars promoting renewable energy and green technologies and then a few years later lets the programs dwindle and die as political priorities and markets shift.
Now it’s Groundhog Day again.
A report released Wednesday by a trio of think thanks – the Breakthrough Institute, Brookings Institution and the World Resources Institute – finds that federal support for green tech will plunge from a high of $44.3 billion in 2009 to $11 billion in 2014 with the expiration of key subsidies designed to speed the deployment of wind farms, solar power plants, electric cars and other green technologies.
“In the absence of significant and timely energy policy reform, the recent boom in U.S. clean tech sectors could falter,” wrote the authors in “Beyond Boom and Bust,” which analyzed 92 federal green tech policies and programs. “Several sectors are likely to experience more bankruptcies, consolidations, and market contraction ahead.”
The upside, according to the report, is the opportunity to reform the entire way the federal government promotes clean energy to make such support and the technologies it underwrites more sustainable.
A big problem: Nearly 70% of federal green tech programs and expenditures are temporary, which by their very nature results in boom and bust cycles as investors rush to tap stimulus funds and tax incentives and then move to the sidelines when those programs expire.
A crucial production tax credit for the wind industry, for instance, has expired three times since it was enacted in 1992 and has been extended seven times, often at the 11th hour. It’s set to sun set again at the end of 2012 and some analysts predict wind energy installations in the U.S. will plunge from 8-10.5 megawatts in 2012 to 1.5-2 megawatts in 2013, resulting in job losses across the industry.
“The vast majority of U.S. clean tech policy support has always been erratic and temporary by nature, with sunset dates or volumetric limits built into the programs from the beginning,” the report’s authors write.
Compounding the dilemma, they say, is an emphasis on getting wind farms, solar power plants and other renewable energy facilities online rather than focusing on promoting innovative technologies that can eventually meet market demand without subsides.
“Unfortunately, clean tech deployment policies today often closely resemble crop supports, offering a flat production subsidy for any clean energy produced, rather than the demanding military procurement policies that delivered steady improvements and the eventual mass-adoption of everything from radios, microchips, and jet engines, to gas turbines, lasers, and computers,” according to the authors.