It is easy to get caught up in thinking that the green craze sweeping the country is a new phenomenon, but it is important to remember it has historical roots. Over four long decades, the U.S. has made halting progress toward energy independence, a reduction of fossil fuels and a general concern for environmental issues, but that progress still faces many challenges. With the introduction of a new U.S. federal administration, the continued growth of “clean” technologies around the globe and a lagging global economy, Worldwide Capital Group feels it is prudent to reflect on the global direction of clean technology and the United States’ positioning within the world as a green power.
We can examine the jagged growth of wind power in the U.S. as a representation of U.S. clean technology policy in general. In 1986, California had installed over 1.2GW of wind power, nearly 90% of global installations at the time. By 2000, Europe had nearly 12,000MW installed vs. only 2,500 MW for the United States. Only with the re-introduction of federal legislation has the U.S. begun to re-challenge the world for top wind producer. Unfortunately, the wind production tax credits (“PTC”) have expired three times in seven years. Until large scale clean technologies can compete cost effectively with traditional energy sources, government support will be required to sustain growth. Consider the growth of solar energy during the 1970s in response to the U.S. energy crisis and support from the government, the relative lull in production during the 1980s and 1990s and the rapid growth during the late 2000s, culminating in 48.0% growth in 2007 as a result of state and federal policies and incentives. Future growth depends upon continued incentives and improved efficiencies along the supply chain until the price is competitive with traditional fossil fuels.
It is clear that assistance from the federal government is necessary to propel many green technologies in the United States. Consider that by the 1960s there was concern over pollution, perhaps most clearly highlighted by the publication of Silent Spring by Rachel Carson, the growing size of landfills and the extinction of animals. In the words of Joel Makower, environmental issues were “local, immediate, visible…and thus solvable.” From this concern came the U.S. EPA, Greenpeace and the Endangered Species Act. As the decades progressed, the environmental problems morphed as individuals and companies began to look for the sources of pollution and ways to effectively manage them. Over forty years have passed and the environment remains one of the top concerns.
That leads us to the current U.S. administration and a desire to see President Obama implement many of the green strategies he talked about on the campaign trail. It is quite common now to see regularly occurring studies stating consumers are willing to buy green products, but only if those products are as efficient as what they are replacing, require little or no extra effort on the consumers’ part to operate, and cost the same as their replacements. In a February 2009 study, more than half of consumers (54.0%) surveyed by Mintel said they would buy more green products if they weren’t so expensive. Unfortunately, many green technologies will remain more expensive than “traditional” products for years to come. Hence, the role of the government in promoting green technologies.
President Obama, commenting on the stimulus bill, stated “…it’s an investment that will double the amount of renewable energy produced over the next three years.” With over $30.0 billion earmarked for clean energy, WCG is optimistic about many potential growth sectors. Most promising in the opinion of WCG is the nearly $2.0 billion for research into batteries for electric cars, a three-year extension of the “production tax credit” for wind energy, and $6.0 billion for loans for renewable energy power generation and transmission projects.
These political developments in the United States are very positive. Unfortunately, as highlighted above, even the most well intentioned U.S. policies struggle. It is the belief of WCG that much of the growth in energy efficient systems and clean technologies will continue to happen outside of the United States. More favorable political climates, exploding populations and cultural variances all offer companies tantalizing opportunities in a wide range of global markets. Referencing Joel Makower again, our current environmental problems may best be represented as “global, largely invisible, resulting from millions of sources over a century…”, but that does not mean they are not solvable. At WCG, we believe that companies in the U.S. and abroad will continue to find innovative solutions.
