Beyond Boom and Bust: Clean Tech And Subsidy Independence

Editor’s Note: EarthTechling is proud to repost this article courtesy of Breakthrough Institute. Author credit goes to Alex Trembath and Jesse Jenkins.

Despite robust growth and recent improvements in price and performance, a boom in US clean energy technology (“clean tech”) sectors could now falter as federal clean energy spending declines sharply, according to a new report just published by some of the country’s top energy analysts.

To both sustain clean energy growth and put the United States’ clean tech sectors on an accelerated path to subsidy independence and global competitiveness, analysts at the Breakthrough Institute, Brookings Institution, and World Resources Institute counsel a thorough revamping of American clean energy policies to prioritize innovation and cost declines.

The rewards for smart policy reform now are enormous: with global energy markets hungry for clean, affordable energy technologies and clean tech markets continuing to mature and improve, this is exactly the time for America to secure its leadership in clean tech.

Clean energy sectors have surged in recent years, driven by both private sector innovation and entrepreneurship and a historic expansion of federal support for clean tech sectors. Renewable electricity production has expanded; prices have fallen for wind, solar, advanced batteries, and other clean tech products; and construction has begun on the first US nuclear reactors in decades. Clean tech firms were among the few to add jobs during the depths of the great recession, with employment in the sector expanding 12 percent from 2007 to 2010.

Yet clean tech owes much of this growth to historic federal policy support, which the new report estimates will total $150 billion from 2009 to 2014 – a three-fold expansion from cumulative 2002-2008 totals.

Now, much of that support is set to decline, as stimulus funds dry up and a number of tax credits and other programs reach their sunset dates or volumetric limits. Without Congressional action, federal clean tech support is slated to plunge 75 percent from 2009 to 2014, the report estimates.

America is now at a key inflection point, with federal clean tech funding this year set to decline 50 percent from 2011 levels.

image via Breakthrough Institute

Clean tech segments examined in the report include renewable power, nuclear, carbon capture, energy efficiency, high-speed rail, smart-grid, biofuels, electric and plug-in vehicles, and advanced batteries. While the specific impacts of declining federal support on these clean tech segments differently, several sectors are likely to experience new headwinds.

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