Give me the green light
Businesses respond to signals, not speeches. High unemployment tells companies to hold off on production, and low interest rates tell companies to borrow, but State of the Union addresses don't have the power to tell companies to do anything.
So when the president says he's committed to green energy, that's fine. But the U.S. isn't giving alternative energy companies the green light. We're giving off something more like a ruddish-yellow light, as if to say: Go ahead if you'd like, but proceed at your own caution.
Ask Eric Spiegel, CEO of Siemens USA, who told me his company is held back by the United States' reluctance to pass a carbon tax or make permanent the solar tax credit. "If you don't do anything on carbon and you don't have renewable energy standards or investment tax credit, every utility company would go out tomorrow and build coal," he said.
Ask J. Bryan Ashley, chief marketing officer at Suniva, a celebrated solar cell manufacturer out of Georgia, who told me his company exports 80 percent of its products partly because there's so little demand for solar at home. "More people would manufacture [solar products] here if demand was here," Ashley told me. "We need a renewable energy standard to create a market in the United States. If demand is overseas, then I'll move factories to other parts of the world. That's just good business."
The White House doesn't want to oversee a mass exodus of alternative energy companies to China. That's why it put $151 million in experimental clean energy grants in 2009. That's why Obama announces the "Better Buildings Initiative" Thursday to get commercial buildings to retrofit themselves with government money.
This is a step. But what a small step. Total R&D spending in green energy is miles behind biosciences and IT, which together make up two-thirds of total research spending in the U.S. Private-sector investment in energy research amounted to barely half what Merck or Microsoft put to R&D in 2009, economist Michael Mandel said. If you're betting on the future of America's innovation engine, what reason is there to put your chips on green?
One answer is that if the federal government fails to give clean tech companies the green light, world events might force our hand.
In the recession and the recovery, the price of oil plummeted, and wind-power installations fell 72 percent between 2009 and 2010 in some states. But in the global resurgence, it's beginning to look like 2007 again. The price of a barrel of oil cracked $100 this week. Speculation and organic demand from Asia and Latin America could drive up the price even further. One way or another, alternative energies will replace the dirty and unstable supply of fossil fuels. We can either get serious about sending the right green energy signals or accept that the United States won't lead this particular revolution and focus our attention on other industries.
Derek Thompson is an associate editor at the Atlantic, where he writes about economics, business and technology.
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