Thursday, November 8, 2012

How Governments can Show Support for Cleantech

Many want to see more government investment in clean technology. There are a lot of things governments can do to help advance cleantech. They can provide tax credits, craft policy mandates, impose standards, develop regulations and pass legislation. On the macroeconomic level, governments can also play an important role supporting education, developing markets and encouraging demand.

Cleantech subsidies were provided by the American Recovery and Reinvestment Act of 2009 (ARRA). The U.S. Production Tax Credit (PTC) provides a 2.2-cent per kilowatt-hour benefit for the first ten years of a renewable energy facility’s operation. It was born in 1992 and is set to expire at the end of 2012. The PTC for incremental hydro, wave, tidal, geothermal, MSW, and bioenergy was extended until the end of 2013.

American Wind Energy Association (AWEA) CEO Denise Bode cited a study suggesting Congressional inaction on the PTC “will kill 37,000 American jobs, shutter plants and cancel billions of dollars in private investment.” The same study suggested extending the wind PTC could allow the industry to grow to 100,000 jobs in just four years.

Governments should also be passing aggressive policy mandates, standards, codes regulatin and legislation. Passing laws like the renewable portfolio standards in the U.S. that mandate a certain percentage of power from renewable sources by certain dates.

In the case of coal or other fossil fuels efforts should be made to wind them down gradually so as not to shock the economy too suddenly. Gradually mandated changes could require power plants to meet certain efficiency or emissions standards by certain dates. Governments can directly contribute to the cost parity in cleantech by slowly eliminating subsidies to the fossil fuel industry.

In addition to subsidies, governments can also play a vital role by focusing on activities that help to create large and sustained markets for clean technology products and services.

Growing demand for cleantech is best achieved by governments that set standards and improve codes and other regulations. They can also help build the talent pool. One of the most important things they can do is stabilize the economy and cultivate political stability. Governments can also invest in infrastructure projects and build showcase projects to put cleantech on display.

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