Some quote-worthy testimony passed through the U.S. Senate Energy and Natural Resources Committee earlier this week, and I wanted to share it here.
My Intelligent Utility Daily column appearing May 25 (http://bit.ly/KLsPqD ), “Bill Gates, clean energy investment and the role of government,” discusses Gates' investment in Liquid Metal Battery Corp., which was announced today, as well as his involvement in an independent and informal group, the American Energy Innovation Council (AEIC). The AEIC, which has seven members, came together, according to the Senate committee testimony of another member, Norman Augustine, “because of our common concern over what we consider to be America's insufficient response to one of the greater challenges facing our nation today; namely, the provision of energy.”
In my opinion, all members of the AEIC – Norman Augustine, retired chairman and CEO of Lockheed Martin Corp., Ursula Burns, chairman and CEO of Xerox; John Doer, partner at Kleiner Perkins Caufield & Byers; Bill Gates, chairman and former CEO of Microsoft; Charles Holliday, chairman of the Bank of America and former chairman and CEO of DuPont; Jeff Immelt, chairman and CEO of GE; and Tim Soslo, chairman and CEO of Cummins, Inc. -- deserve a round of applause for the work they have done on two separate reports.
The first report highlighted the need for a more vigorous public commitment to energy technology development. The second, discussed before the Senate committee this past Tuesday, addressed the limited but important role the federal government will need to play in catalyzing American ingenuity as it seeks to meet the energy demands of the future.
In my Intelligent Utility Daily column, I excerpted comments from Augustine's written testimony. But there were two others who testified before the Senate committee that day, as well, and their comments were also share-worthy.
Here are excerpts from their written testimony.
Ethan Zindler, head of policy analysis for Bloomberg New Energy Finance, wrote:
“...Inevitably, all of this raises the question of whether the capital markets are today providing sufficient financing to address the valley of death conundrums. I would argue that they do not, and a closer examination of the investment trends reveals why.
“The vast majority of new capital entering the clean energy sector in any given year is actually directed toward well established, low-risk technologies. Just $5.1bn of the $263bn invested in 2011 came in the form of venture capital in support of new companies with the newest technologies.”
Jessie Jenkins, director of energy and climate policy for Breakthrough Institute, took Zindler's call to arms even further:
“...The role of government policy has been crucial to recent advanced energy industry growth and progress,” he wrote. “Advanced energy technology segments, from renewable and nuclear power plants to alternative transportation technologies and fuels, receive a variety of federal incentives, including direct grants, tax credits, financing guarantees, and other subsidy programs. Similarly, nearly all clean energy research and development benefits from some form of federal support.”
He went on to discuss public policy support and subsidies as follows:
“Despite recent cost declines, nearly all advanced energy sectors currently rely on public policy support and subsidy to gain an expanding foothold in well-established energy markets. That support is now poised to decline precipitously, presenting new challenges and raising the possibility of market turmoil ahead for several U.S. clean energy markets ... Absent Congressional action, total federal clean tech expenditures will be cut nearly in half from 2011 to 2012 and will fall to just one-quarter of 2009 levels by 2014.
“In the absence of legislative action to extend or replace current subsidies, America's system of policy support for nascent advanced energy sectors will have been largely dismantled by the end of 2014, a casualty of the scheduled expiration of 70 percent of all federal clean tech policies.
“Furthermore, many of the remaining programs will end shortly after 2014 ... The only other ongoing programs left after 2014 include the nation's underfunded energy R&D programs and a handful of tax credits and grant programs for energy efficiency and conservation.”
Jenkins describes the current policy uncertainty as having “a chilling effect on private sector investment in advanced energy sectors.” He continued: “After setting a record in 2011, global clean tech investment plunged in the first quarter of 2012, diving to the lowest levels since the depths of the global recession in 2009.”
And he cautions: “With virtually all advanced energy segments dependent in one way or another on policy support, how this emerging industry will weather this policy collapse remains to be seen.”
However, with policy collapse comes opportunity, according to Jenkins.
“The time has come then to craft a new energy policy framework specifically designed to accelerate technology improvements and cost reductions in advanced energy sectors, ensure scarce public resources are used wisely to drive technologies towards subsidy independence as soon as possible, and continue the growth and maturation of America's advanced energy industries.
“With the U.S. advanced energy policy system set to be effectively wiped clean in the comping years, the time for smart reform is now,” he wrote.
So, readers, what's the next logical step for government?
editor-in-chief, Intelligent Utility magazine