Yesterday, the White House released a report touting the recovery act’s success at fostering innovation in key economic sectors, most notably clean energy. ARRA’s $30 billion clean energy investment is unique in its comprehensive approach, the White House notes, containing “investments across the innovation chain – from retooling current auto factories to new manufacturing and commercial deployment to research and development of electric drives and batteries.”
According to the report, the energy investment spike will achieve three major breakthroughs:
“1) Cutting the cost of solar power in half by 2015, putting it on par with the cost of retail electricity from the grid.
2) Cutting the cost of batteries for electric vehicles by 70 percent between 2009 and 2015, putting the lifetime cost of an electric vehicle on-par with that of its non-electric counterpart.
3) Doubling U.S. renewable energy generation capacity and U.S. renewable manufacturing capacity by 2012, a breakthrough that would not be possible without the Recovery Act.“
Robust federal investment in clean energy technologies has created the foundation for an energy industrial revolution in the United States, but the subtext of all this good news is that the achievements are being threatened by an impending funding cliff. When the funding dries up, the fruits of many of these investments could wilt on the branches before they ever have time to ripen. As Jesse Jenkins and Devon Swezey noted at Breakthrough Institute:
“Yet while the White House report highlights the considerable clean energy momentum established by the Recovery Act, it also inadvertently raises the specter of an impending clean tech funding cliff which risks sending U.S. clean energy industries into deep freeze as stimulus funds begin to expire over the coming months…. Facing such intense global competition, and with Recovery Act funds poised to expire soon, sending U.S. clean energy markets off a clean tech funding cliff, the U.S. is in dire need of a long-term clean energy investment strategy to regain economic and technological leadership in this new growth sector.”
The report’s summary of investments in wind and solar offers a poignant lesson in both the successes of large scale investment and the dangers in non-sustained funding. ARRA has allotted over “$3 billion so far in payments-in-lieu-of-tax -credits to over 500 projects in 44 states to support renewable energy generation projects” which in turn ”supports more than 10,000 construction jobs and over 2,000 ongoing operating and maintenance jobs.” The Recovery act also dolled out “over $2 billion in tax credits to 183 projects in 43 states for clean energy manufacturing projects,” and “$2 billion in conditional or closed loan guarantees for renewables deployment and manufacturing projects,” which will “will create or save more than 5,000 construction and permanent jobs, lead to more than 3 GW of clean power generating capacity, and avoid more than 30 million tons of CO2 per year, according to company estimates.”
When the funding for these tax credits and loan guarantees dry up so too will many of the jobs and advancements in still young American industries. America’s clean energy sector, which has only started to blossom because of these investments will be cut loose to compete against Chinese competitors operating in a country spending around $740 billion over 10 years on renewable energy related investments.
The achievements of the Recovery Act are commendable, and now is the time to take stock of past successes and failures and move forward with renewed conviction. Equally as important as the amount of investments in clean energy will be the length over which these investments occur. To fully recoup the benefits of these efforts we must build on the foundation with sustained, long term investment in clean energy innovation.