Published also at the Huffington Post

On Wednesday, Bloomberg reported that hedge funds are increasing short selling in U.S. renewable energy stocks to an annual high as firms like Goldman Sachs trim their clean-tech positions. These steps have already damaged the U.S. wind industry, and hedge funds are rallying against First Solar, Tesla Motors, and other firms, potentially endangering a strategic national industry and thousands of American jobs.

As we’ve previously reported, support for the U.S. clean energy industry is teetering on the edge of a federal funding cliff as stimulus investments dry up.  Unfortunately, that cliff just became substantially steeper.  A lack of public support is sending ripples through the financial world, magnifying the impact of a lack of action in Washington as major financial institutions hedge against the predicted fall:

“In the run-up to this week’s global climate talks in Mexico, short sellers targeted makers of wind turbines, solar panels and electric cars whose sales also were undermined by cash-strapped European governments cutting subsidies. Goldman Sachs Group Inc. and BlackRock Group trimmed long positions in renewable-energy shares in the third quarter, filings show.

…“We are just coming off a period of strong fundamental performance and we expect demand to weaken sharply,” Robert Clover, global head of clean power research at HSBC Plc in London, said in an interview. Clover forecast that global panel demand will drop 50 percent in the first quarter of next year from the previous three months.

The inability of Congress to extend even some of ARRA’s tax breaks and grants is putting clean tech funding on dangerous ground.  Past failures are being compounded by large Republican gains in the mid-term elections, which in terms of finance are classified by Bloomberg analyst Krishan Shkkottai as “a huge deal.”

While President Obama’s chief science advisors call for federal energy technology investment, these developments highlight a seriously inadequate national strategy and the problem with relying on speculative Wall Street-led investment. Even as many of these firms profited from helping create a clean-tech bubble, they are now pushing for its rapid decline, which will further damage U.S. economic competitiveness.

In an increasingly globalized world such a flight of capital from U.S. clean energy companies will mean a distinct advantage for American competitors who are moving rapidly to corner the market. By failing to commit to these crucial industries we risk wasting the money already invested in making our clean energy companies competitive.  Days after Secretary Chu warned of a “Sputnik moment” it looks like some of America is already betting against itself.

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3 Responses to “U.S. Cleantech Industry Endangered as Wall Street Sells Short”

  1. Jim Baird says:

    In the absence of political or Wall Street leadership, the insurance industry should take the lead as the risk/reward driver for clean technologies.

    A year ago Allianz forecast sea level rise could place $28 trillion worth of property at risk in the world’s largest coastal cities by 2050.

    Climate driven water problems are already an issue for the insurance industry. Heavy rainstorms, melting snow, overflowing rivers and tidal surges are all currently generating massive property damage and correspondingly high insurance claims, which are likely to increase.

    The insurance industry should be building carbon risks into their premiums for industry and home owners and investing those premiums in climate mitigating technologies that will ultimately reduce their exposure to losses. Most of these technologies are not currently cost competitive – principally because they are in the early stages of development – but they will more than payout over the long haul mitigating harmful practices as well as future losses.

  2. James Monachino says:

    Happy New Year —

    Looks like another round of re-organizational leadership for the alternative energy companies will be emerging as we ring in the new year for 2011.

    As stated above, without the ARRA’s tax breaks and grants we will all find funding of clean tech more challenging.

    The results will be the usual compressed profit margins and new faces moving forward as old business models are reshuffled to try and hang on for better days.

    James Monachino

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