Government investment in clean energy is important

Launce Rake and Jim Rossi

Monday, Dec. 10, 2012 | 2:02 a.m.

Over the past 30 years, society has struggled with an energy dilemma: fossil fuels have been cheap and plentiful, but they pollute the air and water — and much of the world’s oil must be imported from unstable and often-unfriendly parts of the world. Renewable energy from solar and wind are very clean but very expensive — until recently.

The cost for photovoltaic (PV) solar power has dropped in half from 1998 through 2010, with most of the decrease occurring over the past four years. The costs of the panels themselves have dropped by two-thirds, with the remaining balance-of-system costs — the steel trusses, bolts, electric wires and inverters — making up the difference.

The effect on the energy industry is dramatic and increasing. Renewable energy’s contribution to total electricity generation in the United States has nearly doubled since President Barack Obama took office in 2008. Solar capacity alone has nearly tripled, wind has nearly doubled and geothermal is up 13 percent. All of this happened while natural gas prices remain at historic lows.

The evolution of renewable energy is not limited to the U.S.; it is a global phenomenon. In 2011, worldwide investment in renewable energy surpassed investment in fossil fuels for the first time, topping $1 trillion since 2004.

To be clear, a big reason is subsidies for the renewable industry. But let us be clear about another thing: all industries have received energy subsidies, and the ones that renewables are receiving are small compared to what nuclear, oil, natural gas and coal have received since the end of World War II. Incentives for renewable energy have been supported, to varying degrees, by every president since Jimmy Carter. But President Barack Obama’s stimulus act for the first time included grants, loan guarantees and tax incentives on the scale that the other industries have long enjoyed. State Renewable Portfolio Standards have helped to drive demand.

Not all of the incentives have been successful — think of Solyndra and Amonix. But overall, progress has been outstanding and ahead of most estimates. Energy analyst Michael Noble earlier this year pointed out important examples:

• In 1999, the Department of Energy estimated that the U.S. would have 10 gigawatts of wind energy by 2010. We reached this milestone in 2006 and now have four times that.

• In 2002, an energy industry analyst projected a 1 gigawatt market for solar energy by 2010. By the time 2010 rolled around, the annual market was 17 gigawatts.

• In 2000, the International Energy Agency forecast that nonhydropower renewable energy would total 3 percent of the world’s energy by 2020. It reached 3 percent a bit early — in 2008.

But why should the government be involved with the energy industry at all? After all, we cannot go back in time to take away all of the subsidies that all of the energy industries received. But perhaps they were not just government pork — but a sound investment in the future.

Railroads, interstate highways, the electricity grid, personal computers and the Internet are inventions crucial to our modern economy which were first developed through investments by the federal government — aka subsidies. The government made these investments because these new technologies were too big, complicated or too risky for the private sector to develop all by itself.

The same is true for renewable energy. For decades, optimists have been talking about the potential. Now, realists are talking about the results.

Jim Rossi is a Las Vegas-based analyst with the Nevada Institute for Renewable Energy Commercialization. Launce Rake is a Las Vegas freelance writer on environmental issues.