Encouraging Alternative Energies

Derek Thompson points out the major problems of our alternative energy policy.

Ask Eric Spiegel, CEO of Siemens USA, who told me his company is held back by the United States' reluctance to pass a carbon tax or make permanent the solar tax credit. "If you don't do anything on carbon and you don't have renewable energy standards or investment tax credit, every utility company would go out tomorrow and build coal," he said.

Ask J. Bryan Ashley, chief marketing officer at Suniva, a celebrated solar cell manufacturer out of Georgia, who told me his company exports 80 percent of its products partly because there's so little demand for solar at home. "More people would manufacture [solar products] here if demand was here," Ashley told me. "We need a renewable energy standard to create a market in the United States. If demand is overseas, then I'll move factories to other parts of the world. That's just good business."

Is anything being done about this?

The White House doesn't want to oversee a mass exodus of alternative energy companies to China. That's why it put $151 million in experimental clean energy grants in 2009. That's why Obama announces the "Better Buildings Initiative" Thursday to get commercial buildings to retrofit themselves with government money.

This is a step. But what a small step. Total R&D spending in green energy is miles behind biosciences and IT, which together make up two-thirds of total research spending in the U.S. Private-sector investment in energy research amounted to barely half what Merck or Microsoft put to R&D in 2009, economist Michael Mandel said. If you're betting on the future of America's innovation engine, what reason is there to put your chips on green?

Some smart nation will develop alternative energies and make it an integral part of their economy. Perhaps many will. We should be smart enough to be one of them, rather than trying to hang on to days gone by.

Before you go into convulsions over this though:

One answer is that if the federal government fails to give clean tech companies the green light, world events might force our hand.

In the recession and the recovery, the price of oil plummeted, and wind-power installations fell 72 percent between 2009 and 2010 in some states. But in the global resurgence, it's beginning to look like 2007 again. The price of a barrel of oil cracked $100 this week. Speculation and organic demand from Asia and Latin America could drive up the price even further. One way or another, alternative energies will replace the dirty and unstable supply of fossil fuels. We can either get serious about sending the right green energy signals or accept that the United States won't lead this particular revolution and focus our attention on other industries.