At a time when the U.S. economy is desperate for jobs and investment in future growth, a slew of clean-energy projects are on hold largely because of political stalemate in Washington.
With President Obama’s energy and climate proposals bottled up in Congress, business leaders say they cannot tell what direction government policy will take on a variety of issues, including new energy taxes, tougher emissions standards for factories and vehicles, and guaranteed markets for start-up wind and solar power plants.
That has companies reluctant to pull the trigger on green-energy investments that could create employment and combat climate change. Case in point: New Jersey’s largest utility, Public Service Enterprise Group Inc., is exploring development of a massive wind farm 16 miles off the state’s coast. But it won’t commit until the political winds in Washington are more certain, said Ralph Izzo, PSEG’s president and chief executive.
“It’s one thing to manage risk,” he said. “It’s another thing to gamble.” The U.S. logjam stands in sharp contrast with the situation in China and Europe. Green investment there is booming in large part because their governments have committed to making renewables a major component of their national energy policies.
Last year, for the first time, China surpassed the United States in private clean-energy investment. Meanwhile, China’s government is poised to outspend the U.S. 3 to 1 on public clean-energy projects over the next several years.
“The investments being made in China are just huge government investments that the venture capital industry couldn’t hope to match,” said Tom Baruch, who heads CMEA Capital in San Francisco.
At stake for Americans are thousands of new jobs, from low-skilled maintenance work to high-level engineering, that are expected to result as the world transitions away from fossil fuels. The International Energy Agency estimates there could be as much as $10 trillion in international spending on clean energy over the next several decades.
Partly because of the bad economy, U.S. venture capitalists cut total clean-energy spending by half last year from a 2008 peak.
The Obama administration earmarked more than $80 billion in its economic stimulus package for clean energy, including research ventures, home weatherization programs and manufacturing tax credits.
But to spur more private investment and job creation, the federal government must reassure Wall Street that the need for clean energy will grow, experts said.
“The key has to be that you create a sustained demand” for clean-energy technologies, said Ethan Zindler, head of North American research for Bloomberg New Energy Finance, which tracks clean-energy investment globally.
The utility sector is increasingly anxious about what types of power will make economic sense in the coming decades.
NextEra Energy Resources, which generates power in 26 states, is ready to double its annual wind energy spending to $4 billion, said Lewis Hay III, CEO of FPL Group Inc., the utility’s parent company.
But “that’s just not going to happen” until Congress passes a climate bill or a renewable electricity mandate, Hay said.
Obama’s preferred energy bill would mandate greater use of renewable power nationwide and in effect increase the price of fossil fuels by limiting emissions through a so-called cap-and-trade system.
The nation’s largest business lobbying group, the U.S. Chamber of Commerce, says the Obama plan doesn’t provide the kind of certainty that will spur clean energy forward.
Karen Harbert, who leads the Chamber’s Institute for 21st Century Energy, said investors needed to see more streamlined permitting processes and more predictable tax structures instead of a patchwork of incentives.
“Certainty,” she said, “actually means simplicity.”