The avalanche of media coverage of the Department of Energy’s roughly half million dollar loan guarantee to Solyndra, a solar technology company that ultimately went bankrupt, has distorted what urgently needs to be a healthy debate on policy options to dramatically increase private sector investments in clean-energy technologies. The real question is not aboutwhether governments should provide these incentives, but rather how they can do so most effectively.
There is clear scientific evidence that rising fossil energy use will lead to irreversible climate change that poses serious risks to public health, safety and the global economy. To reduce these risks, we need governments to quickly adopt smart policies that will create the stable and predictable environment that the private sector needs to invest in clean-energy technologies so that we can reduce our dependency on fossil fuels over the long term.
Government support for energy companies is not new. According to the International Energy Agency’s 2011 World Energy Outlook, governments around the world provided subsidies to fossil fuel industries that totaled more than $400 billion in 2010. These subsidies create an uneven playing field for renewable and other clean-energy technologies.
Given the long-term economic lifetime of energy-related capital stocks globally, there is little room to delay the transition from fossil fuels to cleaner energy sources. Even if countries commit to emissions limits that would prevent global temperatures from rising above 2 degrees Celsius or 3.6 Fahrenheit—the threshold for avoiding costly and dangerous climate impacts agreed by scientists worldwide—the IEA estimates that 80% of cumulative global CO2 emitted worldwide between 2009 and 2035 would already be “locked-in” by power stations, buildings and factories that either exist now or are under construction.
The IEA also calculates that without coordinated international action to dramatically shift away from fossil fuels toward low or zero carbon energy sources between now and 2017, the only way nations can avoid temperatures from exceeding 2 degrees Celsius would be to either ensure that all new infrastructure built between 2017 and 2035 is zero carbon or to phase out existing infrastructure before the end of its economic lifetime—a solution that is neither cost effective or politically viable.
The public has a right to understand the process behind DOE’s decision to provide a $535 million loan gaurantee to Solyndra. Fortunately, as Secretary Chu notes in his testimony before the House Energy and Commerce Committee’s Subcommittee on Oversight and Investigations, DOE has provided more than 186,000 pages of documents to cooperate with the Committees’ investigation. President Obama has also asked for a review of the Department’s loan portfolio.
Secretary Chu noted in his testimony to the subcommittee that “Solyndra was poised to compete in the marketplace”. If Solyndra was indeed commercially viable and in a position to attract private capital on its own, then Congress and the public are right to question whether a DOE loan guarantee to this company was the best use of tax payers’ money.
Nonetheless, the unrelenting focus on Solyndra is distracting policy makers and the public from the much bigger and more pressing problem of finding and implementing the right mix of policies to remove market distortions that place clean-energy technologies at a disadvantage–including fossil fuel subsidies and trade barriers—and to rapidly mobilize investments in low or zero carbon energy sources.
Cathleen Kelly is the Director of the Climate and Energy program at the German Marshall Fund of the United States in Washington DC.
Image by Solyndra.
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