Clean energy

Published: March 5 2009 09:28

It’s not easy being green, even if you have powerful friends. The Obama administration’s $787bn stimulus package contains $56bn in grants and tax breaks for US clean energy projects. The numbers are juicy. But Mr Obama’s billions are no panacea for the sector’s financing woes.
Global investment in clean energy is expected to hold steady at $150bn this year as banks and hedge funds hoard cash – a marked slowdown for an industry where investment grew by 60 per cent a year in 2006 and 2007, according to New Energy Finance, a clean energy consultancy.

As interest in new wind and solar projects wanes amid falling oil prices, and a lack of available credit stalls expansion of existing ones, anxious eyes are turning to the government.
Mr Obama’s stimulus includes calls for $38bn in direct government spending and $18bn in tax breaks for clean energy spread over the next 10 years, according to Dewey & LeBoeuf, the law firm.
Owners of solar, wind, and other clean energy facilities will be able to claim tax credits against the cost of new equipment, helping attract big institutional investors who have been put off investing in clean energy because of uncertainty about taxes. But the short timeframe – credits can only be claimed for projects that are up and running within the next three to four years – means projects still on the drawing board may not be ready in time to qualify.
Plans for direct spending include $11bn for a new energy grid, $2bn in grants for new battery technologies, and $6bn in loan guarantees for new power plants and transmission lines. Such spending is well and good, assuming the money can be allocated efficiently by government bureaucrats. Recent experience at the Treasury, where staffers are being stretched to the limit doling out billions in bail-out money, suggests that is more easily said than done.
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