About 18 months ago, the clean tech buzz was all the rage. Billions of venture capital dollars were pouring in to clean energy technology startups, solar and biofuels stock prices (like the overall market) were soaring, and a new booming industry was well underway. Yet as soon as this happened, the voices of panic sprang up in Silicon Valley and beyond. Is this a bubble? It looks like another dot-com implosion waiting to happen! Be very afraid!
Now there's a whole different kind of panic, reflected in recent stories in the New York Times, Washington Post, and many other outlets, about sudden big trouble in the clean tech sector. Oil prices have plunged and credit has dried up! Clean-tech stocks are way down! We can't afford to fight climate change! Be very afraid! Drill, baby, drill!
I know it's a lot to ask at a time when the Dow swings a couple hundred points every hour, but could we all please just step back, take a deep breath, and look at the long-term outlook? Of course a global slowdown/recession/worse will lower most economic boats (except hamburger sales at McDonald's), including clean tech. But does the current fiscal mess change any of the fundamental drivers of clean energy growth: carbon-reduction imperatives, reducing dependence on foreign oil, reducing dependence on volatile fossil-fuel prices, and the need for innovation and job creation? It does not. And it's worth noting that while falling oil prices grab the headlines, the price of coal -- a much more important cost-comparison indicator for solar, wind, and geothermal developers -- continues near record highs despite some recent softening.
The transition to a clean-energy economy is not some luxury that we can only afford in good financial times. In fact, it can easily be argued that investing in domestic production of solar power, wind energy, sustainable biofuels, electric vehicles, smart-grid technologies, and dozens of other clean-tech sectors may be the best way out of this fiscal mess. Many recent studies have reached this conclusion -- check out the Center for American Progress' Green Recovery report for the nation, and a UC-Berkeley study released last week detailing the positive impacts of energy efficiency and clean-tech development on the California economy. Clean tech is the "triple threat" that can address the Big Three challenges facing the United States: climate change, national security, and economic recovery. Sen. Barack Obama seems to get this, and the increasingly likely prospect of his election next week is another reason not to hit the panic button on clean tech's growth prospects.
I'm not claiming that clean energy is recession-proof. Tight credit is slowing project investment, and jitters throughout the economy have many companies wary of new ventures. Clean tech is a full-fledged industry, not immune from forces affecting any other industry. There will be business cycles. There will be consolidation, losses, and layoffs. To some extent, these are growing pains experienced by all expanding industries, especially those that are technology-based.
It's likely that when all is said and done by year's end, the clean tech industry growth rate for 2008 may be down from the 30%-40% expansions we've seen in the last few years.
But let's stay focused on the longer term. The current knee-jerk reaction of pegging clean tech's prospects to today's closing price for light sweet crude ignores so many fundamental drivers of the clean-energy economy around the world. And pooh-poohing clean energy as an unaffordable luxury in hard times smacks of the "we must choose between the economy and the environment" false dichotomy that's been debunked time and time again (just ask Arnold Schwarzenegger). Perhaps it's not a bad idea to invest in wind farms, solar technologies, and energy-efficiency retrofits instead of sub-prime mortgages and credit swaps?
It's been said many times: every crisis equals opportunity. Let's use the current crisis to accelerate the new energy economy, not retreat back into the old one.