It’s the morning of November 5th 2008 and I’m breathing a deep sigh
of relief. The prospect of a McCain-Palin Administration, with its
focus on “drill baby drill,” 45 new nuke plants, and its mockery of
conservation efforts, was enough to make my not-so-thin clean-tech
skin crawl. More important, the candidate that I had deeply hoped
(and prayed) would win the presidency for a range of reasons, Barack
Obama, is headed to the White House.



His stated platforms could go a long way in bringing about critical
developments in the clean-tech realm. They include investing $150 
billion over the next ten years to catalyze private clean-tech
efforts; instituting a 25 percent by 2025 national renewable
portfolio standard; increasing fuel economy standards and
implementing a national low-carbon fuel standard; and employing an
economy-wide cap-and-trade program to reduce greenhouse gas
emissions 80 percent by 2050.



As we’ve written in our book The Clean Tech Revolution and
elsewhere, clean tech is poised as the greatest growth engine in
more than a generation. Obama seems to think so as well, and the
coming months will be critical as he forms his transition team,
takes over governing in late January, and embarks on his first 100 
days in office.



But it won’t be easy. Obama is inheriting what former Federal
Reserve chairman Alan Greenspan has called a “once-in-a-century
credit tsunami.” Home sales and auto sales have cratered. U.S.
manufacturing is at a 26-year low.



The impact of this credit and financial turmoil has not been as
pronounced in clean tech as in many other markets, but the sector is
by no means immune. FPL Energy has announced plans to cut 400 MW of
wind power next year (out of a planned 1,500 MW), biofuel refiners
are having a hard time accessing new capital (the nation’s
second-largest refiner, VeraSun, recently filed for bankruptcy
protection); and government-backed bonds have been withdrawn for all
types of infrastructure investments, including energy efficiency,
because of market uncertainty. Not good news for the
capital-intensive clean-energy sector.



“The big issue with renewables,” explains Bruce Laird of the Oregon
Economic & Community Development Department, “is that you need to
pay for all the capital costs up front and then amortize them over a
number of years. One of the next breakthroughs needs to be on
financing so that governments can provide low-cost money to build
out the scale-up of renewables.”



Clean-Energy “Victory” Bonds



Well, I’ve been thinking about this issue, and I ask: what about the
concept of Clean-Energy “Victory” Bonds?



The idea certainly isn’t new, back during World War II, the Federal
government marketed the sale of Series E bonds as “War Bonds,” using
the funds to finance the war and to combat inflation. More than $185 
billion was raised by some 85 million people who bought War Bonds
during WWII. Purchased at 75 percent of face value, these bonds had
a guaranteed minimum investment yield. Today, some solar power
purchase agreement investments return an average of six to eight
percent per annum for their private investors (including tax
benefits), over approximately 10 year periods.



What if the government could issue a financial instrument that would
fund America’s clean-energy and efficiency aspirations; an
instrument similar to the War Bond, one that earns respectable
interest with a moderate maturity period? What if we could
replicate the massive marketing success of WWII War Bonds, creating
a unified patriotic movement aimed at financing a new American
clean-energy economy?



There are other bonding and loan options such as lending
programs, tax-credit bonds, and revolving loan funds. The City of
Berkeley, California, for example, is giving out loans to cover the
entire cost of solar energy systems. Integrated into owners’
property tax bills, loans are paid off over a 20-year period. Clean
renewable energy bonds (CREBs), an example of tax credit bonds, have
been issued since 2005 by cities, states, and other public
institutions, financing renewable energy projects. These bonds
don’t pay out interest from the issuer to the purchaser; instead,
CREB bondholders receive interest payments in the form of a federal
tax credit. Revolving loan funds are pools of public and private
funds used to simultaneously finance multiple projects. As projects
reach the end of their payback period and the loan is paid off,
funds are recycled and loaned out to new projects. Clean-energy
projects, having well-defined payback periods, are uniquely equipped
to utilize this form of revolving finance.



Eye on the Prize



At the recent REFF-WEST event in Seattle, put on by the American
Council on Renewable Energy (ACORE) and Euromoney, keynote presenter
Phil Angelides had an interesting take on the challenges ahead. Mr.
Angelides, former California state treasurer (where he was the
driving force behind that state’s Greenwave Initiative) and current
chair of the Apollo Alliance, said in a talk just eight days before
the election that clean-energy advocates will need to aggressively
ensure that Mr. Obama pursue the strategies outlined in his
campaign. A president Obama will be faced with so many competing
challenges and interests, he explained, we’ll need to keep the new
Administration’s eye on the prize.



Indeed, we face an once-in-a-lifetime opportunity to transform our
economy in a way that reduces the threats of environmental
degradation and economic decline, while ensuring future U.S.
technological prowess and continued global leadership.



Let’s get to work. There’s no time to waste.



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Ron Pernick is co-founder and managing director of Clean Edge, Inc.,
coauthor of The Clean Tech Revolution, and sustainability
fellow at Portland State University’s School of Business.