Top 10 Cleantech Subsidies and Policies (and the Biggest Losers) – Ranked By Impact

We all know energy is global, and as much policy driven as technology driven.

We have a quote, in energy, there are no disruptive technologies, just disruptive policies and economic shocks that make some technologies look disruptive after the fact.  In reality, there is disruptive technology in energy, it just takes a long long time.  And a lot of policy help.

We’ve ranked what we consider the seminal programs, policies and subsidies globally in cleantech that did the helping.  The industry makers.  We gave points for anchoring industries and market leading companies, points for catalyzing impact, points for “return on investment”, points for current market share, and causing fundamental shifts in scale, points for anchoring key technology development, points for industries that succeeded, points for industries with the brightest futures.  It ends heavy on solar, heavy on wind, heavy on ethanol.  No surprise, as that’s where the money’s come in.

1.  German PV Feed-in Tariff – More than anything else, allowed the scaling of the solar industry, built a home market and a home manufacturing base, and basically created the technology leader, First Solar.

2. Japanese Solar Rebate Program – The first big thing in solar, created the solar industry in the mid 90s, and anchored both the Japanese market, as well as the first generation of solar manufacturers.

3. California RPS – The anchor and pioneer renewable portfolio standard in the US, major driver of the first large scale, utility grade  wind and solar markets.

4. US Investment Tax Credit for Solar – Combined with the state renewable portfolio standards, created true grid scale solar.

5. Brazilian ethanol program – Do we really need to say why? Decades of concerted long term support created an industry, kept tens of billions in dollars domestic.  One half of the global biofuels industry.  And the cost leader.

6. US Corn ethanol combination of MTBE shift, blender’s, and import tariffs – Anchored the second largest global biofuels market, catalyzed the multi-billion explosion in venture capital into biofuels, and tens of billions into ethanol plants.  Obliterated the need for farm subsidies.  A cheap subsidy on a per unit basis compared to its impact holding down retail prices at the pump, and diverted billions of dollars from OPEC into the American heartland.

7. 11th 5 Year Plan  – Leads to Chinese leadership in global wind power production and solar manufacturing.  All we can say is, wow!  If we viewed these policies as having created more global technology leaders, or if success in solar was not so dominated by exports to markets created by other policies, and if wind was more pioneering and less fast follower, this rank could be an easy #1, so watch this space.

8. US Production Tax Credit – Anchored the US wind sector, the first major wind power market, and still #2.

9. California Solar Rebate Program & New Jersey SREC program – Taken together with the RPS’, two bulwarks of the only real solar markets created in the US yet.

10. EU Emission Trading Scheme and Kyoto Protocol Clean Development Mechanisms – Anchored finance for the Chinese wind sector, and $10s of Billions in investment in clean energy.  If the succeeding COPs had extended it, this would be an easy #1 or 2, as it is, barely makes the cut.


Honorable mention

Combination of US gas deregulations 20 years ago and US mineral rights ownership policy – as the only country where the citizens own the mineral rights under their land, there’s a reason fracking/directional drilling technology driving shale gas started here.  And a reason after 100 years the oil & gas industry still comes to the US for technology.  Shale gas in the US pays more in taxes than the US solar industry has in revenues.  But as old policies and with more indirect than direct causal effects, these fall to honorable mention.

Texas Power Deregulation – A huge anchor to wind power growth in the US.  There’s a reason Texas has so much wind power.  But without having catalyzed change in power across the nation, only makes honorable mention.

US DOE Solar Programs – A myriad of programs over decades, some that worked, some that didn’t.  Taken in aggregate, solar PV exists because of US government R&D support.

US CAFE standards – Still the major driver of automotive energy use globally, but most the shifts occurred before the “clean tech area”.

US Clean Air Act – Still the major driver of the environmental sector in industry, but most the shifts occurred before the “clean tech area”.

California product energy efficiency standards – Catalyzed massive shifts in product globally, but most the shifts occurred before the “clean tech area”.

Global lighting standards /regulations – Hard for us to highlight one, but as a group, just barely missed the cut, in part because lighting is a smaller portion of the energy bill than transport fuel or generation.


Biggest Flops

US Hydrogen Highway and myriad associated fuel cell R&D programs.  c. $1 Bil/year  in government R&D subsidies for lots of years,  and 10 years later maybe $500 mm / year worth of global product sales, and no profitable companies.

Italian, Greek, and Spanish Feed in Tariffs – Expensive me too copycats, made a lot of German, US, Japanese and Chinese and bankers rich, did not make a lasting impact on anything.

California AB-32 Cap and Trade – Late, slow, small underwhelming, instead of a lighthouse, an outlier.

REGGI – See AB 32

US DOE Loan Guarantee Program – Billion dollar boondoggle.  If it was about focusing investment to creating market leading companies, it didn’t.  If it was about creating jobs, the price per job is, well, it’s horrendous.

US Nuclear Energy Policy/Program – Decades, massive chunks of the DOE budget and no real technology advances so far in my lifetime?  Come on people.  Underperforming since the Berlin Wall fell at the least!


Kill Bill Volume 2 and the Cancun COP

Quentin Tarantino’s Kill Bill, Volume 2 is one of my favorite movies.   It penultimate scene – a final confrontation of vengeance  from the wronged Beatrice Kiddo (aka, The Bride, aka, Black Mamba, aka Uma Thurman) and the evil, yet oddly amiable and ambiguous, title character (aka, the great David Carradine) is perhaps the finest in the film.  For those of you unfamiliar, shame on you.  In a nutshell, at the outset of a fight that will certainly require a major furniture allowance, the Bride suddenly executes the most exquisite sequence of strikes on the all of Kung Fu – the Five Point Palm Exploding Heart maneuver.  Bill – to his utmost surprise – finds his greatest disciple has surpassed him (their thousand year old kung fu master played by Hong Kong action master, Gordon Liu, had not deigned to pass this knowledge to him) and bows to her grace and superiority.

Why am I, sitting here on the beaches of Cancun, reminiscing about Tarantino’s oevre?  Well, it’s because of the way the Five Point Palm actually operates, explained via foreshadow earlier one by Bill himself.  It is not instant death – far from it.  The victim feels perfectly normal – except in his fifth step after the strike, his heart explodes and he drops dead.  It creates – literally – a perfect example of the walking dead.  Which is what brings us to the Cancun COP – climate’s first full gathering after the Copenhagen Five Point Palm Exploding Heart debacle.

Cancun is Bill getting up from the couch and taking that first proud step to his inevitable demise.  Everything here looks normal, feels normal – the mass ant colony of climate has done is annual migration to another odd corner of the world and set up shop. It’s lower energy than Copenhagen, Bali, the Hague or Kyoto, but that’s to be expected – off year COPs always go through these cycles

But make no mistake, COP/MOP process in its original form is most certainly the walking dead.  The fundamental political dynamics around past and future carbon responsibility in a world transitioning to new global multipolar balance (a dizzy prospect in its own right) have not been remotely resolved.  The chasm we saw in Copenhagen is not close to being bridged and there appears no way it ever will be bridged in this particular UN process.

To quickly review the dynamics of this particular Mexican standoff, developing countries continue to insist on an extension of Kyoto emission caps on industrial countries as the fundamental policy to engage mitigation.  Simultaneously, more and more industrial countries refuse to continue down that path.  While there are many other issues – macro and micro – this alone is a pretty binary choice and neither side is ever remotely likely to move.  Since the UN process is intrinsically based on 100% consensus, well – it ain’t gonna happen folks.  This  is my ninth COP/MOP total, my fifth in a row and these tensions are not getting better, they are getting worse.

Therefore – for all intents and purposes – the CMP process dead in its current configuration and the question is how many steps we will take before we too collapse in a heap.  For the record, cinema buffs debate  whether Bill died on his fifth or sixth step off the couch.  If each COP were a step, Tarantino’s model means we have another five years to go before we final collapse. Somewhat sickeningly, that feels about right.  Unlike David Carradine – who had total awareness of his fate – my guess is that substantial parts of the COP ant colony continue to delude themselves that this process represents the only relevant forum for climate management.

The COP process has become is own raison de etre and its existence seems increasingly  isolated  from the real innovation that countries, companies and other aggregations are attempting to address small fragments of the problem.  Basically, what goes on for two weeks inside these halls of official dialogue is a shadow game with little relevance to actual decision making around carbon policy, innovation and investment in the world that 6.5 billion people inhabit.  And vice versa.  And when when institutions exist simply for the reason that they exist under their own life force, a serious rethink is in order.

If we solely focus another half decade to supporting this particular paradigm, we may indeed be accused by our grandchildren of fiddling while Rome (and many other places) burned.  The efforts that thousands of negotiators and tens of thousands of other participants undertake to address the climate challenge through the COP process are undoubtedly real and important.  They are, however, driving toward an inevitable dead end.

The UN process as a intermediary of economic and environmental value between countries no longer holders up to scrutiny.  Being honest, we must recognize that the UN and CMP texts of the last decade do represent some agreement to abrogate  sovereignty – and for countries who are finding their way in a new global political  dynamic, this is likely a bridge too far.   Given the other forces at work, that simply is not a realistic assumption to make during such a fundamental power transition such as we find ourselves

This is not to say the UN does not have a role going forward – far from it.  My very good friend Christiana Figueres is now the ringmaster of the circus and if there is a human being on the planet who can recast the intergovernmental role positively for  our species and our fellow  earthlings, she’s the one I’d put my money on.  In my next installment in the next couple days, I’ll lay out some ideas for reinvigorating this UN processes relevance, making it so real climate mitigation work and UN support can walk hand in hand, as opposed to in parallel paths around the climate policy maze.