Without cash, Cancun’s promise is empty
Published Monday, 13th December 2010
World governments claim they made some progress toward reducing the global economy’s carbon footprint through the agreements hammered out during the final day of climate talks in Cancun, Mexico, last week. But unless those governments are also prepared to advance the right legislative and financial incentives, such as feed-in tariffs, on the domestic front, green-energy and clean-technology companies will face an uncertain future.
That’s an especially pressing concern in the US at the moment, where the sustainability sector is closely watching the political bickering and horse-trading in Washington, DC, over a proposal that would extend Bush-era tax cuts for both the middle class and wealthy citizens. The bill includes — for now — one more year of life for a Treasury Grant Program that’s provided cold hard cash for renewable energy investments.
Before grant funding was made available through the 2009 Recovery Act, the government offered only tax credits for developments such as wind and solar power. The cash grants, currently set to expire at the end of this year, provided a much-needed boost for renewables projects in an era of tight credit.
That’s been true not only for small, green startups, but for giant multinationals like GE. GE’s Energy Financial Services, which recently hit its target of $6 billion in renewable energy investments, specifically cites the Treasury renewable energy grants as critical for driving clean-energy development.
“Consistent policy provides the certainty investors need to provide long-term capital, which drives new technology and creates jobs,” said Kevin Walsh, managing director and leader of power and renewable energy at GE Energy Financial Services.
“With consistent policies like this one, wind energy can generate 20 per cent of America’s electricity within 20 years, and employ half a million Americans,” added Denise Bode, CEO of the American Wind Energy Association.
GE also notes that, when green-energy incentives were allowed to expire in previous years, the installation of new wind and solar projects in the US the following year dropped by 76 to 90 per cent.
Proof that the market alone isn’t healthy enough, or ready, to promote the kind of renewables development we need could also be seen with the announcement that the wind-energy firm Huaneng Renewables has delayed a planned initial public offering, despite already having $160 million in investment and government approval for a new wind-energy facility in northeast China.
With developments like these, it’s clear that one sign of Cancun’s effectiveness will be the willingness of governments to next put their money where their mouths are.
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