Cleantech Market Intelligence
With New Energy Fund, Obama Adds Fuel to Cleantech Engine
Speaking today at Argonne National Laboratory, outside Chicago, President Obama laid out the details of his “Energy Security Trust,” a proposal to direct $2 billion in federal revenue from oil and gas leases to R&D for clean transportation technologies. Following up on the pledge made in his State of the Union Address, to confront global climate change, the plan unveiled today should add momentum to a cleantech market surge that’s already underway.
In that sense, the new funding will mean that the federal government, under a Democratic administration, is catching up to broader social and economic shifts.
Eighty-four percent of Americans now understand that carbon emissions from human activity are “probably” or “definitely” causing global climate change, according to a February survey by Duke University. Two-thirds support limitations on greenhouse gas emissions from power plants, factories and cars, and government-imposed requirements for utilities to generate more power from low-carbon sources. The public has long since moved beyond denial on climate change and the future of the world’s energy system, and is well into acceptance that something – even if it involves raising taxes and putting a price, in some form, on carbon – must be done about it.
Obama’s plan is relatively modest – the congressional Budget Office estimates that proceeds from federal oil and gas leases on public lands will total $150 billion between 2012 and 2022, so the president is talking about shifting 1.3% of that money to advanced vehicles. But the Energy Security Trust reflects a clearer understanding that market forces and public attitudes are quickly tipping the balance away from fossil fuels and toward renewable and other forms of low-carbon energy, including the natural gas boom that is helping to power an accelerating economy.
Not everyone in Washington, of course, agrees. But the market itself is moving ahead of policymakers.
- Driven by falling turbine prices and the rush to take advantage of production tax credits (which were set to expire but were renewed by Congress in early January), wind energy was the fastest growing source of new electricity generation in the United States in 2012. Nationwide wind generating capacity increased by 13.1 gigawatts last year – up 28 percent from 2011, according to the American Wind Energy Association.
- The solar industry also enjoyed a record year, as new installations of solar photovoltaic systems grew 76% over 2011, to total 3.3 GW in 2012, with an estimated market value of $11.5 billion, according to the Solar Energy Industries Association.
- According to our forthcoming Market Data report on microgrids, revenue from worldwide deployments of microgrids – many of them harnessing distributed renewable energy resources – will reach $8.3 billion in 2013, increasing to more than $40 billion annually by 2020. That is sharply higher than previous market forecasts.
- The move away from coal and nuclear power continues to gain momentum, as power generators in the Midwest, like Dominion, shutter aging reactors and sell off coal plants.
Most of these trends will continue to unfold regardless of government intervention. Indeed, there are signals that the mental shift away from a carbon-based economy is happening even in the boardrooms of the oil majors. In a new report from its Scenarios Group, Royal Dutch Shell – which exited the solar sector in 2009, saying it would focus on biopower instead – acknowledges that solar power could become the world’s biggest source of energy by the second half of the 21st century.
“These scenarios show how the choices made by governments, businesses and individuals in the next few years will have a major impact on the way the future unfolds,” commented Shell CEO Peter Voser in a statement on the new report. What Obama’s new smart-transportation plan will do is add Washington’s imprimatur to a cleantech economy already poised for growth.