Summary
Clean energy stimulus packages sustainability in the past has failed not because they did not promote R&D or develop new technology; rather they failed due to not promoting the paradigm shift through commercialization.
Analysis
The most common failure in government subsidies, stimulus packages and initiatives is that most of the packages are geared toward technology development and R&D. Sustainability only comes with real world applications of the technology that is the commercialization of the clean energy product. Too often good ideas die on the vine because stimulus packages have not addressed commercialization. Sustainability comes through commercialization, not through R&D. Real world results come through commercialization of a new product or idea. The stimulus package released by the Obama administration mentions lots on the R&D and the technology development, but very little on the commercialization of already existing technologies that need only a small stimulus to roll them out right now. Energy efficiencies, renewable energy replacement and reductions in GHG’s can all be achieved to the significant levels to meet or exceed the proposed 14% reductions from 2005 emissions by 2012 if they were commercialized. The technology exists right now.
The barrier is the capital to roll these technologies out on a commercial level. The investment community is reeling and therefore are shy to invest in what is clearly going to play a major role in the next boom. If President Obama wants to achieve the targets of 14% reductions by 2012 from 2005 levels then it is imperative that the stimulus package have at least 50% designated for commercialization. I would recommend a Private/Public Partnership in financing these roll outs. It could come in the form of back-stopping convertible debenture investment vehicles for the commercialization of energy efficiency, renewable energy replacement and GHG reduction projects. The convertible debentures would have a term of 2 – 3 years so as to allow the company to overcome the most difficult time period in development. By the end of the term the companies that have an excellent ROI the Private investments will convert to equity thus releasing the Government from obligation. Those that don’t meet the Private investment ROI threshold will very likely be able to bank their debt by that time. Those that fail entirely will likely be low and the investment community will welcome the opportunity to recover invested funds rather than risking it all. This is a win – win situation for many different sectors. Employment will jump from unskilled labour right up the scientist. Faith will slowly and methodically be restored in the investment community, while at the same time the Government will be using taxpayer dollars more effectively. I understand this is a paradigm shift, but it is one whose time has come.
