Originally Published at the Breakthrough Institute
Four months ago, we warned that while the stimulus bill had created considerable momentum in the domestic clean energy sector by funding clean energy research, manufacturing, and markets, a looming clean tech funding cliff threatened to send clean energy markets into a deep freeze as stimulus funds expired with no new investments in line to replace them.
Now it looks like that funding cliff is in sight, and Wall Street is threatening to push us over it. As Bloomberg News reports, hedge funds have increased their short selling of U.S. renewable energy stocks--essentially betting on their decline--to an annual high. The investment decisions follow widespread skepticism that the federal government will continue to invest in nascent clean energy industries.
As Daniel Goldfarb of Americans for Energy Leadership writes, in the short term, the move could advantage international competitors in the clean tech space:
In an increasingly globalized world such a flight of capital from U.S. clean energy companies will mean a distinct advantage for American competitors who are moving rapidly to corner the market. By failing to commit to these crucial industries we risk wasting the money already invested in making our clean energy companies competitive.
The impending funding cliff also imperils the thousands of domestic jobs tied to clean energy projects and manufacturing supply chains. If they disappear, there's no guarantee they'll return as other nations forge ahead with concerted efforts to build competitive clean energy industries and supply the growing global market.
Ultimately, the news from Wall Street exemplifies the precarious nature of a clean energy industry that still requires major public subsidies to survive, particularly in a time of budgetary constraint. Over the long-term, the only way to catalyze a global clean energy revolution and reclaim American leadership in the global clean tech industry is a national commitment to an energy technology innovation strategy that can make clean energy cheap.
Just this week the President's top science advisors called for such a strategy. Congress should listen before it's too late.
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