My goodness! How bad do the financials have to get before the government says “enough”? If an “environmentally friendly” energy project can’t make it in a world with renewable-energy mandates, production tax credits, exemptions from road-use taxes, cap and trade, etc., that’s a sure sign the deal is a loser.

Don’t pretend this would be some sort of bank making loans. However politically correct the lipstick may be, this would be yet another huge hunk of pork.

As the system is currently set up, an American solar company looking for federal backing to build a new manufacturing plant can get it – as long as the plant is located outside our borders. For years, the Overseas Private Investment Corp. has provided loans, loan guarantees and other financing support for U.S. companies looking to expand abroad.

A couple of years ago, while I was at the Energy Department’s Office of Energy Efficiency and Renewable Energy, we began wondering aloud why that same level of support wasn’t available to companies hoping to expand here at home. We issued a request for proposals to consulting firms to explore the issue of a domestic “clean energy bank.” Over months of study, our research partner, Booz Allen & Hamilton, helped make a solid case. Initial interest in the idea was sparked in Congress when former New Mexico Senator Pete Domenici proposed a clean energy investment bank a little over a year ago.

Now the credit crisis has fanned those flames of interest. Clean tech firms, like so many companies elsewhere, simply don’t have the same kind of access to capital that they once enjoyed. Banks are in lock-down mode. Venture funding is scarce – clean tech investments fell by a staggering 84 percent in the first quarter of this year, compared with the prior three months. As a result, entrepreneurs are sitting on cash, cutting jobs, and putting their expansion plans on hold while they wait for federal loan guarantees and stimulus dollars to come to their rescue.

The Clean Energy Deployment Administration could go a long way to curing this paralysis. On a long-term basis, it should be designed to be self-funding – through interest and fees – and it should apply to any technologies that helps reduce or eliminate harmful emissions. As CEDA is being formulated, the Energy Department can take the interim step of turning over certain of its financing program functions to private lenders and fund managers with proven track records of managing risk and making successful loans. OPIC has long had a formal process for delegating credit approvals to financial institutions, and the key to its success is that substantial private sector capital is always at risk alongside OPIC’s investment.

We can’t gauge the success of federal efforts by the amount of dollars we are ready to spend. We have to focus on outcomes, and right now the outcome we need is more clean technologies available in the marketplace. If we can all agree that this a national priority, then we need the full weight of the federal government’s balance sheet behind it, just like we have availed it for other national priorities such as exports, home ownership and college education.

America’s electric power industry is on the verge of a historic transformation. Just as we must rebuild our transportation infrastructure, so also we must rebuild our energy infrastructure – replacing older inefficient power plants with more efficient, cleaner technologies; deploying new technologies to improve efficiency; modernizing our electric grid; and reducing greenhouse gas emissions.

This transformation in the electricity system is both a daunting challenge and a tremendous opportunity. If America rises to the challenge, we will create a 21^st century electricity system, produce millions of green jobs, rebuild our manufacturing base, and generate economic growth and opportunity. Nuclear energy will play a key role in this transformation. The 104 nuclear power plants across the United States represent three-quarters of our carbon-free electricity. Of the emission-free sources, nuclear energy has the most potential for large-scale expansion.

Despite the fact that our economy and quality of life relies more than ever on reliable electricity, the greening of the grid will not happen automatically. The electric industry faces an unprecedented challenge. It must invest as much as $2 trillion in new power plants, transmission and distribution systems, and environmental controls to meet a 20-25 percent increase in electricity demand by 2030. To put these numbers in perspective: the value of our entire electric power supply and delivery system today is only about $750 billion.

The pace of clean technology deployment is largely dictated by the ability to secure financing – a challenge at the best of times, but even more so in today’s tight credit markets. Addressing this financing challenge will require innovative approaches to financing.

America needs 21^st century institutions to manage 21^st century challenges. The times demand a new federal financing corporation – a Clean Energy Development Bank – modeled on the U.S. Export-Import Bank, with sufficient financing capability to ensure that capital flows to clean technology deployment – renewables, advanced coal-based systems, nuclear and other clean fuels – in the electric sector.

Sens. Jeff Bingaman and Lisa Murkowski deserve great credit for having recognized this imperative. Bipartisan legislation to create a Clean Energy Technology Deployment Administration was approved by that committee last week, and companion legislation has been introduced in the House. If it is sound public policy to support export of U.S. goods and services through Ex-Im Bank, which has $100 billion in financing capability at its disposal, surely it is also good public policy to support deployment of clean energy infrastructure and creation of green jobs in the United States.

We should try this. We should try a variety of financing approaches, but we should aggressively use the leverage provided by low federal cost of borrowing to get wind, solar and geothermal up and going fast -- just as we used cheap federal money to build the federal hydro system in the depression. Like the dams, wind and solar farms, and geothermal facilities, are low risk to the taxpayer -- we know we can get paid back. And in this case there is an additional bang for the buck -- by having a federal funding agency help get renewables to scale, we will also be learning, improving the technology and driving down the price for private investors -- exactly the kind of public benefit that warrants publklic investment. Bugt we ought to open several windows for federal funding, the bank being one, and see which one is most effective. We're still learning.

Few people who have taken a serious and honest look at our current situation would argue with the premise that meeting our energy security needs while diverting from our current pathway towards catastrophic climate change will require significant investment. There is immense promise in technologies being developed in US labs, universities, and companies. But they share a lack of sufficient support in the private lending marketplace that is interfering with their transition from a demonstrated technology to a commercially proven technology that can be widely adopted by traditionally conservative energy investors.

People in the clean technology industry call this transition phase the “valley of death,” a place where good ideas wither for lack of sufficient capital. There are many reasons for this under-investment, and we’re taking a number of steps in Congress to correct the market failures that have led us to this place. But even with a corrected market, the scale of investment needed to correct our course is daunting. Yet I’m convinced that making this investment is not only the right thing to do for future generations, but that it will pay real dividends to the U.S. economy if we can position ourselves to lead the rest of the world in this necessary transition.

I have heard people say we need a new Apollo Project or Manhattan Project to produce the clean energy technologies we need. These are useful analogies, as both projects represented a commitment by the federal government to achieving a technological goal quicker than anyone thought possible, and both programs achieved their goal. But I believe this analogy is incomplete. Both were focused projects that required speed and ingenuity, but this problem requires a scale of commitment unlike either. We can’t simply develop one or a few technological breakthroughs. We’ll have to develop multiple technologies across many sectors of the economy and then deploy them at a pace that is nearly unprecedented in history. It’s like undertaking 9 or 10 simultaneous Apollo projects or, perhaps more apt, mobilizing the entire country like we did for World War II.

While I believe it is imperative we put a price on CO2 emissions through a cap and trade system in order to send the right market signals. And I believe policies such as a Renewable Electricity Standard will also be a part of the solution, but to achieve the speed and scale required, we can’t limit ourselves to one or even a few policy tools. We should explore every possible option and be ready to adapt when policies don’t seem to get the job done. It’s going to take significant and sustained investment to bring these technologies to a point where they can be deployed on the scale necessary to meet our needs. That doesn’t have to mean that the government picks the winners and losers – there are ways to be technology-neutral in our approach. But we will have to be willing to risk that some technologies won’t pan out. The failure of a technology or two to live up to expectations will inevitably be far less costly than the failure of imagination in declining to try.

Promising technologies exist that can address our oil security needs, both in reducing our demand for fuel through efficient or electric drive vehicles, and in replacing gasoline with sustainable biofuels. Just as exciting are recent advances in solar power generation, geothermal, and ultra-efficient lighting and appliances that can help secure the balance of the earth’s climate for our children. This is the beginning of a sizable list of technologies we’ll need in the near future. The bill I introduced with Senator Murkowski is our attempt to accelerate the timetable of moving these technologies from the laboratory to the marketplace. Further, as we begin to catch up to the rest of the world in CO2 regulation, I believe developing countries will join in, making a strong economic case for leading in this investment, as well.

But we must understand that, likely even with a new price on CO2, the returns on investments in energy technology are not like those on information technologies. It doesn’t take hundreds of thousands or millions to bring a technology to commercial deployment. It takes hundreds of millions or billions. Even when a technology arrives, as onshore wind power has, the returns are not enough to justify the risks that often must be undertaken. This is a classic case where focused government intervention, using the “patient capital” of the federal treasury, can unlock the private capital that will be necessary.

Finally, I believe this investment can’t wait. Our commitment must be more than a promise to find revenues in the future, when a CO2 emissions reduction program is up and running. We certainly would not address any national security concern that way. The needs are immediate and our response must be correspondingly urgent.

If we fail to make the investments necessary to meet this challenge, I believe we risk passing on to our children a fundamentally more dangerous, less prosperous, inhospitable, and ecologically diminished world than the one we inherited from our forebears -- the very antithesis of the American dream. It is a significant challenge; and one we have shied away from for too long.

Thus, in a very real sense, we are investing in our children’s future here. The choices we make will dramatically shape the world in which they will live, and the longer we wait, the higher the hill we must climb. It is with that sense of urgency that I believe we must approach this problem. Waiting for someone else to act first simply won’t do.

A public "Low Carbon Technology Fund (LCTF) should embrace all low carbon technologies and stick to early stage R&D (in exchange for equity stakes) and scale-up capital for pilot plants (in exchange for loans with equity kickers). The managers of the Fund should get some equity stake to align their interests with taxpayers. Making it a Fund I rather than a Bank lets us decide later about a Fund II. And a Bank format, making loans that private banks won't, risks making equity holders richer on investments that would have happened anyway. LCTF would be a useful catalyst for the much larger private capital flows emanating from cap and trade legislation.