Solar energy is a smart investment. It is clean, reliable energy that creates jobs. It is creating jobs at an impressive clip, according to The Solar Foundation’s National Jobs Census 2011. Our latest research shows that solar energy now employs more than 100,000 workers. This figure represents 6.8 percent growth from the previous year. To put that in perspective, overall job growth grew an anemic 0.7 percent and fossil fuel electric generation actually lost 2 percent of its workforce.

As Washington has discussions about crucial energy policy choices, it important to have reliable data, backed by strong methodology. Doing so ensures that policymakers are informed about the best course of action.

These numbers were created using both primary and secondary data sources, along with careful statistical analysis to ensure that these numbers are as accurate as possible,

Driving this job growth are federal policies like the 1603 Treasury Program, which is stimulating the commercial solar market and the solar investment tax credit, which is helping more and more homeowners go solar.

Solar’s longstanding popularity, combined with increasing cost-competitiveness is creating opportunities for many businesses to grow and to scale an industry. For example, Oakland-based solar installer Sungevity plans to double its workforce by the end of the year. They’re also becoming an economic anchor in the city by recently signing a lease to double its space in Jack London Square.

The data clearly shows that our small investments (when compared to the billions given to fossil fuels) in solar are making a real impact in helping workers find jobs and growing our economy.

Though our government plays a critical role in supporting American industries, it has only a modest role in creating jobs in industry. Although the President and his administration are clearly committed to doing all they can to encourage job creation, our current economic issues cannot be resolved until more of our industries show greater confidence in America’s future and focus again on achieving success.

American energy firms provide a particularly good case study of the private sector’s ability to innovate and grow, even when faced with a tough economic period and a rather volatile economic environment.

Since the recession began in Dec 2007, the total number of U.S. jobs has dropped by 105,000 jobs; meanwhile, our oil and gas sector has worked to add 20,300 new positions. Not only is the oil and gas sector growing, but the benefits of its direct growth spill over into other industries too.

Consider the Aker Shipyard in Philadelphia. Barely nine months ago, it was on track to close by July. But now that the ExxonMobil Corporation has placed a more than $400 million order for two 46,000-ton product tankers, the near-extinct yard is expected to employ about 1,000 workers, many of whom will be from those currently unemployed. And the inspiring examples don’t end there.

From Thomas Edison inventing electric-power generation in 1880 to Elijah McCoy a decade earlier creating the automatic lubricator necessary to grease the steam engines of trains (a system so preferred by railroad engineers, they dubbed it “the real McCoy”), America’s history is filled with pioneers and entrepreneurs who have pushed our economy forward through private innovation.

It’s important that our government continue its regulated support of American industry without attempting to define its path for growth. When we fully emerge from this very difficult recession as an even stronger nation, it will be a result of what some call American exceptionalism, a combination of technological advances, courageous management, and prudent investment, not by government, but by private enterprise.

For better and often for worse, there is a long history in this country of government investment in the energy sector. Fossil fuels – oil, gas, and coal – have received hundreds of billions of dollars in government funding. In the early 20^th century, public money helped spur hydroelectric power through the construction of dams, and a few decades later $100 billion tax dollars were invested in the development of nuclear power.

Despite the fact that some of these subsides are a century old, the American taxpayer continues to invest in the most profitable industry on earth, the oil and gas industry.

In the first six months of 2011, the top five oil companies – ExxonMobil, ConocoPhillips, Shell, BP and Chevron – reported $67.4 billion in profits. According to a 2011 Taxpayers for Common Sense report, the oil and gas industry receives another $15 billion in government handouts every year.

It is called Big Oil for a reason: It is a massively profitable industry. It is time to end the flow of subsidies to the oil and gas industry. Instead, we should make long-term investments in the New Energy Economy and a more secure energy future.

Of course, you can’t talk about clean energy investments without talking about the story of the day. Big Oil apologists have tried to leverage the Solyndra story as a way to kill American jobs in the clean tech sector while voting multiple times to uphold taxpayer handouts to Big Oil.

True enough, Solyndra has created a black eye on the solar industry. However, Big Oil apologists forget to mention the black eye that the BP Gulf oil spill disaster gave the oil and gas industry and how American taxpayers helped write-off billions of clean-up costs for BP.

The truth of the matter is that, overall, clean energy has been a strong investment for America. The American solar industry grew the first two quarters of 2011, increasing its global share of the global market. Solar employs more than 100,000 Americans and is hiring at a faster rate than the overall economy.

On the other hand, taxpayer subsidies seem to be creating nice dividends for Big Oil instead of creating jobs. The Center for American Progress blew the lid off the fact that the top oil and gas companies are sitting on tens of billions of dollars instead of reinvesting that money in the economy.

In May, The Checks and Balances Project commissioned a poll in Colorado to learn how people living in an energy producing state feel about oil subsidies. When asked about ending subsidies to the oil and gas industry, seventy-two percent of Coloradoans believe transferring those funds to companies that are developing wind and solar power would be an effective strategy for the nation. And Grist recently reported that despite Solyndra’s failure, there continues to be overwhelming support for clean energy.

It’s too bad that some in Washington won’t look past the millions of dollars in oil and gas campaign contributions and lobbying to make the right choices about how to invest in our energy future.

DOE's race against the clock to approve more guaranteed loans for energy projects that haven't been properly vetted is completely reckless after the Solyndra fiasco. The government should limit its involvement and funding to basic research on alternative energy sources and should not be funding risky “start-ups."

If a renewable technology makes economic sense, the private sector will adopt it and it will succeed without mandates and subsidies. Federal and state governments should not mandate renewable energy, it’s cost is usually at least twice that of conventional energy and places an economic burden on households and industry (see Energy Information Administration data on cost of renewable electricity at http://www.eia.gov/oiaf/aeo/electricity_generation.html).

As the "Super Committee" and Congress weigh options to shrink government spending, eliminating DOE’s budget for funding renewable startups would be a great place to start.

In recent weeks, we’ve seen how using the tax code and other government support programs to drive energy policy and influence markets can lead to unintended and detrimental results. Rather than endorse specific market outcomes – essentially picking winners and losers in the marketplace – President Obama should focus on developing a comprehensive energy strategy that promotes the sustainable, efficient use of all energy sources.

That’s why, in testimony last Thursday before two subcommittees of the House Committee on Ways and Means, I presented a case against legislation that would introduce unnecessary distortions into the natural gas market. The New Alternative Transportation to Give Americans Solutions Act (“NAT GAS” Act) aims to do just that by boosting the production and use of natural gas vehicles (NGVs) at a price to taxpayers that even the bill’s supporters put at $5 billion. Simply put, it’s a bad idea.

One of the arguments that proponents of the NAT GAS Act cite is the cost advantage of running a vehicle on natural gas rather than on diesel. Fuel savings alone, they point out, would add up to approximately $57,000 per year. Given the cost differential between buying a natural-gas-powered truck and a diesel-powered one – estimated to be $70,000 – it would only take 15 months to pay off the investment. That’s an impressive 80 percent return.

But, if you think about it, this is not an argument for subsidizing the use of NGVs – it’s an argument against it! I would bet that many private sector companies, both big and small, would be pretty pleased with an 80 percent return in just 15 months.

That’s probably the reason so many large fleet operators are choosing to switch their trucks to natural gas without the NAT GAS Act. And today’s low cost of natural gas is probably the reason that natural gas fueling stations are being installed in towns and cities across the country, paid for by the private sector.

There is a legitimate debate to have about the role of government in supporting the adoption of energy technologies. But this seems to be an issue that can easily be put to rest: more taxpayer money shouldn’t be used to provide handouts to an industry that is already growing, at a time when we are trying to eliminate unnecessary federal spending. Instead, we should let industry and the marketplace continue to let their current business model work.

Before arguing the role government SHOULD have in energy production, we need to have a clear understanding of America's energy challenges, and an explicit national energy plan to meet them. Only then can the wisdom of the loan guarantee program involving Solyndra be properly viewed. Government IS already heavily involved in energy production; however, without a clear view of the big picture, government is bound to steer in the wrong direction. The national energy debate needs a healthy dose of “Truth in Energy.”

The mission of the Association for the Study of Peak Oil & Gas USA (ASPO-USA) is to help Americans understand, and confront our changing energy reality—where global demand for oil and all forms of energy is growing exponentially, and fossil fuels will be hard-pressed to keep pace, where higher prices and outright shortages are increasingly likely. Policies to advance and accelerate deployment of renewable energy resources need to be formed in this context.

ASPO-USA is an “open-tent” organization—we embrace healthy debate and discourse among diverse perspectives—often the only way a clear view of the truth can emerge. Historically, ASPO-USA has not taken positions on public policy or specific solutions. Our only “position” is that America's monumental energy challenges must be faced squarely, with an honest assessment of the great problems—and opportunities—that are unfolding before us.

The most pressing energy and economic challenge, in our view, is the declining rate of supply from a many of the world's largest oilfields and oil-exporting nations. It is highly uncertain whether new sources of oil can offset these losses, let alone meet rising global demand, while the costs and risks of developing new petroleum sources are rising. In short, it's becoming more difficult, costly, and energy-intensive to extract oil from the Earth. We are seeing the end of cheap, plentiful oil as we have known it. The implications for the world economy and all aspects of modern life are far-reaching.

To confront this challenge and promote “Truth in Energy” in public policy and private sector decisions, ASPO-USA is working to advance a National Oil Emergency Response Plan. Such a plan would address both near-term oil price or supply emergencies, and the implications of long-term oil supply shortages.

The plan would be initiated through legislative or other government action, but development and implementation of the plan needs to involve industry, independent experts, and concerned citizens. For example:

• The Department of Transportation should engage industry and the public to examine the implications of Peak Oil for travel behavior, freight movement, and infrastructure investment decisions.

• The Departments of Commerce and Labor should convene diverse stakeholders to examine consequences for job creation and economic competitiveness.

• The Departments of Defense, State, and Homeland Security should lead efforts to evaluate impacts on national security, foreign affairs, and global stability.

A broader national energy plan, developed through an equally open and transparent process, is still desperately needed. Given the immediate possibility of an oil supply crisis, a National Oil Emergency Response Plan is a critical first step.

Note, “Truth in Energy” is the theme of the 2011 ASPO-USA Conference: Peak Oil, Energy, & the Economy, being held November 2-5 in Washington DC.

Renewable energy has been favored by the Obama administration with loan guarantees, production tax credits, and other incentives--all under the rubric of using green energy policies as a stimulus to the economy. Though there is certainly a future for solar and wind in America’s energy portfolio, little or no benefit has adhered to the economy from these public investments. Indeed, the renewable energy sector is currently in turmoil.

The same market forces that helped bring down Solyndra, such as competition from lower-cost manufacturers in China, have derailed several other solar ventures this year. For instance, Evergreen Solar, a company that received tens of millions in loans and grants from the state of Massachusetts, closed its factory in January. SpectraWatt, a small solar company near Poughkeepsie, N.Y., declared bankruptcy on August 19. And both General Electric and United Technologies Corporation recently decided to scale back offshore wind power investments.

No doubt, the debacle at Solyndra will raise a cry to reduce or remove subsidies and tax expenditures that benefit fossil fuels as well as renewables. This would be a serious policy error. In the first place, the subsidies to the oil and gas industry are negligible compared with renewables. According to the Office of Management and Budget, last year solar and wind received about $6 billion in subsidies for power production, almost ten times that of the oil and gas industry. But solar and wind only accounted for about two percent of all electric power generation. Second, solar and wind are intermittent energy sources that aren’t scalable and can’t provide the reliable base load power required to drive America’s economic engine.

Wind energy, as a proven commercial technology, utilizes the Renewable Energy Production Tax Credit to incent over $7 billion of other private investment to keep growing a new U.S. manufacturing sector, and providing affordable, homegrown energy. It does not rely on other government supports.

Kansas Gov. (and former U.S. Senator) Sam Brownback (R) had some thoughtful words on this issue in a recent opinion article that appeared in the Wichita Eagle and Bloomberg Government. In the article, Gov. Brownback strongly supported an extension of the existing federal Production Tax Credit for wind—thereby opposing a tax increase on this promising new energy industry that is generating clean, affordable, homegrown electricity, creating jobs, and providing an economic shot in the arm to farmers, ranchers, and rural communities across America.

According to Gov. Brownback, "Experience has taught us that investment in the renewable-energy economy is creating jobs across all employment sectors, including construction, engineering, operations, technology and professional services, in both rural and urban communities." The Governor also expressed strong support for building new transmission lines to export wind-generated electricity from midwestern states to population centers in the eastern U.S., "thereby providing access to clean, reliable and affordable energy for millions of customers."

So, point 1: At this critical economic juncture, the federal government should not increase taxes on an emerging energy industry that is showing very strong potential for growth and employment. Having accounted for 35 per cent of all of the new electric generating capacity installed in the past four years, wind is a proven commercial energy source, and the existing tax credit has been extremely successful in leveraging private funds to help it grow.

Point 2: Policymakers should push for a clear accounting for all of the costs of our energy.

The reasoning for this is nicely expressed by former Republican Congressman Bob Inglis (R-SC) in another recent opinion article, in USA Today: "[M]arkets can't respond when some fuels escape accountability. If the coal industry, for instance, were held accountable for all of coal's costs — including health effects — we'd build emission-free nuclear power plants instead of coal-fired plants. Electricity rates would rise because we'd be paying all of coal's cost at the meter, but health insurance premiums would fall. In such an all-costs-in scenario, the profit motive would drive innovation just as it drove innovation with the Internet and the PC — without clumsy government mandates.

"Conservatives can restore our objectivity by acknowledging that Americans are already paying all the hidden costs of energy. We can prove our commitment to accountability by properly attaching all costs to all fuels. We can prove our belief in free markets by eliminating all subsidies and letting the free enterprise system sort out winners and losers among competing fuels."

And finally, point 3: In fairness, consideration of federal support for energy sources should include a historical perspective. A recent report from DBL Investors, briefly described below, explains why.

Policies based on these three principles—don't raise taxes on emerging energy industries, account for all-in costs of all energy sources, and provide equitable treatment among energy sources—would go a long way toward building an energy policy and production system that could meet our country's energy needs, now and in the future.

The report, “What Would Jefferson Do?,” from DBL Investors, is among the first and best attempts to make an “apples to apples” comparison of federal incentives for fossil fuels, nuclear and renewable sources of energy

What may surprise some is that the study finds “that current renewable energy subsidies do not constitute an over-subsidized outlier when compared to the historical norm for emerging sources of energy. For example: … the federal commitment to [oil and gas] was five times greater than the federal commitment to renewables during the first 15 years of each [subsidy’s] life, and it was more than 10 times greater for nuclear."



The report concludes, “Looking at the history of American energy subsidies, a strong case can be made that in order to drive the next generation of energy technology, the federal government needs to continue its support for renewables, in line with our historical commitments to innovation.”

I completely agree.

There are two persuasive reasons for continuing public-private funding of both research and development and early commercialization of innovative energy technologies. First, the benefits of energy security for society outweigh the risks of the failure of individual companies. And second, the market is unlikely to direct sufficient capital to the endeavor by itself, which would leave the United States dependent on foreign sources of energy.

Policy makers should keep in mind that the benefits anticipated from increased use of biofuels include energy security through domestic production of transportation biofuel and environmental improvement through the reduction of greenhouse gas and other particulate emissions associated with fuel combustion. Additional benefits include creating new markets for agricultural products, keeping productive farm land in use, improving U.S. trade balances and maintaining U.S. leadership in the development of alternative energy technology. If the Department of Defense plays a larger role in helping to commercialize technologies, there can be a direct national security benefit as well, as a recent Pew Charitable Trusts report shows.

Policy makers should also bear in mind that the federal government’s role in supporting other vital industries has not been limited solely to R&D. In the 1980s, the semiconductor industry and federal government created a public-private partnership, called Sematech, to help U.S. companies conduct coordinated R&D on new manufacturing processes and then share the advances. But the federal role went beyond just supporting the R&D; it included removing regulatory barriers to sharing the results among companies. The risks of lowering antitrust barriers were weighed against the benefits of maintaining U.S. competitiveness in this high-tech industry – and those benefits can be counted across numerous industries today, even if some of the original companies in the Sematech partnership are no longer in existence or have changed their business models.

Private investment in any new technology is inherently risky. But energy and fuel production are also very capital intensive – because energy and fuels are high volume, low value commodities – increasing the risks for investors. Building new advanced biofuel biorefineries while simultaneously securing new upstream markets for agricultural feedstocks and downstream markets for new fuel molecules is a daunting task. And institutional investors are more risk averse than usual following the recent banking crisis and economic recession and looming threat of a new recession.

The restricted flow of capital is a market barrier to innovative alternative energies and advanced biofuels that requires government action. The public-private funding mechanisms for R&D and early commercialization that have been employed to date – grants and loan guarantees – are an appropriate response. The failure of any individual company should not be compounded by a failure of the U.S. government to help to address U.S. energy security.

Beyond the obvious benefit of ensuring more energy—and making America a more competitive country — support for the solar industry is also support for more jobs. The U.S. solar industry now employs more than 100,000 Americans, who work at more than 5,000 companies, mostly small businesses, in every state. In fact, solar energy is one of the fastest growing sectors of the economy, with 69 percent growth in the last year alone. Accordingly, solar power in the United States now exceeds 3,100 megawatts, enough to power more than 630,000 American homes. And we are now a net exporter of the solar products we manufacture by $2 billion. With the expansion of the U.S. solar industry, the costs associated with solar energy have declined. Since the start of 2010, the price of solar panels dropped by 30 percent, underscoring the fact that continued investment and increased competition will lower prices for consumers.

This growth occurred amidst an economic downturn, due in large part to the 1603 Treasury Program. It was this program that helped the commercial solar market grow by 22 percent in the 2^nd quarter of 2011. Not only is the program effective, but the fact that it gives companies a grant after a solar project is installed and generating electricity, makes it an extremely safe investment for government.

It’s clear by the number of new jobs created and power generated that programs to support solar, like the 1603 Treasury Program and the federal investment tax credit (ITC), work. But the reality is they could be better. The problem lies largely in the stop-and-start nature of these policies. For example, the 2005 ITC was only enacted for two years. Then it was extended by one year. In 2008, the government granted an extension until 2016. Similarly, the 1603 Treasury Program was set to expire at the end of 2010 to coincide with the expected recovery of the financial markets, but was then extended until the end of 2011 when such recovery didn’t occur. Today, with financial markets still struggling, further extension of the 1603 Treasury Program is necessary to maintain the solar industry’s momentum.

Likewise, we can’t overlook the essentiality and success of the DOE Loan Guarantee Program for power generation projects. Loan guarantees have been essential to leverage private investment in utility-scale solar power projects that would otherwise be unavailable in the continuing economic downturn. These are rock-solid investments because these power plants already have agreements to sell the electricity they generate before they break ground. To date, the Loan Guarantee Program has sparked private investment of more than $40 billion in proven technologies, and holds the promise of creating thousands of jobs in the coming months.

To be sure, not every renewable energy company will succeed, just as hundreds of thousands of businesses in other sectors that also receive government support did not weather the recession. The Solyndra bankruptcy is not at all reflective of the health of the U.S. solar industry—just as the failure of one IT company, for instance, is not an indicator of the health of the entire IT industry.

Now more than ever, we need to support and improve programs that bring the promise of new jobs, a more diversified energy portfolio, and increased competitiveness for our nation. We cannot allow one start-up company closing its doors to stand in the way of achieving these goals.

The role of government in energy production should be limited to promoting robust competition in the market by leveling the playing field, removing barriers to trade and investment, and funding basic research that leads to new technologies in the market. Instead, this Administration favors a disjointed and uneven set of favored technologies and fuels that provides no long run incentives for technological advancement.

Solyndra is just one (albeit dramatic) example of failed government policy. No amount of spending will find us a shortcut to American dominance in a solar- or wind-powered world.

Tax credits, loan guarantees, and other subsidies undercut market competition and substitute opaque bureaucratic processes, and limit opportunities for private investors to support ground-breaking discoveries that will change our energy future. If the Administration wants renewable energy technologies to succeed, it should reduce barriers to private investment and push the market to innovate on its own.

We are stuck with old ways of thinking and doing business both on Wall Street and in Washington that are ill-suited to bring about a new energy system. Why can’t Solar City get a loan at a reasonably low rate on Wall Street without a government loan guarantee when the Pentagon wants to buy 160,000 solar systems for its buildings? Isn’t a Pentagon contract enough of a guarantee for Wall Street? If that cannot attract financing on good terms, what is it that investors are looking for? Are speculation and commissions now the main sources of income and profit rather than actual investments that result in things people and institutions want? If so, Wall Street has lost its capitalist raison d’être.

Of course, the way of doing business applies most of all to the old energy sources with tax breaks for oil and gas companies, loan guarantees for nuclear power plants, a liability limit of $12.6 billion for the nuclear industry, even though a government study indicates the most severe accidents (in full spent fuel pools in densely populated areas) could cause damage of over $700 billion (in 2010 dollars). We can put into place a package that responds to the most urgent and important needs of the country jobs in the short- and medium-term, and reduction of deficits in the long-term with a sound fiscal approach that does not create new subsidies every time some lobbyists on K Street have a new idea for their clients. Here is a set of proposals that would meet these difficult objectives if approached as a package:

1. The federal government should set a carbon-neutral goal for itself by 2030 and procure renewable energy, especially solar and wind and geothermal, as well as energy efficiency for its buildings and vehicles. It will mean an increase in employment in the short- and medium-term and a substantial reduction in deficits in the long-term by reducing energy bills. The Pentagon, which spends about $15 billion a year on energy, is already on that track mainly due to security considerations. This would also create sufficient demand so as to induce large-scale private investment in renewable energy and efficiency technologies and bring down their price. It would be a stimulus and deficit reduction all in one program.
2. Drop all proposals for new loan guarantee programs but maintain existing ones (so as not to disrupt jobs at a difficult time).
3. Eliminate the most egregious tax breaks and subsidies for established energy industries like oil and gas and nuclear. Increase the liability limit on existing nuclear power plants and lift the limit altogether for new nuclear plants.
4. Extend investment and production tax credits for renewable energy sources, including solar and wind energy, to 2020. A large amount of employment is currently structured around the present tax credits, so that an abrupt change would create havoc for jobs and pollution reduction. The renewable energy industry should have a fair notice that subsidies will end but it should be a firm and clear policy for the long run that all parties, including investors, can rely on. The subsidies should be ended starting in 2021.
5. Pursue the Department of Energy’s SunShot Initiative vigorously with increased R&D and purchasing support. Its goal is to reduce the cost of solar energy to that of coal-fired electricity without any carbon price. It is an excellent initiative that deserves more support. It will also reduce government energy bills in the long run.

6. Expand grants through the ARPA-E program of the Energy Department (based on a similar defense Department program) which funds promising ideas that are not fundable on Wall Street because they are too risky. Some will undoubtedly fail to produce commercial products but others will yield huge returns. The government should retain an appropriate interest in the intellectual property rights so that projects with big payoffs provide a return to both private investors and taxpayers.

While America needs all forms of energy to compete in the global marketplace, our policymakers must recognize the industries that are naturally creating real jobs and supplying our energy demand.

In other words, they cannot ignore the facts: Fossil fuels account for 78 percent of American energy production, and receive 13 percent of tax incentives. Renewable energy sources account for 11 percent of American energy production, and receive 77 percent of tax incentives.

The independent oil and gas exploration and production sector is a major natural and substantial job creator. Market-created jobs, rather than those directly created and supported by the government, are the key benefit of increased activity by independent producers. A recent IHS study commissioned by IPAA confirmed the amazing heights of independent producers’ job creation. In 2010, the activities of independents supported almost 4 million American jobs, comprising 3 percent of all U.S. jobs.

The oil and natural gas industry is transforming states like North Dakota which, due to the Bakken shale play oil boom, has the lowest unemployment rate in the country at 3.5 percent. Today, NPR reported that small towns like Williston, North Dakota have “skipped the recession entirely.” In the past four years, Williston’s population has burst from 12,000 to 20,000 as people flock there for well-paying jobs.

In 2010, independents alone added $579 billion to the economy - 4 percent of the total U.S. gross domestic product. Clearly, the oil and gas industry is productive – the industry is not being propped up what anti-industry folks call “subsidies.” In fact, these provisions, like percentage depletion and intangible drilling costs (IDCs) are neither “loopholes” nor “subsidies,” but rather methods very similar to real estate depreciation in accounting for those capital expenditures. Policymakers must understand the consequences of repealing these provisions, which will inevitably be a downtick in industry investment, and therefore a loss of jobs and American energy supply.

The Solyndra case is an important lesson for our energy policymakers. It serves to highlight the industries that create real, meaningful jobs for Americans. The American oil and natural gas industry is the flagship industry that not only provides these jobs, but also supplies the energy that grows our economy and bolsters our energy security.

(These comments were submitted by George Biltz, Corporate Vice President of The Dow Chemical Company and Vice President, Energy & Climate Change.)

As the run-up in gasoline prices earlier this year demonstrated, the growth of the U.S. economy depends on affordable energy. So does our manufacturing base, which converts energy into products that consumers rely on, create added value for the economy and in many cases also save energy. Without the Administration and Congress coming to consensus on an effective energy policy, the U.S. economy will struggle to grow and create jobs.

Dow’s long-held belief is that national energy policy should increase, diversify and optimize domestic production of all forms of energy while at the same time accelerating energy efficiency and lower-carbon alternatives. This approach will allow us to diversify our energy mix, grow American manufacturing, make the U.S. more competitive globally and put us on a path to slow, stop and ultimately reverse greenhouse gas emissions. To get there, we believe government has a legitimate, but limited, role to play.

First, through support for basic and high-risk R&D that targeted investments in technologies critical to US competitiveness and energy security, such as advanced electric batteries and carbon capture, government can help lead. Our fiercest competitors in the global marketplace provide aggressive incentives to their domestic companies. With thoughtful, targeted investments, our government can help American companies turn innovations into industries that fuel economic growth. Enhancing the R&D Tax Credit is essential for fueling energy innovation in the US.

Second, Washington should support policies to encourage increased deployment of energy efficiency measures in all sectors. This will allow us to address 40% of our energy and carbon problem head on, create large-scale cost savings for consumers and increase the value of homes and buildings. It can be done with better building codes, collaborative research and targeted federal incentives. A good example of a legislative effort is the Energy Savings and Industrial Competitiveness Act introduced by Senators Shaheen and Portman.

Third, providing the environment for responsible domestic oil and gas production is a key function of the federal government. Current policies either delay permitting for, or completely prohibit, access to resources both on and offshore. Expanding access could put billions of additional dollars into state and federal budgets while creating much needed jobs. In fact, a recent study by Wood Mackenzie estimated that 1.4 million new jobs could be added through policies encouraging development of these resources by 2030. This is significant and an area where government action is essential.

Finally, government has a responsibility to recognize when it should play no role at all. For example, history has shown that the government is good at legislating demand, but not as successful in promoting supply to meet that demand. Demand without supply drives up prices, and this hurts U.S. manufacturers. This is why we are strongly opposed to the NAT GAS Act, which offers federal subsidies for natural gas vehicles (something the market is already taking care of on its own) but does nothing to ensure adequate supply for value added uses of natural gas, such as manufacturing.

While the failure of Solyndra is currently the center of attention in Washington’s energy debate, it should not be viewed as an excuse to remove government from the process. The federal government can and should play a role to not only ensure the economy is growing and jobs are created, but to get the US on a path towards a sustainable energy future.

The best role for government in energy production may be in the R&D side in the national labs, universities, and so forth. But the choice of what to invest in should be done via a double blind review system by real experts in the relevant fields. The government might also think about developing energy research and application prizes, but these should also be as independent of the usual sordidness of real political economy as possible.

Most large government programs to subsidize new technologies for energy or whatever have the lobbyists hunting about for the big game of government largess. Solyndra was no different. They were in lobby overdrive and that should have been a give-away that something was not right in Solyndraville. It seems that they were losing money and that some people were aware of the weaknesses of the company even as more government money was sent their way. As an economist this makes little sense, especially given that prices for flat panels and other types of solar technologies were declining worldwide. Also, this makes little sense given the falling prices of some fossil fuels and the general weakness of the major demand economies for these devices. Even China seems to be weakening a bit and there is a lot more hidden in their economic closets that we as a world should be worried about.

When all of the facts of the Solyndra case are in the open, if they ever are, we might find that the story is far more complex (surprise, surprise) than presented in the media recently.

However, getting beyond Solyndra and this mess that could do harm to lots of politicians and others along the way. This may be a good time to get real about “green energy” and the branding that has been pushed on it for a very long time. First off, there is no truly clean energy. The best way to judge the environmental, economic and other impacts of any technology is via systems-within-systems life-cycle approaches to measure all costs and benefits. Frankly, there are really no comprehensive studies out there looking at the comparisons of energy technologies across a wide range of technologies, uses, and effects on the environment and the economy. There are partial studies and partial studies are by definition not sufficient given that any full study of the opportunity costs of choices of technologies and systems-within-systems needs to look at all possible competing alternative technologies and systems-within-systems. I doubt that this is being done by anyone in the government given all of the lobbying and political noise out there.

Also, the public assumption that “green energy” is not corrupt is just plain silly. There could be trillions of dollars involved in the development of alternative energy systems. When you are talking that kind of money then there will be corruption. It is the nature of the beast. Also, there seems to be an impression that “green energy” companies are there to save the world. Show me a company CEO who is only there to save the world and I will show you a CEO who is bankrupt. The bottom line needs to be met or the company goes under. Of course, there are likely lots of “green energy” companies out there who have convinced their interns to work for nothing or close to nothing and without benefits in order for the company to “save the world”. Now you get my point. Exploitation of good hearted younger people seems rampant in the business.

And if anyone thinks that self-serving lobbying by “green energy” groups does not exist I suggest you read through some of the commentaries by some of the “green energy” association publicists and others. These are businesses. I can’t help but think of a group of “green energy” lobbyists I met at a conference last year. I would not believe any of them if they told me the time of the year. Surely there are well-meaning people in “green energy”. Amory Lovins and his groups and associates are some of the best of them. However, there are also lots of people out there to make a buck only. They are often cut-throat business people in “green” clothing.

The future of “green energy” will be defined by competition between alternatives here and globally. It will be Darwinian and it will be rough and tumble.

The transition to the new energy futures will require a lot of winners and losers to be defined by the cold forces of the market, both domestically and internationally. There will be subsidies (much like there was oil in the movie “There will be oil”). However, such subsidies cannot be the backbone of the industry. Industry must be the backbone of the industry.

Otherwise, in the long run the US will be a follower, not a leader, in the new energy eras. The fact that there is more and more oil and gas being discovered here and globally is another part of the cold winds of the marketplace. Relative costs of fossil fuels per BTU may end up falling for some time, especially for natural gas. We also have massive oil shale, shale oil, and tar sands reserves in the West and North that we can now get at. We can also get at the oil sands of Canada and many sources of heavy, extra heavy and other unconventional oils and gases world wide. The center of gravity for energy change is moving once again toward fossil fuels, Please do note that there are lobbyists trying to stifle this change with massive efforts (and large war chests of cash) here, in Canada, the EU, etc. It makes one wonder what is really behind all of this push to stop “dirty oil” in order to bring “green energy” in. Is it to “save the world” or “to make a buck”? Even the associations and environmental groups have hopped on this issue with an odd emotional and obsessive persistence. It sure helps in getting donations when you have movie stars saying things against oil, even if these movie starts would likely not have a clue of the complexities and risks involved in sharp and fast movements away from oil, gas, and coal and toward “green energy”. Energy change will take time: a lot of time and maybe even more than a century.

Why do I keep using quotes around “green energy”? No energy system is perfectly clean and without any negative side effects when you see it from a wide angle perspective. Some are better than others. Also, “green energy” is a business. It has a lot to do with the other green. It is not just the oil companies looking for a good profit and huge incomes. Let’s stop kidding ourselves and awaken from the adolescent stupor brought about by some of the green energy people.

If they invent and compete, make a good return in the process, create jobs, and help improve the competitiveness of the economy then just great. But we also need to weigh the costs of moving from what we have to what the future might bring us in environmental, economic, social, psychological and even cultural terms. And that also means weighing them against what we already have.

Change can be good. In some cases it is required, but let’s not be naïve about what is going on here.

I would like to see a better, more sustainable , and more people and environmentally friendly set of energy systems for our future, but not from the worst of the “green energy” con men, but from the best systems we can develop for the long run.

And that will take time and some real leadership in science, engineering, business, government and more. And, frankly, we seem to be falling behind the curve on many of those.

Do I want a better energy and environmental future for my children and generations to come? Of course I do. But that transition needs to be done properly in order to not harm the people of the present by applying the ideological (and self-serving) and the expense of the practical (and more widely beneficial),

The role of the government in energy development, and almost all other activities, should be to establish a level playing field and then let the forces of innovation, competition and the market determine the shape of our energy future. Actions that tilt the playing field in favor of politically preferred alternatives don’t work and invariably generate unintended consequences.

The Solyndra problem came about in part because the government decided to back its business model and innovative technology. Solyndra’s business case was flawed, and its technology not ready for commercialization. The lesson of Solyndra is that the government does not have the expertise to pick winners in the race to develop new energy sources and the politically correct alternatives face serious technological obstacles that will not quickly or easily be over come. This lesson has been demonstrated time and time again but the government keeps trying.

Subsidies—whether loan guarantees or direct handouts—take taxpayer dollars and give them to companies that are doing what the government wants instead of what the market wants. The existence of these “incentives” invariably creates a class of businesses that profit from skills in the regulatory and lobbying arenas instead of the market place.

Incentives—to the extent they can be justified on solid economic and national interest grounds—should be available to all companies, not just a chosen few. While President Obama rails against tax breaks for oil companies, the fact is that those tax code provisions do not favor oil companies over other companies. The repetition of that myth does not make it so.

The history of technological breakthroughs is a history dominated by uncertainty, by false starts, missed opportunities, serendipity, and sound decision making. It is beyond the government’s capabilities to promote those qualities. Politics doesn’t tolerate the process of learning by failing.

The government’s role should be limited to promoting competition and support of research that will not be done by the private sector because it can’t gain property rights over the results. That would include high risk, high payoff research. And R&D that could help move promising technologies into the market place, if they can prove to be commercially viable.

Instead of looking at tax credits and loan guarantees to provide incentives for energy development, the government would serve a better role by figuring out why private capital is not being invested and then removing those barriers. Clearly in the nuclear industry, for example, there are actions government can take to make investments less risky and which would lower the cost of capital. These include tort reform, opening Yucca Mountain, streamlining the permitting process, and standardizing designs.

We are an energy rich nation and a nation that leads the world in innovation. Private capital, market forces, our abundance of energy and economic and energy realities can lead to the development of new energy sources in time. Trying to force them into the market won’t work and will produce economic distortions. For the next several decades, fossil energy will be our dominant source of energy. Instead of cursing that blessing, we should embrace it and support the R&D that is needed to advance technology for both using fossil energy more efficiently and developing alternatives.