Numerous responses to this week's question have highlighted the need for policy stability in the renewable energy markets, and PwC Sustainable Business Solutions' experience with clients bears this out. Both producers and customers in the renewable energy sector face difficulties in making long-term investment decisions when the policy framework underlying them lacks clarity. But we also see a fundamental underlying trend toward deploying renewables.

In our 2010 survey, "Appetite for Change" (http://www.pwc.com/appetiteforchange), only 17 percent of U.S. companies surveyed agree that the government has a clear, unambiguous policy with regard to environmental economic instruments, and more than half (56 percent) said that government does not engage effectively with business to ensure its environmental policies take industry views into account.

Perhaps more surprisingly, we found that only one-third of our U.S. survey respondents agreed that the current mix of tax incentives was sufficiently motivating to change their business behavior. In our view, adopting environmental initiatives and integrating sustainability throughout the organization is a transformational business opportunity.

Although further clarity around incentives such as the production tax credit would have obvious value to the renewable energy markets, there are sufficient drivers toward adoption of renewables technologies to avoid a full-fledged renewable energy bust. In the short-term, chief among these are state renewable portfolio standards and Executive Branch actions such as Executive Order 13514 that help spur demand for renewable energy. We also see increasing interest in renewables deployment from corporate sustainability leaders who are seeking to meet their public commitments on energy use and emissions reduction. PwC SBS sees a trend suggesting that more and more leading businesses will be adapting their energy usein response to demands from senior leadership and investors, among other stakeholders. In the long-term, companies may look to renewable increasingly as a way to manage their energy costs (as more technologies reach scale economies) and build resiliency into their supply chains.

While federal policy has clearly been an important driver for renewable energy, it is not the only driver, and leading companies are likely to remain on the road to deploying renewable regardless of short-term uncertainty over federal incentives.

Offshore wind, while thriving in other parts of the world, is a brand new industry in the U.S. In fact, while offshore wind has thrived in Europe for the past twenty years, creating thousands of jobs and clean, renewable energy for its citizens, the United States has yet to install its first offshore wind turbine. As a result, the offshore wind industry has not received any federal tax dollars for the advancement of its projects.

This is in stark contrast to the oil and gas industry, which, since the early 1900s, has been the recipient of billions of dollars in federal tax subsidies, the purpose of which has been to increase domestic oil and gas reserves and production. Oil and gas subsidies are provided on a permanent and ongoing basis, meaning that these companies don’t have to appeal to Congress every 1-2 years for an extension like renewables do. They will continue to receive their subsidies until Congress decides to repeal them whether they need them or not.

The lack of a federal commitment to, and investment in offshore wind can scare off private investment. Take for example the recent decision by Gamesa to shelve its plans for an offshore wind prototype in Virginia, in favor of investments overseas.

This is a shame because the U.S. has incredible offshore wind potential. According to the DOE, the total gross offshore wind potential of the U.S. is over 4,000 GW, which is approximately four times the generating capacity of the current U.S. electric power system. (See, “A National Offshore Wind Strategy: Creating an Offshore Wind Energy Industry in the United States.”) This is a huge domestic energy resource that we haven’t even begun to tap into. Offshore wind can help us reduce our reliance on polluting fossil fuels, both foreign and domestic, create long-term and good paying American jobs, combat climate change, and become leaders on the global clean energy stage. An Oceana report found that some Atlantic states could generate more electricity with offshore wind than they currently produce by all other sources. And this is energy that can help reduce emissions of carbon dioxide which is driving climate change. There is no good reason not to invest in offshore wind. Yet, that’s exactly what we’re doing.

The Investment Tax Credit (ITC) is the single most important incentive to the growth of the offshore wind industry. However, under current law, the ITC for offshore wind expires at the end of this year. No offshore wind project can meet this deadline. Recognizing these realities, Senators Tom Carper (D-DE) and Olympia Snowe (R-ME) and Reps. Bill Pascrell (D-NJ) and Frank LoBiondo (R-NJ) introduced the Incentivizing Offshore Wind Power Act in both the House and the Senate. To keep in fiscally conservative, instead of extending the ITC for offshore wind to another year-based expiration date, the Incentivizing Offshore Wind Power Act would provide a 30% ITC for the first 3,000 megawatts of offshore wind placed in service. That limits the total expense and prevents a runaway subsidy, not that anything we do on clean energy is likely to be as wasteful as what we have done for oil and gas.

This bill has a limited cost, but it rewards the first movers in the industry, incentivizes development, and sends a clear signal to investors and manufacturers all around the world that America is open for business and committed to producing clean and domestic energy. Extending the ITC for offshore wind, which would signal to the rest of the world that the U.S. is supportive of this nascent industry, is critical to the success of offshore wind. The U.S. can’t keep letting companies take their wind interests elsewhere, nor can we allow this job-creating clean energy industry to go bust before it is ever able to boom.

Boom and Bust comes at a critical moment for the future of clean energy in the US. On one hand, the recent global scale-up in clean energy deployment has significantly reduced costs in that sector, for example a 75 percent decline in the price of solar panels and a 27 percent decline in wind turbines between 2008 and 2012. On the other, at the very moment when these technologies are becoming economically competitive with traditional generation in many parts of the country, a looming 75 percent contraction in federal support threatens the progress we have made at the exact moment when our major economic competitors are increasing their support for a global industry that is now reaching $260 billion per year.

The report is right to point out that the current lack of action in Congress forces a rethinking of the policy framework for clean energy and an examination of the finance structures developers use to build out their projects – two conversations that we are very interested in having at the Department of Energy.

In this rethinking, let’s focus on two principles that must anchor the next generation of clean energy policy.

1. Deployment of proven technology drives innovation by providing market opportunities for innovative companies.

2. Using stock and bond capital markets can offer clean energy projects more robust access to cheaper capital than the current private sources of investment.

Deployment, Scale, Market Access, and Innovation. Much of the decline in wind and solar costs stemmed from large-scale deployment policies that brought industries to scale using "good-enough" technology. In solar, for example, due to scale advantages, "old" polysilicon technology has been more competitive than a range of newer technologies, including CadTel, CIGS, thin film amorphous Si, CSP, and solar thermal. Scale also drives down the substantial non-technology costs that are a major part of any project, including installation. In solar, more than half of a system's costs are non-hardware or “soft” costs.

Newer, more innovative technologies will supplant existing ones, but they can’t unless they have market opportunities, which is why it’s critical for policy-makers to pair policies that promote market development with policies that promote innovation. If you don’t, valuable technology advantages possessed by innovative companies dissipate because they can’t achieve the benefits of scale. The development of “feedback loops” between innovation and manufacturing and between manufacturing and markets is critical to harnessing the power of innovative technologies, like those developed through DOE programs.

Think of the fast chip in the new computer you’re using to read this blog. If we’d had a policy of deploying that chip only after innovation in processors allowed it to be sold at its current price, do you think the computer industry would be where it is today? The “Moore’s Law” in the semiconductor industry of continued increases in performance at reduced cost isn’t a law of physics but a law of markets; without a market into which to sell those initial chips, it is unlikely that manufacturers would have had the incentive to invest in innovation and capital to develop ever more powerful chips.

The computer chip analogy is important in another way. There are parts of the electronics industry that have manufacturing offshore, but many Americans are employed in the value-added parts of the industry that are located in the US. The point is that the industry is complex and global, and focusing on developing markets for clean energy technology creates a range of jobs for American workers.

Recent US policy has been appropriate in its balance between innovation and deployment. But with deployment support policies ending or scheduled to, critics are suggesting that we “can’t afford” to extend them, and therefore should focus only on innovation. We’ve tried this tack before, and it doesn’t work.

Capital Markets, Cheaper Capital, More of It. Nearly everyone would agree that clean energy projects are stuck in an old-fashioned and anachronistic model of financing. While other sectors of the economy long ago shifted to seeking investment from capital markets, clean energy is stuck in a time when all sources of capital came from private, non-capital markets sources. Simply put, projects cannot take advantage of the liquidity and pricing benefits of bond and stock markets. Having clean energy make the same migration would open a more robust and lower cost source of capital for project developers. As it is now, we compete with China in non-capital markets sources of finance, where China has a competitive advantage, and not on the basis of capital markets solutions, where the US has competitive advantage. Compared to conventional sources of energy, upfront costs of renewables are higher because feedstock costs are close to zero. We spend lots of time trying to find ways to reduce hardware costs, but not enough time of ways to reduce financing costs. And costs are costs.

It is ironic that when good projects with proven technology and credit worthy counterparties are begging for low cost financing and investors want long-dated, current-yielding instruments, money can't flow from where it is wanted to where it is needed. Furthermore, if we haven't solved the problem of how to readily finance proven technology, it's hard to know how much the problems of financing innovation are due to innovation and how much are due to failures in the underlying financing structure.

Our clean energy goals would be well served, then, by migrating financing for renewable energy to capital markets solutions and away from expensive private sources of capital. REITs and MLPs are examples of structures that are current yield stocks used by real estate owners (in the former) and oil and gas pipelines (in the latter) to tap inexpensive and ample capital from investors on the NYSE. Yields are generally 5-8 percent.

Furthermore, the creation of financial instruments for clean energy to access investment from capital markets could provide a way to finance the deployment of more innovative technologies. As the evolution from investment grade to high yield (and from there, to emerging markets) debt markets demonstrated, it is reasonable to assume that once structures for proven wind and solar technologies were in place, investors would seek higher yields from innovative generation projects – creating markets for American innovations.

Energy Efficiency: The Ultimate Renewable

Almost lost amid the debate over the proper federal role in stimulating renewable energy is this undeniable reality: The best and cheapest energy is the energy that Americans never use.

Energy efficiency – encouraging greater insulation and other common-sense energy savers that millions of home and business-owners can easily adopt – is the ultimate American renewable. Under-insulated dwellings are among America’s biggest sources of wasted energy.

We know from experience that energy efficiency is "clean” and pays for itself many times over. We also know that most public policy initiatives that promote efficiency won’t cost the federal Treasury a dime. Even those that do cost a little are miniscule compared to the many billions of dollars required to support other forms of both conventional and renewable energy.

So why isn’t enhanced efficiency at the heart of the policy debate over America’s energy future? Perhaps it’s because certain policymakers and the media have become infatuated with emerging technologies; there's an unfortunate tendency to overlook efficiency’s obvious benefits.

What are those benefits? Chief among them are substantially reduced monthly energy bills, the creation of tens of thousands of jobs in the still-depressed home construction and renovation markets, and making the U.S. less dependent on unstable sources of energy. To put it in a single phrase: Energy efficiency is proven, practical, and ready to go right now.

In Washington's current policymaking climate it's tough for any energy policy initiative – no matter how smart – to gain bipartisan traction. But efficiency may yet prove to be the exception.

Efforts to buttress efficiency are drawing support from legislators and opinion leaders across the spectrum. Senators Michael Bennet (D-CO) and Johnny Isakson (R-GA) continue to attract bipartisan cosponsors for their efforts to instruct federal agencies to adopt new appraisal processes that reflect actual home energy costs, a move that would spur greater demand for energy efficient homes. The Bennet-Isakson SAVE Act is supported by a broad-based coalition that consists of the U.S. Chamber of Commerce and the National Association of Manufacturers on one side - and the U.S. Green Building Council and the Natural Resources Defense Council on the other. Therein lies the beauty of energy efficiency.

A bipartisan group of House members is looking to introduce the SAVE Act on their side of the Hill. Meanwhile, Representatives Nan Hayworth (R-NY), Dan Lungren (R-CA), and Mike Thompson (D-CA), are spearheading an effort to revitalize the PACE (Property Assessed Clean Energy) program that brings together small businesses and local governments to ensure accurate residential property assessments, again with the idea of greater homeowner investment in insulation and other energy efficiency measures.

A better PACE program would be a powerful antidote to what’s ailing the American economy. So would the extension of tax credits that incentivize taxpayers to make their homes more energy efficient.

It’s not too late for these issues to gain momentum toward enactment this year, and for efficiency to move where it belongs in the energy policy debate: front and center.

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Kate Offringa is President and Chief Executive Officer of CNAIMA, the Council of the North American Insulation Manufacturers Association.

Another question policy makers should ask is whether U.S. consumers, U.S. investors, and U.S. businesses can withstand another boom and bust cycle of energy prices. If the United States fails to open its energy markets to home-grown alternatives, we will remain dependent – possibly grow more dependent – on imported energy and we’ll continue to allow other countries to set energy prices for us.

Stability in policy is the key to unlocking private investment in the renewables industry. Private investors have become increasingly risk averse in the shadow of the recent economic downturn. Policy instability creates additional market uncertainty. But private companies have invested hundreds of millions of dollars to get the industry off the ground; reversing course now will simply strand those investments.

A number of U.S. biotech companies have completed the R&D phase and have built or are beginning construction of commercial biorefineries to produce advanced biofuels and renewable chemicals. These commercial facilities are translating U.S. research into new industries that can revitalize domestic manufacturing. Other countries are certainly trying to attract companies to deploy that same R&D, by providing critical access to capital. Tax credits, loan guarantees and market development programs are necessary for the U.S. to provide a competitive environment.

Tax policy should be focused on driving innovation to reduce our dependence on foreign oil, lower gas prices, and create high quality U.S. based career opportunities. U.S. tax policy should support the full range of biorefinery opportunities – biofuels, biobased products, and renewable chemicals – to level the playing field for U.S. companies and ensure these American-born technology innovations are deployed here at home to the benefit of all U.S. citizens.

Farm Bill energy programs also have had a tremendous positive impact in revitalizing rural America, helping new agricultural markets emerge, and reducing the need for direct payments to farmers. These programs have unlocked private capital for construction of the nation’s first cellulosic and advanced biofuel biorefineries; put more than 150,000 acres of underutilized farmland in over 150 counties into production raising next generation energy crops; and led to an explosion of renewable chemicals innovation, demonstration and early commercialization here in the U.S. Reauthorizing and adequately funding these programs should be a no-brainer for Congress.

With the Renewable Fuel Standard in place, innovative U.S. advanced biofuel companies have moved as rapidly toward commercialization as possible. These companies are providing energy solutions today. In order to foster the U.S. lead in innovation, the federal government must continue to support development of the advanced biofuel industry. There are successes to point out, including POET-DSM, KiOR, INEOS Bio, Abengoa, Sapphire Energy and ZeaChem.

Lastly, Congress should stand behind its military and support their use of biofuels. As one of the largest consumers of fuel in the United States, our troops are uniquely vulnerable to price swings in foreign oil. When the military is forced to shift its budget to pay higher fuel costs – as it has been for the past several years – it comes at a cost of training for our troops. There are many examples of other industries that the U.S. DoD supported because they were vital to national security – such as the computer chip industry, commercial airlines, the titanium and the aluminum industry. We shouldn’t pretend this is different.

The current market for the renewable energy sector in the United States and around the world is a mix of challenge and opportunity. However, the long-term future of clean energy is bright.

According to our recent report Who’s Winning the Clean Energy Race, 2011 Edition, last year saw record private investments globally. And the United States received more investments for clean energy than any other nation. These investments resulted in record deployment levels—83.5 gig watts of clean generating capacity overall, including an unprecedented 30 gig watts of solar.

But like other emerging high-technology industries before it, the clean energy sector is going through a period of profound transition. The industry faces powerful financial and policy cross currents.

The most important long-term dynamic in this sector is falling prices. Both wind and solar have experienced sustained and dramatic price declines. Solar module prices dropped 50 percent in 2011. Wind prices were down 10 percent. Lithium-ion batteries used in electric vehicles are down 30 percent over the past three years and fell 14 percent just last year.

These price declines are good news for consumers and help explain last year’s record deployments. Yet falling prices are putting manufacturers through a period of turmoil in the United States and elsewhere. Many are hard-pressed to make a profit and scrambling to remain viable. A number will fail, just as the more than 100 automakers in the early 20th century were whittled down to only a few American auto producers.

This turmoil facing clean energy manufacturers is exacerbated by policy uncertainty in the most established and mature markets. Financial incentives in Europe are being curtailed in the push for budget austerity. In the United States, a variety of initiatives, passed as part of the stimulus package, expired at the end of 2011, and the production tax credit that has guided investors in wind projects is set to conclude at the end of this year.

But these challenges will pass, and clean energy will continue its inexorable march forward—pushing innovation into an energy sector that has not seen much in the way of new technologies for more than 100 years. Renewable power will soon be cost-competitive. Indeed, a range of financial and technical experts expect solar and wind to compete favorably without subsidies of any kind within this decade and perhaps in the next five years.

Similarly, U.S. policy uncertainty will not deter other markets from flourishing. China, India, Brazil, and other emerging economies have strong and consistent clean energy policies to encourage private investment in and deployment of clean energy. These are the markets where most of the 2 billion people without modern energy services live and where demand growth will be greatest in the next 20 to 30 years. Clean energy offers African countries, for example, the opportunity to provide electricity to households and communities without transmission wires, just as cell phones allowed that continent to leapfrog landline phones. Residential solar already is the cheapest energy option in many parts of the world.

For American policymakers, the question is not whether clean energy will be part of the world’s energy future. It is and will be. The question is whether the United States will capitalize on its advantages in clean energy innovation and position itself to use, produce, and sell them to consumers looking for safe, clean, affordable energy options in the future. The hearing this week on the proposed Clean Energy Standard (CES) is an important step. Although the legislation is unlikely to move to the Senate floor for debate, a CES is the type of long-term policy needed in this country.

We have a choice. Continue our current complacency and watch others seize the economic and national security benefits of clean energy, such as job growth and competitiveness. Or renew the production tax credit, pass a clean energy standard, and support innovators, entrepreneurs, and industry in developing the world’s most advanced, cost-competitive clean energy technologies for Americans to use and export around the world.

US commitment and stamina to address its energy problems has been unpredictable and reactive. When energy prices are high or when the global energy suppliers experience political instability, policy initiatives are passed. As soon as prices stabilize and political instability calms, political and consumer amnesia sets in. The weakest industries in the political system are the ones that have been intermittently sacrificed. In the mid-1980's, both the residential solar credits and utility-scale wind credits were allowed to expire, and thousands of US jobs lost. In the mean time Scandinavia built a world class large-scale wind industry followed by China. While the largest majority of Americans in virtually every poll want renewable energy, unless policies are sustained so these industries can scale-up manufacturing and deployment and ultimately financing, they will never reach their potential. Wind and photovoltaics have begun to enter this scaling-up threshold primarily due to State policies such as Renewable Energy Portfolio Standards, environmental credits, and System Benefit Trust Funds. The investment tax credits for solar last through 2016 which will have a positive impact for establishing a US-based market. But wind in particular, because it has grown the fastest, now has the highest budget impact of any of the renewable electric options. And the budget cutters are focussing on the wind production tax credit even though the nuclear and fossil industries receive 'orders of magnitude' more subsidies. Now as we are in the political silly season and the Republican leadership have decided to be against any energy policy that The Administration is for. This partisanship just adds to the market uncertainty which frankly is not happening in other industrialized countries who are our competitors. Any technology expert or economist will advise that emerging industries need sustained, orderly, predictable markets to grow. When we have been able to set the rules and be consistent such as with telecom and the internet, we actually witness market growth and transformation. But the traditional energy industries are much larger and more powerful than the telecom industries of yore, so the push back is even more intense. But State and local governments are far more committed to renewable energy which are geographically dispersed, less water intense, and inherently cleaner than other options. And because global private sector renewable energy investments have topped $269 billion in 2011, there are other forces that may drive these clean energy options in spite of the bellwether political system.

Some great points have been made so far, and I do think that a broader discussion on a redesign of the policy supporting clean energy technologies rather than blanket extension of prior policy is appropriate (not that such a discussion is actually viable in today’s political climate). There have been flaws and inefficiencies with some previous and existing policies and the actual needs of the industry are changing. With that said, there is no doubt that without some action on policy we will see a debilitating drop in clean energy investment over the near to mid-term here in the U.S.

Here are a few points that are critical to evaluating the policy landscape for energy and specifically why deployment or installation based supports are part of the necessary policy landscape.

1. Energy markets are not natural free markets. They are incentivized, socialized and heavily regulated, all of them. Equally important is that these are commodity markets, whether it is fuel or electricity the product of a new energy technology can’t gain market share and therefore scale except on price advantage or mandate (there’s no shiny package to draw consumers, just energy). The existing infrastructure, both electric and transportation fuels, benefits from massive scale and that is scale built in no small part on substantial financial and other policy supports over decades. New technologies simply cannot compete in this environment without support.

2. Cost savings for new technology is driven by R&D (and the relative amount of R&D into energy technology over the past several decades, despite a small recent uptick, is shockingly small for what is a vital component of modern society and economic growth) and scale. Scale doesn’t occur without adoption. Chicken, meet egg, or visa versa.

3. While the government certainly can pursue R&D with a long view, without a reasonable expectation of a good market for a product, private industry will not invest in R&D. Without price signals that indicate a market essentially no private money would get allocated to developing new energy technology. Private capital has been, and should continue to be a multiplier for investment in energy technology research.

4. There is no possibility that we see something like the radical acceleration of price declines that we have had in solar without the known market for solar created by the deployment subsidies in Europe and the US. This market certainty (and it wasn’t all that certain) added tremendous private capital to both R&D and production efficiencies. Neither occurs in a government-only sponsored R&D world.

5. Based on the Brookings/Breakthrough report, at it’s funding peak the total pool of incentives for clean energy for R&D and deployment (which was very broad and included nuclear, high-speed rail and others) was just slightly more than half of the defense R&D budget. Even through a lens of actual austerity and using the wild excess of clean energy support in 2009 as the benchmark, the total pool of incentives isn’t all that much money. Especially in light of the social benefits of successfully developing a clean energy industry (portfolio diversity, reduction in exposure to fuel price volatility, potential for reduced energy imports, water savings and of course climate change mitigation to name a few).

There is no question that our emerging clean energy economy is at risk because of policy uncertainty. The industry continues to need some level of policy support – whether that is through maintaining historical programs or rethinking the policy framework to match the evolving industry, the need is there both at the R&D and deployment stages. The need will not be there forever. The progress towards competitive balance for some technologies and in some markets has been shockingly swift. However, walking away from the progress and promise of viable energy alternatives right now is simply bad policy.

Consistent, stable policies have been a staple for all energy development in the United States for over a century now, opening new markets and facilitating economic growth and job creation across the country. For solar energy, that has meant 5,600 companies employing over 100,000 Americans in all 50 states. Solar is following a similar incentive-driven path to the mainstream as other energy sectors such as coal, natural gas, and nuclear – but only if the stable federal policies that have opened new markets across the U.S. are maintained. That’s according to a recent report from the University of Tennessee Howard H. Baker, Jr. Center for Public Policy.

According to the report, all energy technologies typically require about 30 years to achieve widespread adoption and stable incentives are critical throughout this adoption period – for both fossil and renewable sources of energy. Direct federal support has removed market barriers, encouraged private investment and enabled energy technologies to reach maturity.

Thanks to stable policies at the federal level – most importantly the solar investment tax credit – and policies at the state level aimed at opening new markets, solar energy is on a similar but accelerated trajectory toward widespread adoption.

The Baker Center report provides good historical context for the policymakers in Washington that drive our national energy policy. Developing America’s abundant renewable energy resources – including solar – is consistent with an energy policy that aims to create jobs, promote innovation and investment, and diversify our national energy portfolio. It will be consistent federal policy, like those enjoyed for decades by traditional energy sources, that allows solar and other renewables to continue on their current path toward widespread adoption.

Without consistent policy, Washington risks relegating renewable energy to a perpetual boom/bust cycle – and losing all of the benefits of an all-of-the-above energy portfolio that these rapidly growing industries are contributing to.

Renewable energy has been favored by the Obama administration with loan guarantees, production tax credits, and other incentives--all under the rubric of using “clean tech” to stimulate the economy and help the nation reduce its dependence on energy imports. Though there is certainly a future for solar and wind in America’s energy portfolio, to date little or no benefit has adhered to the economy from these public investments.

In short, the renewable power industry has become addicted to federal subsidies and probably can’t stand on its own without them. Last year alone, these tax breaks cost the Treasury $7 billion. For every megawatt of electricity produced by solar, the subsidy amounted to $776. For wind, it was $56. At present, about 76 percent of all energy tax breaks go to renewables, even though they account for less than three percent of electric power generation, excluding hydropower. Green energy advocates justify these subsidies by making comparisons with current and past tax breaks for oil and gas. But they fail to mention that the tax preferences for fossil fuels amount to a mere 64 cents per megawatt.

Renewables have their place, but the Brookings, et al report is correct in suggesting it’s time to wean the industry off subsidies and subject wind and solar power to the market test. The report is also on target when it recommends that federal spending for clean tech energy be focused on R&D, commercialization, and harnessing advanced manufacturing capabilities.

The Brookings and Breakthrough “Beyond Boom & Bust” properly identifies how our misguided focus on existing renewable technology has led to this chronic “boom, bust” cycle. Unfortunately, this rollercoaster of growth and retraction has caused some in Washington to question the value of a diversified, “all-of-the-above” energy policy. As the report recommends, now is the time to reposition our approach to renewable energy development and concentrate on making these resources more commercially competitive before unleashing them into the market.

For years, federal and private support has focused myopically on bolstering existing renewable energy and its adoption through tax credits, grants and incentives. According to the report, nearly three-quarters of clean energy spending between 2009 and 2014 has been directed to subsidize its deployment and adoption. In effect, we’re directing most of our efforts to subsidizing the higher cost of some of these technologies instead of investing in research to make the technologies more affordable from the get go. With natural gas prices hitting record lows, policies such as these will become increasingly difficult for consumers to support.

Rather, Consumer Energy Alliance believes greater federal and private investment should focus on technological innovation and development of any and all energy resources. The report estimates that a paltry 18 percent of U.S. clean tech spending over the same 2009 to 2014 period went to investment in research, development and demonstration. While funding levels will remain somewhat stable at around $4.7 billion a year, the report notes that this is just one-half or one-third of the optimal levels recommended by business leaders and science advisors. For comparison sake, the United States invests an average of $34 billion in health research and $81 billion in defense research annually. At $19 billion a year, even space exploration receives four times as much as energy research.

While some may disagree about whether we should prioritize health over defense R&D investment, few would argue that we should exclude energy R&D from that list of priorities. Energy is the nexus of economic growth and national security; failure to invest in its future will no doubt have serious consequences for our country. Innovation will help us resolve the challenges of existing energy resources, making them more efficient and more cost competitive. In addition, R&D may lead us to a new source of energy that we’ve never even considered.

Nearly every source of energy comes with benefits and challenges: Nuclear energy is emissions free and extremely efficient, but questions loom about appropriate disposal of spent nuclear fuel. Similarly, solar panels in areas like the Mojave Desert could generate significant quantities of energy, but there is the challenge of cleaning thousands of solar panels regularly with limited water supplies. Not to be outdone, oil provides more energy by volume than any other known liquid fuel, but developing it from miles under the ground (or sea) requires careful calculation to mitigate risk. Innovation will help us tackle some of these limitations and hopefully will allow us to truly embrace a cost-effective, efficient, “all-of-the-above” energy policy.

By no means is it too late for renewable energy to recover from this boom-bust cycle. However, policymakers and investors must realign their priorities and focus on research and development as a means to mature renewable industries and work toward subsidy independence.

Boom-and-bust is extremely disruptive to new, growing industries. Instead of making strategic business plans and executing them, companies are forced to lay off skilled employees for indefinite periods and then recall them later or hire and train new workers--a colossal waste of money and time and a wrenching economic hardship for workers and their families, particularly at a time when the overall economy is still struggling.

The Brookings-WRI-Breakthrough report has many useful and valuable things to say about long-term energy policy, and the U.S. certainly needs such a policy, as we have pointed out repeatedly, to seize a foothold in the new growth industry of wind equipment manufacturing and keep jobs from being outsourced to other countries. Still, while we grapple with the difficult process of building a consensus around a new energy policy in a highly partisan political atmosphere, we need to urgently address short-term needs like an extension of the federal wind energy Production Tax Credit (PTC) as well, to avoid serious harm to industries that can contribute to that long-term policy.

The wind power industry shows what can be done with stable policy. In the past five years of bipartisan policy stability, American wind power has:

o Brought in as much as $20 billion annually in private investment to the U.S.

o Created one of the largest providers of new American electric generation with 35% of all new power capacity, right behind natural gas.

o Driven technology advances that have made wind more affordable than ever. A typical wind turbine now generates 30% more electricity – all while driving down costs.

o Created nearly 500 new American manufacturing facilities and employed 75,000 overall, including 30,000 in the manufacturing sector, from coast to coast.

o Produced enough electricity last year to power the entire state of Michigan.

Unlike many other energy policy and legislative provisions, an extension of the wind energy Production Tax Credit has strong bipartisan support. Extension legislation introduced in the House by Congressmen Dave Reichert (R-Wash.) and Earl Blumenauer (D-Ore.) currently has 97 cosponsors, including 22 Republicans, and was strongly supported by Members testifying during a recent House Ways and Means Committee hearing. A Senate bill to extend it was introduced March 15 by seven Senators, including three Republicans. PTC extension efforts have received the endorsement of a broad coalition of more than 370 members, including the National Association of Manufacturers, the American Farm Bureau Federation, the Edison Electric Institute, and the Western Governors’ Association. A PTC extension also has the support of the U.S. Chamber of Commerce, the National Governors Association, and the bipartisan Governors’ Wind Energy Coalition, which includes 23 Republican and Democratic Governors from across the U.S. A PTC extension has been endorsed by a number of newspapers across the country, including the Houston Chronicle, The New York Times, the Denver Post, the Daily Oklahoman, and the Toledo Blade.

Congress should act now to extend the PTC and avoid further harm to one of the country's most promising new energy options. Let wind finish the job of building a new manufacturing industry and making the most of an abundant, affordable, clean, domestic resource.

The US clean tech sector has been on a roll. Rapid growth in the last few years has been powered by expanding demand for low-carbon energy and falling prices for key technologies, including solar panels, wind turbines, and advanced vehicle batteries. But these advances bring along mounting burdens for government budgets, with clean tech deployment subsidies ballooning with every new megawatt installed. Meanwhile, the plummeting cost of natural gas, precipitated by the ongoing American shale boom, has pushed back the goal posts for low-carbon power technologies.

Most critically, clean tech’s key support policies are on the verge of en masse expiration. As documented in a report we released last month with Mark Muro at the Brookings Institution and Letha Tawney at the World Resources Institute, a majority of federal clean tech subsidies will expire before 2014. By that year, the sector will suffer a 75 percent decline in federal spending, from a high of $44.3 billion in 2009 to only $11 billion in 2014. Our report, titled “Beyond Boom and Bust: Putting Clean Tech on a Path to Subsidy Independence,” chronicles this sharp draw-down, and proposes a policy reform platform that will more efficiently drive clean energy technologies to unsubsidized commercial maturity.

The challenges facing clean tech are not harbingers of failure, but growing pains faced by maturing domestic industries. Solar panel prices have dropped 75 percent while annual installations grew 10 times between 2008 and 2011, but American manufacturers are feeling the squeeze of declining margins. The nation’s wind turbine manufacturing base has grown with the impressive surge of wind-generated electricity, but the expiration of the federal Production Tax Credit for wind (PTC) at the end of 2012 threatens the industry with factory closings and stunted growth. Electric vehicles have made headway with the release of the Chevy Volt and the Nissan Leaf, but these models have been slow getting to market. And though the Nuclear Regulatory Commission recently approved the first new nuclear reactors in decades, the projects have been plagued by delays and high costs.

The same policies that kick-started these low-carbon energy technologies will not suffice to carry them through to broad market competitiveness. With the looming expiration of federal support programs comes an opportunity to reform American clean energy policy. Our report recommends a set of broad criteria for a national clean energy policy focused on innovation and subsidy independence for low-carbon technologies.

First, clean tech deployment subsidies should prioritize innovation and cost declines. Instead of simply incentivizing production of current technologies, federal support should be indexed to technological improvement and continual innovation. Smart deployment policies will establish competitive markets among technologies at similar maturation stages, avoid technology lock-out to promote a diverse energy portfolio, and maximize the impact of taxpayer dollars by unlocking private investment. Above all, policies will provide sufficient business certainty, and scale down in line with achieved technology improvements.

Second, we must apply the full strength of America’s energy innovation system. Annual funding for clean energy R&D should at least triple, and public research institutions should align with regional markets and partner in clusters with clean tech manufacturing and financial entities.

Our federal policy platform has been successful at getting clean tech sectors off the ground, and state-level policies like the popular renewable portfolio standards (RPS) have been effective at driving the deployment of the most mature low-carbon technologies. But as the prices for natural gas have plummeted, even the combination of these policies will prove insufficient to push clean tech to full market competitiveness.

But if clean tech developers look with envy at low natural gas prices, they should also take a lesson from the path the shale gas industry took to achieve commercial maturity. As documented in a Breakthrough Institute investigation, the development of hydraulic fracturing and other critical shale drilling technologies relied on smart and sustained federal government investment, from early basic research and applied R&D to tax incentives for unconventional gas and cost-sharing with innovative gas companies. After 30 years of incubation, shale drilling has become an emergent sector in the American economy, fueling job growth, lower energy prices, and the retirement of America’s aging coal power plants.

Decades of government support for shale gas have been relegated to history; with shale drilling at full technological maturity, the shale gas boom continues without the prop of federal subsidies. The shale gas success is a parable for clean tech going forward. Federal policies will work best when they foster competitive markets, drive cost declines and performance improvements, and ultimately expire as industries reach cost-parity with conventional energy technologies. If smart and effective policy reforms are enacted, the growing pains of these young markets will give way to vibrant and competitive 21^st century American industries.

As the country looks for new sources of clean energy finance while Congress remains paralyzed, we might have missed the most obvious funders that have been right under our noses for years. They are the public infrastructure finance agencies all over America that know how to raise capital at the scale needed in this sector. In turn, Congress and the Administration should look to new policies to support this emerging, state-based infrastructure financing trend.

Hundreds of billions of dollars are needed scale up renewable energy, energy efficiency and clean energy manufacturing support. To fill this gap, some are looking to the states, regions and localities, a return to federalism as an investment strategy. Federal gridlock reminds us again that states have been the clean energy innovators. State funds have raised and leveraged over $12 billion in clean energy investment in the last decade. And clean energy policy at the state level has been done on a relatively bipartisan basis, unlike in Washington.

In this search for new forms of clean energy finance, a large group of state and local finance partners has been overlooked – the public authorities and other entities that do tax-exempt and taxable bond financing – a $3 trillion industry that has financed our nation’s infrastructure and public improvements, from bridges to hospitals to university expansion. In the U.S. over 50,000 state and local agencies help finance economic and community development.

To date, these agencies have not been that active in clean energy, with the exception of a few projects; but they now want to aggressively move into clean energy financing. As to the capital they can raise, municipal bond issuers in March 2012 alone brought 1,196 deals to market worth $34.50 billion. That makes $78.3 billion in 2,927 deals in only the first three months of 2012.

Let’s compare this scale to the possible declining federal support. Tax equity revenue generated for wind through the uncertain production tax credit was about $3.5 billion in 2011, while federal support for solar through various subsidies was about $2.5 billion.

These amounts are what municipal bond authorities finance every few days, every week of the year, all across the country.

Now, these bonding instruments are not exact replacements for tax equity investment, but they could usher in new forms of finance strategies. These tools have the potential to enlist major capital players such as institutional investors and pension funds that look for longer term, more predictable returns from infrastructure bonds—creating a new investment profile for clean energy with investors that finance at scale.

So far, there are some interesting emerging examples of bond financing in this space. In New Jersey, bond financing is being used to scale up solar installations though traditional public authority activity, now almost $200 million in investment. There are other models in energy efficiency finance and in other sectors that can be scaled up and replicated across the country.

Oddly enough, until now no one has ever approached these public infrastructure finance agencies to work on clean energy in any systematic way across clean energy markets. Some good news is that the membership organization of these authorities, the Council of Development Finance Agencies or CDFA, has entered into a partnership with Clean Energy Group and state clean energy funds to begin to explore use of bonding tools to finance clean energy.

So we have a unique financing situation for clean energy. To grow a robust clean energy economy, we have a new group of financial players who know how to raise hundreds of billions of dollars for infrastructure investment. They are motivated to make significant new investments in clean energy using existing bond instruments. They have begun to make small moves into the clean energy space, with a handful of investments. They are interested in becoming major players.

While the deadlock in Washington and the uncertainty over federal support is unwelcome, it need not mean a death knell for the clean energy industry. Instead, we have an opportunity to return to our federalist roots and look for our states, regions and local bonding agencies to begin to finance clean energy in the same way we scaled up the infrastructure that made America what it is today.

At the same time, there are many ways for the Administration to help, from clarifying various tax exempt rules to favor clean energy bonds to considering other support mechanisms that put the states in the financing lead. Congress too has a role to play to create a more bottom up, federalist financing strategy for clean energy.

At the very least, this new state-based policy conversation around infrastructure finance should begin now, to begin to shape a new clean energy investment strategy that does not rely so much on the whims of Washington.

Could the recent boom in U.S. renewable energy go bust? Yes, both in the short and long-term and only if we re-think U.S. energy policy can clean energy weather the storm.

To be sure, the U.S. clean energy industry has been in a period of rapid growth, largely due to historic federal investments in the research, development, deployment, and manufacture of clean technologies. From 2009 through 2014, the federal government will invest a total of $150 billion, or the equivalent in magnitude to government support for past national challenges like putting a human on the moon (~$170 billion in 2005 dollars over 10 years, pg. 25).

Yet clean energy continues to face a fundamental problem: it’s not cost and performance competitive with fossil fuels without government support outside of niche markets. In the short-term clean tech projects are propped up by government support (or regulatory requirements) and in the mid-term the industry requires significant innovations to become subsidy independent and competitive. As such two distinct policy issues are set to thwart industry growth: the looming decline in overall federal support for clean tech after 2014 and the continuing deficit in government support for clean energy R&D and innovation. Letting both policy issues linger unresolved could very well be the death knell for clean energy.

In the short-term, the very government support that is buoying uncompetitive clean tech deployment is set to decline drastically. According to the report by analysts at the Brookings Institution, Breakthrough Institute, and World Resources Institute, without any additional Congressional action 75 percent of federal clean tech policies are set to expire by 2014, including numerous incentives that subsidize the higher cost of clean tech projects. Without these incentives, the nascent transition from fossil fuels to clean energy will slow or halt all together, leading to a clean tech bust.

But even if much of this funding continues, the nascent clean tech industry is on a potential path of stagnation. In absence of long-term, significantly larger subsidies (which are politically unlikely), government support for clean energy R&D are central to developing and deploying competitive clean tech. In other words, clean tech growth nationwide (and globally) will be determined not by subsidies, but by innovation that can lead to technologies that are better and cheaper than fossil fuels.

Yet, our policy choices often don’t reflect this reality. According to ITIF’s Energy Innovation Tracker, the U.S. is investing roughly $6 billion in clean energy R&D in FY2012 – on average a third what leading experts think the U.S. should be investing. In fact, the bulk of the federal government’s historic investment in clean energy – nearly three quarters of the $150 billion – is going to the deployment of existing technologies that are not cost-competitive with fossil fuel sources of energy. While these deployment incentives expand domestic supply chains and are spurring incremental innovations, the policies are acting like blunt force tools propping up lower-risk technologies while playing little role in incenting innovation and technologies to put clean energy on a path to subsidy independence. By not orienting the significant federal investment in clean tech towards spurring innovation while grossly underfunding R&D, the U.S. is failing to jump start and accelerate the clean tech innovations needed to create a robust, long-term sustainable industry. Even if the expiring tax incentives are extended as is, the long-term stagnation of the industry will still occur due to a lack of innovation. If we want a global clean tech revolution driven by the marketplace, we need to bring the equivalent of “Moore’s law” (the prediction that computing power would double every 24 months while costs would fall by half) to clean energy. Nothing less will work.

But it’s not too late to avert both the short-term clean tech bust and long-term innovation stagnation if federal policymakers and clean energy advocates truly make innovation less like empty rhetoric and more its core goal. This means fully funding key clean energy innovation R&D programs even in a time of budget austerity. Consistent support for innovation is absolutely necessary – just ask the fossil fuel industry which continues to reap the benefits of a century’s worth of government largesse deficits or not – and cutting innovation programs does more harm than good to the deficit and economy.

Policymakers must also reform clean tech deployment subsidies to link early stage tech development with commercialization. Simply extending expiring or expired subsidies and tax incentives are simply not enough and will only continue to marginally grow the industry. It’s surely not a long-term solution to continue deploying technologies carte blanche even if they don’t hold the promise of competitiveness. A group re-think on clean tech subsidy programs is critical. It’s for “smart” deployment policies that work to pull transformative innovations, rather than just extend incremental innovations of costly energy technologies.

At the end of the day, significant industry growth is only possible if there is an aggressive flow of innovations linked with deployment policies that pull to market emerging, long-term competitive technologies. Today’s energy innovation ecosystem fails on both accounts and our policy choices are to blame.

The numbers are in and the reality is stark, as notes a recent report assembled by myself and colleagues associated with the World Resources and Breakthrough institutes. Sixty-one out of the 92 federal cleantech finance programs in place in 2009 will have expired by 2014. Total annual support is poised to decline by 75 percent from its 2009 high of $44.3 billion to $11 billion. A full-blown moment of reckoning has arrived as the recent gains of U.S. cleantech are shadowed by the impending collapse of the federal support on which most of cleantech segments still rely. No wonder fears of a widespread bust to follow the recent renewable energy boom are deepening.

And yet, for all that, I remain generally bullish about the prospects of renewable energy in America. Why would that be? I am optimistic because while the federal draw-down represents a huge problem, I remain a huge believer in the creativity and power of U.S. states and regions. With Washington mired in partisan gridlock and budget austerity, I remain confident that America’s diverse states and metropolitan areas will once again step into the breach and play their traditional roles as “laboratories of democracy” and centers of policy innovation to keep things moving ahead.

Nor is this mere wishful thinking. With the federal government unable or unwilling to provide the necessary policy framework, numerous states and their leading regions are moving to fill in parts of it.

Be it market-making policies—ranging from renewable portfolio standards to net metering and interconnection standards—or critical financial support to spur deployment or, for that matter, various renewable-energy development programs such as industry cluster support and workforce training, states are again battling to advance clean energy.

Numerous states, for example, are beginning to aggressively utilize their dedicated clean energy funds to building a robust cleantech industry sectors, as Lew Milford and I have noted. These states are going beyond individual project financing and deployment to take on a broader range of cleantech- and renewable energy-related economic development and industry support activities. So while California’s PIER program is devoting a portion of its clean energy funds to funding groundbreaking research in energy efficiency and renewable sourcing, the Massachusetts Clean Energy Center (MassCEC) is making direct investments in game changing new technologies that will enable clean energy companies to establish themselves in the state.

Likewise, a forthcoming paper from my group at the Metropolitan Policy Program at Brookings in partnershipwith the Coalition for Green Capital will highlight Connecticut’s “green bank,” the Clean Energy Finance and Investment Authority, and provide implementation ideas to the dozen or so states that are looking in earnest at ways to leverage private capital and other monies to offer low-interest loans to renewable energy and energy efficiency projects.

And meanwhile, region by region, local cleantech industry clusters are innovating—bottom-up, region by region—by developing smart, place-based development strategies that run the gamut of market-making, finance-oriented, innovation, and cluster development activities. For instance, industry and economic development leaders in the Puget Sound region have crafted a hard-edged “business plan” reflecting that region’s specific cleantech speciality, with a view to strengthening the global positioning of the region’s energy efficiency technology cluster. Likewise, the regional non-profit NorTech in northeast Ohio is leading the development of a series of advanced energy technology and industry cluster roadmaps to guide the region’s work in advanced energy.

In short, renewable energy policy in America stands at a crossroads—but not necessarily a dead end. To be sure, Washington cannot any longer be depended on to set in its lumbering, erratic way the main outlines of the nation’s clean energy market and finance provisions. Yet even so, a vanguard of leading-edge states and their varied, dynamic regional cleantech clusters stand ready and willing to shoulder a portion of the burden of designing and implementing the next generation of stable, optimized, performance-driving cleantech development policy.

In that respect, the present moment holds out an enormous opportunity for the nation’s states and regions to redouble (or retriple!) their efforts to develop the American renewable energy sector.

As to the federal policy crash, it cannot be allowed. America remains a federal republic, rather than a confederacy of independent states. There will always remain a crucial role for Washington in setting the outlines of a supportive, market-wise framework for renewable energy growth.

For that reason, U.S. states and metropolitan area leaders need to step into the breach here too and push the federal government hard to deliver the necessary minimum platform for renewable energy growth via transformative policy interventions and investments—in market-making; in finance, in technology innovation.

In that sense, the daunting present provides, along with all of its scary aspects, an opportunity to revise the nation’s federalist system to ensure that all of its tiers can collaborate more effectively to move the U.S. renewable sector “beyond boom and bust” and into a new era of steady growth.

(These comments were submitted by Brooke Coleman, Executive Director of the Advanced Ethanol Council.)

Researchers at Brookings, World Resources and Breakthrough are right to call out unstable federal policy as the cause of the boom and bust cycles that plague the renewable energy industry. And the enactment of long-term, predictable energy policy is clearly the solution. The question is, how do we get there?

It is clear that the perpetual debate about the efficacy (or not) of grants, production and investment tax credits, and performance standards is not working. In fact, our industry is playing into the hands of incumbents, who fuel this never ending debate to keep the Congressional hatchets focused on our government support and not theirs. This is a game we cannot win.

What the renewable energy industry needs to do, writ large, is agree to a set of messaging principles to level-set (or reset) the energy policy debate. For the sake of starting the discussion, let’s start with three.

Bunker Bust the Baseline

Lobbyists for incumbent energy industries spend a lot of time perpetuating the myth that energy markets are free markets. Why? Because this phony construct sets in motion the idea that renewables are the high-cost, subsidized alternative, which in turn undercuts our ability to get the type of government support the fossil fuel industry enjoys every day. For those still wondering, fossil fuels get special tax treatment in three areas that are vital to securing investment for energy projects: accelerated cost recovery, production incentives and access to capital. Forget oil industry profits and unenforceable promises to someday be subsidy free. The better position is: if you want us to compete, stop rigging the markets.

Demand Comprehensive Tax Reform

Certain influential members of Congress are starting to talk about comprehensive tax reform. The renewable energy industry should do everything it can to fuel the fire. Permanent tax breaks for competitors put renewables at a systemic disadvantage when it comes to attracting project finance. Percentage depletion, write offs for marginal wells, and tax free project finance for oil and gas might have made sense in the 20th Century, but they are handicapping our ability to build new industries in the 21st.

Absent Reform, Do No Harm

The first two messaging principles set up the third. If Congress is not going to fix the biases that favor fossil fuels in 2012, and until it does, the rule should be “do no harm” to the industries fighting to commercialize homegrown alternatives to fossil fuels. For the Advanced Ethanol Council (AEC), that’s a multi-year extension of its Producer Tax Credit (PTC) and Accelerated Depreciation Allowance. For all biofuels, that also means not messing with the federal Renewable Fuel Standard. But the rule should apply to all government support for renewables, and the broader industry should unite around the concept.

There is no doubt that a more stable and growing renewable energy industry is achievable. But if we continue to play the policy game on someone else’s terms, it’s not going to happen.

The renewable energy boondoggle should go bust with the equivalent of a 10 on the Richter scale. It is mindboggling that advocates continue to push for large subsidies in the face of what has happened to the renewable energy agenda in Europe. Country after country is turning away from the pursuit of this “Holy Grail” because with their economies in shambles they can no longer afford unproductive subsidies and the high energy costs that accompany mandates forcing renewable energy on consumers.

In Germany, the strongest EU economy, the solar subsidies have exceeded the $100 billion euro mark, leading to the second highest consumer electricity costs in Europe. These subsidies have not produced the promised results but have caused companies to leave Germany and resulted in Germany importing coal generated electricity.

The green energy revolution has been more the pursuit of green dollars than developing and producing alternative energy that is competitive with traditional power generation sources. Advocates use the infant industry argument for temporary subsidies. But how much is enough and how long is long enough. Federal support for wind and solar go back decades and yet these industries still cannot stand on their own and produce competitively priced energy. Manufacturers of alternative energy equipment like GE have become skillful at capturing profits through the regulatory process instead of the market place. The subsidies for alternative power producers, including renewable standard mandates, are nothing more than a sophisticated way to pick the pockets of the many to line the pockets of the few.

T J Rogers the CEO of Cypress Semiconductors recently wrote “the law of unintended consequences … (has a) corollary Law of Misguided Subsidies: whenever Washington disrupts a market by dumping subsidies into it, Wall Street will find a way to pocket a majority of the money while the intended ...beneficiaries are harmed....” He went own to describe how LLCs were being created by Wall Street firms to buy solar systems to sell power to homeowners while capturing the tax breaks.

The Chinese are all too willing to build those solar systems to sell to us to pursue our folly. Does this bring to mind, P T Barnum’s observation about a sucker being born every minute?

Technical analyses going back 20 years have concluded that wind and solar are, as Science Magazine concluded in 1992, “... intermittent dispersed sources unsuited to baseload without transmission, storage, and power conditioning.” Where is the evidence that those constraints have been overcome? There is none and more subsidies are not going to produce the technological breakthroughs needed to do so. A clearheaded view of wind and solar would lead to the conclusion that they are niche energy sources and will remain so for the foreseeable future. As niche energy sources, they do not need more government handouts.

As a country we face ever more serious fiscal and financial problems that political leaders are unwilling or incapable of dealing with. Even when proposals like Simpson-Bowles offer a good start, there is no large enough political consensus to implement it. Like Europe, our political leaders talk about fiscal austerity but spending keeps going up. Unless we get our fiscal house in order and deal with entitlements like Medicare and Social Security, we will lose the capacity to achieve the technological breakthroughs and innovations that will maintain us as the world’s strongest and best economy.

Unless we begin the process of eliminating subsidies and putting in place economic policies, and energy policies, that promote growth and create good paying jobs, we can look across the Mediterranean to see our future--Greece.

Global clean energy investment is expected to reach $2.3 trillion within a decade. Markets continue to expand 30 – 40% each year. By 2016, the global solar market alone is expected to reach $75.2 billion. Wind energy is expected to grow by double-digits annually, reaching $93.1 billion by 2016. These enormous economic opportunities are why the Obama Administration has focused so intently on helping grow American clean energy businesses. This has not been just through the investments in 2009, but also standing up of the Advanced Research Projects Agency-energy, the issuing of the first loan guarantee for a new nuclear power plant in the United States in more than a generation, and setting ambitious auto efficiency standards that will encourage American auto manufacturers to innovate.

As a result of these policies, American companies are competitive in virtually every part of the clean energy sector, including solar, wind, and nuclear energy, smart grid, and electric vehicles. There is much more, however, that could be done. This includes reforming federal clean energy investments so that they expire as technologies stand up, or fail, in the market; expanding investments in clean energy innovation; driving demand through a national Clean Energy Standard; and spurring more private capital to domestic clean energy companies through a Clean Energy Deployment Authority and Green Bank.

Unfortunately, Congress has devolved into partisan gridlock that prevents much more from getting done for the foreseeable future. As Thomas Mann and Norm Ornstein recently warned, “The GOP has become an insurgent outlier in American politics. It is ideologically extreme; scornful of compromise; unmoved by conventional understanding of facts, evidence and science; and dismissive of the legitimacy of its political opposition.”

We fear that the result of this dysfunction is that many conservatives in the House of Representatives have decided to oppose clean energy because President Obama supports it. Opposing a segment of the private sector for political expedience is exactly the kind of “picking winners and losers” that conservatives so often rightly disdain. It also puts our economy at risk of a Kodak moment that could cost us our economic leadership in the 21^st century. As we noted in our recent report, the United States invented many of today’s emerging clean energy technologies. But unless we can end the paralysis in Washington that is starving companies of capital, innovation, and market-drivers, we risk missing out on enormous economic benefits. Like Kodak and many established companies, we will find ourselves stuck relying on increasingly costly and antiquated technologies as our competitors surge past us. If we refuse to move forward into this $2.3 trillion clean energy market, the United States will essentially lock itself out of tremendous opportunities for economic growth—and lock itself into outdated energy technologies that no longer meet our nation’s energy, economic, public health, or environmental needs.

There is no question that the future of renewable fuels such as ethanol is headed for what can be described as nothing less than a second renaissance. The only arguments critics use against the future of ethanol are baseless attacks stemming from misinformation, distorted facts and consistent criticism of a subsidy that no longer exists. The reality of the situation is that American made ethanol has been around for decades and will continue to saturate the marketplace because it is an integral part of a comprehensive energy policy that puts Americans to work with jobs that cannot be outsourced.

While our nation has an abundance of natural resources, they are still finite and will not solve our nation’s addiction to foreign oil. Just last week on May 9, the Congressional Budget office released a study, Energy Security in the United States, which found that, “Even if the United States increased production and became a net exporter of oil, U.S. consumers would still be exposed to gasoline prices that rose and fell in response to disruptions around the world.” The oil market is a global market, and with dependence comes the ramifications of a global commodity. Continuing to pursue a policy dependent on finite resources is not only shortsighted; it is reckless and leaves our nation at the mercy of the global markets, and price fluctuations. A perfect example is Canada – they are a net exporter of oil, but still are affected by spikes in the price of oil and also pay the high prices at the pump.

The ramifications of a global market leave no logical choice but for the United States to increase usage of ethanol, a cost effective fuel that is renewable, proven on the tracks of NASCAR races and other high performance engines, as well as providing the security of limitless potential. Not only will this provide savings for consumers at the pump, but it will continue to create jobs here, investing in the American economy, not OPEC.

Another strong sign that the boom is only just in its infancy is the USDA’s World Agriculture Supply and Demand Estimates report (WASDE), which was just released last week. It indicated that 2012 is on track to set the record for corn growth, and that an excess surplus will drive down the price per bushel an estimated $2.00 from last year. This is definitive proof that America’s corn supply is large enough to provide food and fuel, while at the same time contributing nearly 50 billion a year to the economy and supporting more than 400,000 high paying jobs.

The bottom line is that, despite criticism and erroneous attempts to tie ethanol to a failed policy agenda, ethanol has been embraced for decades and currently provides 10 percent of our nation’s fuel supply – with the ability to provide more.

The biofuels industry and ethanol specifically, is the logical solution to the many challenges we face. With support of the Renewable Fuel Standard, the use of biofuels will increase through 2022. We are only five years into a major policy achievement in energy, and by all legitimate accounts, ethanol has exceeded expectations, by operating without a tax credit and continuing to increase production.

As the role of renewable fuels moves forward, the next generation of biofuels will provide a greater variety of feedstocks and solutions to reduce our dependence of foreign oil, while increasing the needed supply of fuel by American made renewable sources that invest in our economy and our future.