Google is backing it. So is Warren Buffett, America's most-watched investor. GE, one of the world's biggest manufacturers, is too.
Each of these corporate icons is placing big bets and hundreds of millions of dollars on a future powered by wind and solar power. Apple just joined them, announcing plans to power its main U.S. data center in Maiden, North Carolina, entirely with renewable energy by the end of this year. So why -- yet again -- are pundits making dire warnings about prospects for renewable energy?
The answer is that the clean tech industry is at a critical crossroads.
On the one hand, wind and solar power are close to cost competitiveness with fossil fuels in many parts of the world -- including the southwestern United States. In recent years, the cost of wind turbines and solar panels has plummeted, fueling worldwide demand for renewables and leading to double-digit growth. The sector's mid- to long-term future is very bright. For example, the latest industry analysis by McKinsey & Co. finds that solar PV deployment could increase 50-fold between 2005 and 2020, rivaling the growth rate for natural gas.
On the other hand, wind and solar power, still fledgling industries, face the imminent loss of the very government subsidies that have been driving their growth and cost reductions in both the U.S. and Europe. These policy shifts risk stalling progress toward cost competitiveness at the 11th hour.
A recent report, "Beyond Boom and Bust: Putting Clean Tech on a Path to Subsidy Independence," by authors at the World Resources Institute, the Breakthrough Institute and the Brookings Institution, highlights the scale of the subsidy blow to the U.S. industry. The authors find that U.S. federal support for clean energy technology dropped nearly 50 percent from 2011 to 2012 alone, and could plummet a whopping 75 percent from 2009 through 2014. If Congress fails to renew the wind power production tax credit (PTC), set to expire in December, this would undercut the U.S. turbine market, endangering tens of thousands of jobs.
Despite these set-backs, some major corporate players are willing to ride out the turbulence, confident in clean tech's long-term viability:
Not every investor, however, has the deep pockets and long-term focus of Google, Berkshire Hathaway and GE. As clean tech subsidies potentially expire in the U.S., other investors are choosing to sit on the sidelines. Ominously, according to Bloomberg New Energy Finance, investment in new wind farms, solar parks and other renewable projects globally fell to $27 billion in the first quarter of 2012, a three-year low. Investors are waiting to see how countries set solar subsidies in an era of austerity, and which solar companies will survive the current round of consolidations and mergers. They are also closely watching what the U.S. does about renewing subsidies, particularly the production tax credit. All this volatility makes it difficult for them to plan and act.
The answer to this predicament is for the U.S. to accelerate the renewables industry's cost competitiveness with fossil fuels. As "Beyond Boom and Bust" argues, Congress should extend clean energy subsidies to calm investors, while making it clear that they will decline over time. Just last week, President Obama urged Congress to extend the production tax credit at a wind plant in Iowa.
Supporting clean tech while it matures is a reasonable investment for taxpayers. The recent furor over the industry's future has been fanned by those who dismiss renewables as a "failed experiment." This attitude willfully ignores the history of energy innovation and the progress in price and performance these technologies have already made. Many of these voices also support subsidies for fossil fuels, which has benefited from a century of government assistance.
Driving investment in clean energy is good for business and the environment, and can help the United States maintain a foothold in an expanding global market. Many business leaders are putting big bets on the table. It is time for America's policymakers to match their faith and build a bridge to the coming clean tech future.
This article originally appeared at Forbes.com and is reprinted with permission from World Resources Institute.
Solar panel image via Shutterstock.