Environmental journalists have long called for greater connectivity with the political and business beats — that objective has never been more critical than it is now.
Last week, I wrote a column commending those journalists who had tied the ongoing clean-energy story to the $700-billion-bailout story, the question being: Will “green technology” be the victim of, or the solution to, the faltering American economy? Since then, a number of other reporters have weighed in. The most conspicuous example is The New York Times Magazine’s cover story from last Sunday, which reported, over the course of 7,500 words, that venture capitalists are still optimistic about investing in clean energy. “I don’t expect the credit crunch will change that,” a partner at V.C. giant Kleiner Perkins told the Times’s Jon Gertner.
Over the last few years, a wave of public, industrial, and, not least, financial support for non-polluting fuel sources has convinced many that the energy economy is slowly but inexorably approaching a green revolution. According to Gertner’s piece, Silicon Valley still subscribes to that wisdom.
That’s good news for those who argue that clean power is the ticket to energy independence, new jobs at home, and new exports abroad — but it’s no reason to be complacent. Gertner’s story is really a profile of Kleiner Perkins, one of the world’s most successful venture capital firms; it doesn’t go into detail about what the rest of the industry is thinking. According to the latest report from Greentech Media, Inc., however, venture capital investment in renewable energy technologies exceeded $2.8 billion (a record) in the third quarter of 2008, which ended September 30. With $998 million in the first quarter and $1.3 billion in the second, 2008 has already bested last year’s total of $3.4 billion. But remember, the third quarter had all but wrapped up just as the full measure of the economic crisis was becoming apparent. And even if investment from Silicon Valley stays strong, it’s doubtful that venture capital can foment revolution on its own.
Still, Gertner’s article is so full of sanguine quotes from Kleiner Perkins (“I’m so dead certain that we’re solving the next huge problem for the planet,” said one partner), it was hard not feel a moment of relief while reading it. And though he pushes its merits forcefully, he is realistic about the limitations of venture capital:
[T]he sums that a firm like Kleiner invests each year are modest compared with what a company like General Electric might spend on research and development. Yet venture dollars can be extremely potent. Many of the most innovative American companies – FedEx, Amazon, Apple and Google, for instance – have received venture money; a recent study by Global Insight noted that such businesses now account for nearly 18 percent of America’s gross domestic product and 9 percent of our private-sector employment.
As soon as that’s said, however, Gertner cites several reasons why investments in Web start-ups are different than those being called for in clean energy, not least of which are the drastically lengthened payoff time and technical complexity of energy projects. “Renewable energy may ultimately be about the environment,” Gertner concludes, “but it is perhaps about economics first and foremost.”
Well, yes, economics and policy, which must come into play when the free market isn’t doing enough to promote sound development (and the current economic crisis is, of course, a brutal reminder that it often does not). Gertner comes to that point in a somewhat odd narrative flip. After opening his story by noting the limitations of global-warming solutions that have been defined by “government action,” he rounds it off by writing that, “If technology cannot provide a safety net for green-tech investments, politics just might.” Of course, a better answer is the one Gertner gets from Princeton physicist and climate-change mitigation expert Robert Socolow: “You can’t separate” private-sector investment and government regulation; they’re both necessary.
Clearly, the public, or at least part of it, is still eager for clean energy. “There’s a Goldmine in Environmental Guilt,” according to a rather obnoxious headline in The Washington Post that detracts from what is otherwise a very good story about the still strong demand for carbon offsets, a seemingly very elastic expense:
Experts say this is possible, in part, for economic reasons: The financial crisis has not yet reached those upper-middle-class consumers who are willing to pay $12 to offset a cross-country flight, $80 for a wedding or $400-plus for a year of life.
But there is also a cultural factor, the legacy of a complicated decade defined by a “green” awakening and a national splurge in consumer spending. Many people have learned to pay to lessen their climate shame — and, at least for now, they don’t think of it as a luxury purchase.
But they might, one day, and that’s what makes Gertner’s invocation of economic-before-environmental interest in the Times so important. Fortunately, many advocates are lobbying for the financial soundness of a clean energy economy. On a single day last week, there were some 700 rallies around the country promoting the green power industry as a source of wealth and jobs, according to a radio report from Jeff Young at Living on Earth. Young reports that at last week’s meeting of the Clinton Global Initiative, former Environmental Protection Agency director Carol Browner voiced a question that was common at the rallies: “If we’re gonna spend 700 billion on bailing out the financial [sector], why not a trillion into energy and renewables?”
It’s a question that has also been popular over at Grist, the online environmental magazine, where regular contributors and readers have been mulling over the connections between the financial and climate crises for almost a month (a Wall Street topic page, currently comprising twenty-eight posts, was born there on September 15). In the name of clean energy, Gristers have both inveighed against and supported the $700 billion bailout Congress passed last week, though the consensus seems to be that environmentalists generally oppose it. David Roberts, Grist’s lead blogger, thinks that clean energy would be a more fruitful and lasting bailout, as does Glenn Hurowitz, a guest contributor there, who also penned a strong article for The Nation on the subject.
One of the most intriguing pieces from Grist, however, came from Adam Stein, the co-founder of Terrapass, a commercial carbon offset vendor, who argued that the dissolution of Lehman Brothers, including its carbon trading desk, will not damage the carbon offsets market. Likewise, after a blog post early last month at The New York Times suggested that New York Gov. David Paterson might exempt businesses from regulations like the northeastern cap-and-trade initiative in order to alleviate economic pressure, Paterson reiterated his support for such regulations, according to The Daily Green. And yesterday, The New York Times’s new Green Inc. blog reported that Michigan has become the twenty-eighth state to adopt a Renewable Portfolio Standard.
So there is reason to be optimistic about clean energy. Indeed, the bailout package included eagerly sought (and by no means certain) tax credits for renewable power sources like wind and solar. Yet many ramifications of the economic crisis are still unclear. Venture capital and state-level policy may not guarantee green-tech’s viability in a prolonged, global recession. As Keith Johnson at The Wall Street Journal’s Environmental Capital blog has pointed out, as the worldwide economy plummets, “oil plummets, and so does green rhetoric.” Today, oil prices hit an eight-month low. To make matters worse, European leaders, who have been far more progressive (if not successful) than their American colleagues on energy policy, are attempting to retreat somewhat from promises to curb greenhouse gas emissions.
Despite all the sanguine news accounts about clean energy’s future, it is those clouds on the horizon that give pause. We’ve heard about the fortitude of venture capital and state-level regulation, now it is time for journalists to explore the financial crisis’s influence on larger industrial investments and federal policy, which is what really matters.