Building On The New Enthusiasm For Renewable Energy

Renewable energy credits (RECs) are now going from promise to reality. The Texas and California REC markets have been extremely active. Today, 19 states have Renewable Portfolio Standards (RPS), and we are starting to see real market growth. As more states adopt renewable energy credit programs and renewable portfolio standards, many more trades will occur. Demand is also coming from commercial and industrial customers seeking green energy, with many active green power marketers stepping up to meet this market need. In addition, state governments are making purchases under renewable energy procurement mandates, with some federal agencies also participating.

With a new term for the Bush administration, it's time to set the framework to begin a national REC market and promote rapid commercialization of new technology. The nascent, homegrown U.S. renewable energy industry is presently in a state of confusion. The wind-power Production Tax Credit (PTC) went through an on-again-off-again period, wreaking havoc on the U.S. wind industry. While the PTC has now been extended through 2006, a long-term act is clearly needed to jumpstart the industry. Today, the U.S. small wind power business employs only 3,000 employees, compared to 45,000 workers in Germany where the rules are in place. Ironically, in the summer of 2004, there were shortages of renewable energy credits as consumers are finally embracing green power initiatives (with cost premiums) in a major way.

The U.S. government needs to set the rules for corporate America to invest in the renewable energy arena. Despite platitudes of national security and energy independence, all efforts to gain traction for renewables at the federal level have continued to be frustrated. Meanwhile, an interesting collection of diverse interest groups has assembled, working together to gain a toehold in the emerging renewable energy space. These groups range from renewable energy and energy efficiency policy wonks to agribusiness (in the form of the ethanol lobby) and defense contractors. This is because the renewable energy industry has reached a stage where there are technological breakthroughs every year. It has gone past the solar collectors and abandoned wind turbines of the early 1980s and produced the next generation of environmentally benign, cost-effective, and highly efficient renewable-energy technology.

The irony is that the current renewable energy industry is being funded by the Pentagon which has assumed the role NASA played in the 1970s. Many of the new technologies that are being readied for deployment have been funded by the Department of Defense and, to a lesser extent, the Department of Homeland Security. The threat of energy security is now real, and energy prices have been high and will remain so. Logically, the time for renewables and alternative energy is now.

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