November 9th, 2010

Post-election cleantech apocalypse? No. Look at the bright side. Then profit from it.

BOSTON -

By the time you are reading this, votes in the 2010 elections will have been cast.  As a cleantech groupie, I really hope to be celebrating the defeat of Prop 23 in California and a victory for Deval Patrick in Massachusetts.  It’s safe to say, however, that (save for big oil and the military), public sector support for most every industry will be on the wane in 2011, and that includes cleantech.  But if my dogs lose this race, I won’t be too worried.

I want to remind you that what drives the clean energy industry are *gasp* clean energy companies!  And these businesses have business models.  Why do VCs and institutional investors dole out to millions to clean energy companies each year?  Not to save the environment, but because they believe simply, that X company will provide them Y return on investment.  Companies will have to innovate, bob and weave to get through the next year.  But weren’t the best ones doing this already?

My point here is that we need an industry that can stand on its own.  Or at least stand on one leg, with states and cities as a stepstool.  I say forget about federal initiatives for a while.  I hear so much about the (lack of) federal activity on climate, but while we mope, states and cities are paving the way with successful and innovative programs, creating pockets of cleantech activity all across the country.

For America, the sum of local initiatives is bigger than its parts.  If you haven’t seen the American Council On Renewable Energy’s (ACORE) 50 state opus Renewable Energy in America, you should check it out, for nothing more than to see the sheer volume of activity happening in every state in the union.

This election cycle may prove to be a blow to cleantech, but I am still bullish on the long term.  Nimble entrepreneurs and resilient companies will find a way to make it work.  And when, one day, we are finally able to breach the federal climate logjam, even better.  But let’s not depend on that right now.  Believe me, this industry will be better off down the road for having found a way to thrive on its own.

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Aaron Lindenbaum

About Aaron Lindenbaum

Aaron Lindenbaum is an Account Executive at Rasky Baerlein Strategic Communications in Boston. At the intersection of media and politics, Aaron works in the Energy, Environment and Emerging Tech practice group where he provides essential support in developing and executing campaigns that include community, media and government relations for a wide range of energy and cleantech companies and organizations. Connect with Aaron @lindybomb

  • http://twitter.com/wfrick Walt Frick

    Great post, Aaron.

    I’d add that state/regional initiatives are at least equally important. Improving efforts like RGGI and the Wester Climate Initiative offers a promising policy path at the regional level.

  • Anonymous

    Excellent post.

    I’d suggest that our political system has two structural problems beyond the fact that the ‘good guys’ lost this election.

    1) Despite the best efforts of some in power, we don’t really have a set of medium-term national goals, to say nothing of a national strategy to achieve them. This despite the acceptance that efficiency and energy independence would be a ‘nice thing to have.’ This is a problem, of course, especially because a number of our competitors seem to have a much better sense of their strategy.

    2) Especially given strategic ‘drift’ and partisan gridlock, our political system defaults to rewarding firms and industries that have already ‘won’ their economic race. This would be why King Coal and Queen Oil tend to receive favorable leasing terms, government subsidies for ancillary industries and research (asphalt (i.e. roads/road construction), clean coal, carbon sequestration). And a bigger problem is that these mature industries tend to entrench their position by plough their excess cash back into political lobbying.

    Politically, the ‘new energy’ field must accustom itself to an ‘asymmetric conflict’ against entrenched interests. We need to find wedge issues that divide the entrenched industries (e.g. a tariff on imported oil, investments in grid infrastructure), build regional strongholds (New England, California, (Texas?)), and finally, the grassroots must keep fighting for their own backyards.

    Which is why, economically, your post is spot on — investors should realize that ‘new energy’ will become much more profitable when it has ‘won.’ But we’re still in the interim period, still pushing a disruptive technology, still establishing a hold on market niches were we can succeed and prosper with very limited government support.

  • Jim

    dude! sweet post! I sent it to my cousin, Darryl, he plays bass, but is really into green tech stuff too.

  • http://www.thegreenlightdistrikt.com Chris Williams

    Aaron,

    I like Carrington and Walters point about region strongholds. As these stronghold gain power they put their pressure on the markets and governments to change around them.

    The shift also reminds me of the dot com bust. If you look at internet usage it never stopped increasing, it was only the business model that needed to be tweaked. I feel like we’re going through the same issue here. The amount of renewables and efficiency is only going to increase, the question is where, how fast, etc.

    Chris

  • Carrington Ward

    As these stronghold gain power they put their pressure on the markets and governments to change around them.

    Absolutely, we’ve seen it with CA’s fuel efficiency and pollution initiatives. Also interesting was the rejection of Prop.23 — outside money and lobbying tends to be much more conspicuous, and resented, at the state level.

  • Aaron Schneider

    Aaron,

    No industry functions without some set of policies and subisidies from the federal government. While I agree with your bullish long term outlook, it seems that the clean tech industry needs to ramp up its lobbying efforts in the federal arena as well as the state. Perhaps clean tech should look to the lobbying efforts of the traditional energy industries of oil, gas, and coal as a model for order to achieve their clear that

  • http://www.thegreenlightdistrikt.com Chris Williams

    Aaron,

    Without a doubt this is currently happening already, expecially as the larger banks are getting into project finance with 20 year horizons. Once they sign a deal, they’re now bound to it. This has been a benefit of the recession is that renewables are growing so fast banks were forced to get into the action and now they have to stay involved. The benefit is that have existing lobbying arms and relationships they can leverage.

    The trick will be this: when will banks and other industry association prefer to lobby for renewables then traditional fuels?

    I like your point about subsidies being inevitable and it’s something people don’t like to admit. The reality is that food, energy, infrastructure are all so critical that they’re going to be heavily involved with the government.

    Chris

    @Lindybomb what do you think?