Bingaman on Green Financing
April 28, 2009
01:53 PM
This morning, Chairman Jeff Bingaman and Ranking Republican Lisa Murkowski led a full committee hearing on the “21st Century Energy Technology Deployment Act,” legislation designed to increase the availability of financing for deployment of clean energy and energy efficiency technologies and to enhance America’s competitiveness in this rapidly-expanding business sector.
Chairman Bingaman: “Yesterday, the President spoke about this country’s proud heritage of scientific discovery and innovation. He pledged his support to the cause of continued leadership in basic sciences and the pursuit of scientific discovery.
“I share his commitment in meeting the energy and climate security challenges of the 21st Century and in the belief that the United States can be a global leader in energy innovation. The goal of the legislation we have here today is to find ways to bridge the gap between the barriers of deploying 21st Century energy technologies.
“We’ve set an audacious goal to not only address our past under-investment in clean technology development but to move to a leadership position; but I believe it is achievable. We’ve tried to strike the necessary balances in this legislation to move us forward in an aggressive, yet prudent way.”
The prime factor that distinguishes most energy technologies from other successfully developed technologies is the exceptionally high capital costs needed to prove commercial-scale viability. The tens or hundreds of millions of dollars that are required to build even moderate-sized electricity generation or to achieve economies of scale in manufacturing of solar photovoltaics or advanced batteries are unavailable from even the more risk-tolerant investors, leaving borrowing as the only option.
In today’s hearing, Bingaman pointed out that this problem existed prior to the current worldwide credit crunch and policies designed to relieve the stress on private lenders to restart lending would be unlikely to have significant effect on lending for advanced technologies. “While regulatory, tax and programmatic policies, which continue to be debated in the U.S. Congress, can have a role in shaping the marketplace and making clean energy technologies more attractive, the fundamental challenges associated with the significant capital needs required for early commercial deployment are likely to remain,” Bingaman noted.
The “21st Century Energy Technology Deployment Act” seeks to address this deficiency by improving existing programs and the establishment of a self-sustaining Clean Energy Deployment Administration that will provide for an attractive investment environment through partnership with and support of the private capital market in order to promote access to affordable financing for accelerated and widespread deployment of clean energy technologies.
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