Green Energy and the Risks and Opportunities of Plenty
Will the demise of Solyndra and pressure on green energy initiatives stall out our domestic investment? Competitors are massively investing in green energy R&D, aiming at growing technological innovation and taking leadership positions in new green industries. Will the newly exploitable domestic energy that fracking has let lose at home be a risk or a boon to green energy investment in the US?
With the demise of Solyndra, there is great political pressure from many camps to cut back on green investment. Last month two DOE programs were cut already, including a federal loan guarantee program. But green investment programs have been under pressure since first proposed, despite wide agreement from experts that investment, including incentives and loan guarantees, are crucial to the future of solar and other cleantech sectors.
Investment in the scientific research that produces new technologies is a proven way to accelerate technological innovation and drive competitive advantage. Commercialization of innovation is at the heart of all economic booms and is the strategy being employed by competitors all over the world, who are investing massively in the green and alternative energy sectors domestically. Keeping that innovation at home and scaling it locally is the key to maximizing jobs at home and maintaining leadership in the industry.
As green investment at home is under further pressure, the newly exploitable energy riches in our own backyard are changing the demand and supply of traditional energy. The US imported almost 2/3rds of our oil in 2008 but we now import less than half. Scientists figured out how to extract oil from rocks and this hydraulic fracturing technology is playing out in North Dakota where oil extraction and related employment is going gangbusters. It is believed that trapped in North Dakota’s rock is 11-20 billion barrels of oil (enough to power the US for 4 years).
And fracking is happening in small towns all over such as in Colorado, Wyoming, Texas, Louisiana – all of this domestic oil could add up to $2 trillion barrels in reserve, twice as much oil as the middle east, according to NPR. Within a decade, we could produce as much oil as Saudi Arabia, and within 5 years we could surpass Russia as the world’s largest energy supplier.
So how will this impact government green investment? The lesson is clear from the successful technological innovation in hydraulic fracturing – we need to invest money in research and development in green energy so that we can create the revolutionary green industries of tomorrow here at home. The risk is that we rely on fracking and do not invest enough in green technology R&D. The opportunity is to make that investment despite the current plenty that is being enjoyed up in North Dakota. As Jaffe asks, why not use royalties and revenues from U.S. production of oil and natural gas to invest in improving green technology?