Cleantech entrepreneurs got a jolt of energy today from President Barack Obama’s rollout of climate-change initiatives.
In a speech delivered at Georgetown University this afternoon, Obama outlined his approach for addressing climate change. His action plan decreases carbon pollution, prepares the U.S. for increasingly severe weather patterns and spearheads an international effort to combat climate change. Many of his proposals are executive orders, circumventing the need for Congressional approval.
Obama is directing the U.S. Environmental Protection Agency to work with existing and new power plants to develop emission standards, according to a blueprint for the proposals from the White House. Obama is working to meet a commitment he made in 2009 to reduce U.S. greenhouse gas emissions by 17 percent between 2005 and 2020.
Requiring the reduction of carbon emissions will make coal-based energy more costly, while solar and wind technology are expected to be priced more competitively, thereby supporting those alternative energy industries, says Jason Blumberg, chief executive and managing director of Energy Foundry, a Chicago-based cleantech impact venture capital fund. “Something like this will increase the pie,” Blumberg says. Not only will the initiative support existing startups that are trying to get off the ground, but “it also provides opportunities for new technologies that are currently in the lab to come to market.”
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For example, 50 percent of the heat that escapes coal plants is wasted heat, Blumberg says. As power plants are charged with decreasing their emissions it becomes more profitable for an entrepreneur to innovate a way to turn that wasted heat into useable energy, he says.
Not only will the initiative support new startups, but it will work to promote cleantech innovations that already exist but aren’t widely adopted yet, according to Greg Neichin, the executive vice president of San Francisco-based Cleantech Group, an industry research and advisory group. “Anything that is encouraging deployment of new technologies is ultimately a good thing for entrepreneurs in the space,” says Neichin.
Approximately $50 billion in venture capital has been invested in the cleantech industry in the past decade, says Neichin, but widespread adoption of the new technologies has been slow. “It is not for lack of innovation that things are not progressing," he says. "The speed of deployment is often slow.”
In the next few weeks, the Department of Energy will issue a draft of a plan for $8 billion in loan guarantees for alternative energy projects, according to the White House blueprint. The finalized plan will be released in the fall. This capital will be used to back investments in equipment and construction necessary for installation of alternative energy solutions, including everything from construction efficiency to water conservation. “In general, many of these have long payback periods, so loan guarantees over the life of those projects are quite helpful in getting customers over the hump of taking the risk on new technology,” says Neichin.
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Obama’s climate-change initiative charges the U.S. Department of the Interior, which protects America's natural resources, with permitting enough renewable energy -- in the form of solar panels, wind farms and geothermal plants -- to power millions of homes. Creating a pool of opportunities creates revenues, customers and the technologies to become more efficient and offer people the opportunity to try new technologies, says Blumberg.
In addition to cutting carbon pollution in the U.S., Obama also emphasized the need to prepare the infrastructure for the repercussions of climate change, including hotter days and more severe weather patterns. Hurricane Sandy, when it slammed the East Coast last year, was devastating to countless small businesses. The Obama Administration is making climate-relevant government data public in what’s being dubbed the Climate Data Initiative. A goal is to provide entrepreneurs materials they can use to innovate ways the U.S. can be more prepared for climate change.
While higher coal-energy prices are expected to drive innovation in the cleantech sector, many small businesses and consumers will likely be hurt by the higher energy bills in the short term, says Blumberg. While it is still uncertain just how much coal-energy prices are expected to rise, Rep. House Majority Leader Eric Cantor has called Obama’s initiative a “war on coal,” which he says will cost jobs and hurt businesses.
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