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Paul Dickerson in National Journal article, "A new Go-To Agency for Clean Cash?"
05/11/2009

A New Go-To Agency For 'Clean Cash'?
National Journal

Should Congress create a new independent agency to pass out cash for clean energy investments?

The Energy Department has dragged its heels in handing out billions of dollars in congressionally mandated loans and loan guarantees for renewable and clean technology projects. Now the House and Senate are considering legislation setting up a new Clean Energy Deployment Administration within the Energy Department to speed money to environmentally friendly energy technologies.

The National Journal asked clean tech experts: Is it a good idea, or will the new agency just mean more red tape? What are the potential pros and cons? Should nuclear power, clean coal technology and other traditional energy sources be included in the program?

Paul Dickerson, Partner, Haynes and Boone, LLP

As the system is currently set up, an American solar company looking for federal backing to build a new manufacturing plant can get it – as long as the plant is located outside our borders. For years, the Overseas Private Investment Corp. has provided loans, loan guarantees and other financing support for U.S. companies looking to expand abroad.

A couple of years ago, while I was at the Energy Department’s Office of Energy Efficiency and Renewable Energy, we began wondering aloud why that same level of support wasn’t available to companies hoping to expand here at home. We issued a request for proposals to consulting firms to explore the issue of a domestic “clean energy bank.” Over months of study, our research partner, Booz Allen & Hamilton, helped make a solid case. Initial interest in the idea was sparked in Congress when former New Mexico Senator Pete Domenici proposed a clean energy investment bank a little over a year ago.

Now the credit crisis has fanned those flames of interest. Clean tech firms, like so many companies elsewhere, simply don’t have the same kind of access to capital that they once enjoyed. Banks are in lock-down mode. Venture funding is scarce – clean tech investments fell by a staggering 84 percent in the first quarter of this year, compared with the prior three months. As a result, entrepreneurs are sitting on cash, cutting jobs, and putting their expansion plans on hold while they wait for federal loan guarantees and stimulus dollars to come to their rescue.

The Clean Energy Deployment Administration could go a long way to curing this paralysis. On a long-term basis, it should be designed to be self-funding – through interest and fees – and it should apply to any technologies that helps reduce or eliminate harmful emissions. As CEDA is being formulated, the Energy Department can take the interim step of turning over certain of its financing program functions to private lenders and fund managers with proven track records of managing risk and making successful loans. OPIC has long had a formal process for delegating credit approvals to financial institutions, and the key to its success is that substantial private sector capital is always at risk alongside OPIC’s investment.

We can’t gauge the success of federal efforts by the amount of dollars we are ready to spend. We have to focus on outcomes, and right now the outcome we need is more clean technologies available in the marketplace. If we can all agree that this a national priority, then we need the full weight of the federal government’s balance sheet behind it, just like we have availed it for other national priorities such as exports, home ownership and college education.

Article excerpted from National Journal.