Clean Energy’s Fiscal Cliff

The best explanation of the looming fiscal cliff I’ve seen so far came from Conan O’Brien sidekick Andy Richter last week: http://youtu.be/6YS1xnTjL_4

So if Congress can’t get a deal done and we do fall off the fiscal cliff and “crash into the double dip recession river,” what does that mean for clean energy? Like many government programs, clean energy funding would see mandatory cuts. The White House reports that sequestration would take away $148 million from the DOE’s Energy Efficiency and Renewable Energy program in 2013 (I know, it’s a ridiculously long document – look at page 80 if you don’t believe me).

That’s $148 million less to be invested in clean energy over the next year, and even if we do avoid the fiscal cliff, chances are that government funding for renewables will see cuts anyway. That means that the cleantech companies with the best chance to survive 2013 might just be the ones with the most cost-effective products or services. As unconventional as it may sound, technologies exist for which customers don’t have to pay more to be green.

Myriant, a company that manufactures green replacements for petroleum-based chemicals, charges “no green price premium” for its products. And since their bio-based chemicals are identical to those that come from petroleum, there are also no hidden costs for manufacturers making the switch. GreatPoint Energy is another example: the company produces a clean, high efficiency fuel called bluegas that is a cost-competitive replacement for standard liquefied natural gas in many regions.

Many of the companies with the best chance to survive are service providers that save their clients money through green alternatives. Absolute Green Energy Corporation, for instance, uses solar and thermal systems within integrated building designs to help organizations and individual residents save on energy costs. Conservation Services Group offers a similar value proposition: they optimize energy efficiency in residential buildings through weatherization and other services. Next Step Living is another company that helps people reduce their bills through energy-efficiency best practices.

No one in the clean energy industry wants to see government funding fall, but if it does decrease – whether by the $148 million baked into the fiscal cliff cuts or a lower number – the companies with the best chance to thrive will be those (like the five above) that can actually compete with their less green counterparts. Many other cleantech companies have promised cost-effective products and services, and we’ll have to see if 2013 turns out to be a good test of those claims.

Jake Navarro is a senior consultant for Greenough. Send him an email at jnavarro@greenough.biz