Furthermore, the “production tax credit” for wind, which gives generators of wind power 2.2 cents for every kilowatt-hour of electricity they generate, is slated to expire at the end of this year. If so, the market for wind turbines in the U.S. would contract by 80 percent, putting an estimated 75,000 jobs on the line. Vestas, for example, has already announced plans to layoff 1600 workers in the U.S. if the tax credit lapses.


Similar stories are unfolding across clean energy. As stimulus investments and temporary tax credits lapse, federal clean energy spending is poised to shrink 75 percent, from $44 billion in 2009 to $11 billion in 2014. Just between 2011 and 2012, federal support fell 50 percent, according to a new analysis by experts at Breakthrough Institute, Brookings Institution, and World Resource Institute.

The dramatic downturn of federal support for clean energy couldn’t come at a worse time. China is rising as a clean tech powerhouse. And cheap natural gas — driven in part by decades of government support for innovations in shale gas extraction — is putting pressure on alternatives in the energy market at home.

This is exactly the wrong moment to walk away from these technologies.

What’s needed is renewed federal support for clean tech sectors that charts a path to subsidy independence and drives further innovation. Congress should help to develop a robust industry that can stand on its own and eventually thrive without public subsidies.

To help clean energy achieve its full potential, policies must be designed from the beginning to reward companies for developing, producing, and continually improving advanced energy technologies that can ultimately compete on price and performance with both fossil fuels and international competitors.

Whether through tax credits or payments for clean power producers; consumer rebates for electric vehicle purchase; or performance standards for new vehicles, a suite of new clean tech deployment policies must simultaneously drive both market demand and continual innovation.

Subsidy reform alone will not be enough. Building a dynamic domestic industry requires that the U.S. also leverage its strengths as an innovation leader and increase funding for energy research, development, and demonstration. It also requires that the U.S. bring to bear its full financial prowess, harness its advanced manufacturing capabilities, leverage its dynamic regional industry clusters, and cultivate a high-skilled energy workforce.

And, just as clean tech looks to subsidy reform, fossil fuels are in serious need of reform as well. Fossil fuels have had a century to drive down costs, reach scale, and build an energy system specific to their needs. Subsidies to this mature industry should clearly be removed as soon as possible. Even if doing so would not truly level the energy playing field.

Clean tech deserves continued investment as it moves toward cost competitiveness. In exchange for sustained support, policy makers and the industry should focus laser-like on reducing costs through innovation. Cost-competitiveness with fossil fuels is achievable. But until that point, clean tech companies will remain under threat of subsidy-expiration and political uncertainty.

The time has come for a new clean-energy framework, one that accelerates technology and reduces costs, guarantees that scarce public resources will be used wisely, and continues the maturation of the nation’s most competitive clean tech industries.

With industry leadership and smarter new policies — and with innovation at the helm — clean energy can power America and fuel economic growth for the future.

Jesse Jenkins is director of Energy and Climate Policy at the Breakthrough Institute; Mark Muro is a senior fellow at the Brookings Institution Metropolitan Policy Program; Letha Tawney is a senior associate at the World Resources Institute. The three are co-authors of “Beyond Boom and Bust: Putting Clean Tech on a Path to Subsidy Independence.”