The NYT Freakonomics column is attempting to figure out what affect the economic downturn is going to have on the clean technology industry. By asking three of the leading experts in the field (George Tolley, Professor Emeritus of Economics at the University of Chicago and president of RCF Inc.; John Whitehead, professor in the Department of Economics at Appalachian State University and contributor to the blog Environmental Economics; and Ethan Zindler, head of North American research at New Energy Finance) Freakonomics has done a pretty good job of summarizing what 2009 will probably look like.
If you're looking for a great wealth of analysis, head to the original article. But if you don't have time for that, here's a quick summary:
The cost of fossil fuel is dropping once again, so the cost differential between renewables and fossil fuels is widening, not closing (like it was for years.) In short, that's bad news. It's also bad news that people will have less disposable income with which they will choose renewables (when given the choice.)
And, in the short term, there's less capital for investments and IPO's, for certain. But the fundamentals of the sector are extremely strong. Oil and natural gas prices remain historically high, state and federal renewable energy mandates remain in place, and the possibility for further carbon regulation is extremely strong.
In short, everyone expects things to stagnate for a little while, but the sector will remain an important growth industry, and the possibilities for exponential growth in wind, solar and other renewables remain strong.
written by Tom, January 09, 2009
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