Greenies save the Economy

President-elect Barack Obama is developing a plan to create or preserve 2.5 million jobs over the next two years by spending billions of dollars to rebuild roads and bridges, modernize public schools, and construct wind farms and other alternative sources of energy.

Governments on both sides of the Atlantic are agreed that delivery of large scale infrastructure projects will help provide the economic stimulus required to drive western economies out of recession. Reference has been made, not just in the US, to the New Deal, and the Roosevelt Administration’s use of major projects to rebuild their economy after the Depression.

Commentators speculate that an incoming Obama team will want to deliver a couple of major projects – such as moving the US towards universal healthcare, and rebuilding much of the country’s creaking infrastructure. In the EU the message from governments is similar, though many are constrained by existing deficits as to their room for manoeuvre.

In the UK the Government trailed the announcement of an accelerated investment programme in advance of the Pre-Budget Statement. The additional commitment to extend the RO clearly shows that the UK Government views the renewables sector as one of the few bright lights in an otherwise gloomy economic environment.

Even before the severity of the economic downturn became apparent, it was clear that the growth in the clean tech sector, both in the EU and in the US, would offer the opportunity to create many thousands of new jobs. There are undoubted market opportunities now for developers with an appetite for growth, and access to resources.

In a further twist – and of benefit to the wind industry in Europe – the financial sector crisis in the US means that the PTC tax equity play is no longer so attractive, and has already led to a shift back towards development in the EU. An incoming Obama Administration may find the necessary Congressional majority to introduce another support scheme for renewables, but until that happens, Europe will retain a market lead in renewables.

In the UK, the government may have bet the farm on us pulling out of recession next year, and whatever one’s view on the likelihood of that scenario coming to pass, it is clear that continued growth in our sector will be one of the catalysts for that climb back from the brink. Don’t expect tabloid headlines on the lines of Greenies save the Economy, but perhaps a letter from the Chancellor to say “thank you” might be in order.