While the discussions in the U.S. Congress concerning economic growth have centered largely and appropriately on the immediate threats our country now faces, there is substantial opportunity in this time of crisis to position the United States in a promising manner over the long term.
Nowhere is this opportunity more apparent than in the area of clean technology. Our government’s commitment to growing our country’s cleantech economy promises to help reduce our dependence on foreign oil and create millions of green collar jobs.
Should the government enact policies to encourage investment in cleantech, the entrepreneurial and venture capital ecosystems will be there to heed the call. The U.S. venture capital industry has seen this benevolent cycle before, with venture investment in life sciences and information technology creating millions of 20th century jobs in sectors that did not exist before 1990. Today, the venture industry is poised and ready to work with Congress to build and nurture the companies operating in renewable energy and energy efficiency.
The new U.S. cleantech economy will include venture-backed companies that will become sustainable, high-value operations with the potential to create thousands of new U.S. jobs in the next several years. But in order for these promising companies and others to keep their operations on U.S. soil and be competitive in the world stage, they will need more than what venture capitalists can do individually or as an industry: They must have the unwavering support of our government.
While venture capitalists and entrepreneurs have worked well together in other industry sectors without incentives, the market signals that our government can send with strong supportive polices are critical. In this nascent sector, small companies are not only battling technological risk. They are also pitted against powerful entrenched interests, hold a slim technological lead against government-financed foreign competitors, and face a frozen credit market here in the United States.
Countries such as Germany and Malaysia are actively recruiting U.S. companies to move off-shore and take advantage of robust tax credits being offered by foreign governments. Yet, modest tax incentives would be sufficient for these entities to remain in the United States.
For promising cleantech companies to keep their operations on U.S. soil and be competitive in the world stage, they will need more than what venture capitalists can do individually or as an industry: They must have the unwavering support of our government.
Unlike traditional technology and life sciences sectors, the “special sauce” for renewable energy often exists in unique manufacturing processes. If those facilities are on foreign soil, advanced technologies are quickly adopted and then improved by those closest to the operations.
Also unlike traditional tech sectors, the United States is not generations ahead of our foreign competitors in renewable energy. Therefore, we must act now while we still have a slim technological advantage to keep our intellectual property here at home.
We also need to ensure that our innovation pipeline is robust so that new companies are continuously being created. To that end, we must support ongoing critical funding levels for key science-based agencies and increased investment in basic R&D that will generate new discoveries that will be delivered to Americans for decades to come.
By committing to the earliest point in the research process, the government is ensuring that the best ideas from government labs and universities will not only see the light of day, but will also have the opportunity to be delivered to millions.
While our nation’s once-thriving manufacturing base has taken a brutal hit, the continued support of the provisions that will grow our cleantech economy begins to offer a counterbalance to all that has been lost. Putting people to work and spending on R&D is the correct prescription, and the cleantech economy is the right area to channel those efforts. The threat of ignoring the global cleantech market is large, but not as large as the opportunity when we embrace it.
Emily Baker is Director of Federal Policy and Political Advocacy for the NVCA. She may be reached at email@example.com.