Hello folks. We are clean tech people. We believe in reality; we believe in the power of invention, compound annual growth and leverage; and we never give up. Thanks for coming today and special thanks to Tom Amis and his many colleagues at the great Cooley firm for inviting me.

I’ve lived in California and Washington, D.C. all my life and I always find the latter needs some explaining to the former.

Maybe it’s helpful to think of Washington as resembling the new planet that has just swum into the ken of our watchers of the skies – Keppler 16b.  Like Keppler, saturnine Washington isn’t the same as Earth: it is at most earth-like. Like Keppler, it orbits two dwarf stars – one is called Congress, the other is the White House.  Like Keppler, Planet Washington is gaseous, unusually hot, and – most important – not congenial to humanity.

By chance, I’ve known pretty well all the Presidents and most of the candidates for the Presidency for the last two decades. Sooner or later, they all have learned that holding on to your humanity is the hardest part about living on Planet Washington.  This is something Barack Obama hoped to change but hasn’t been able to.  On the other hand, shucking many humane values apparently has been comparatively easy for the Republican candidates for President.  They are seemingly unanimously in support of punishing innocent people (refusing to provide public education to children whose parents illegally entered the country, meeting out the death penalty to wrongly convicted people). They are in favor of maintaining record low income tax rates for the richest people in the country, while cutting social security, Medicare, federal support for education, and college loans.

And let’s not forget that Massachusetts Governor Romney strapped the family dog to the roof of his car and then drove from Boston to Canada.

Around the corner to the vet might have been okay, if it was a really big dog and a really small car.

But Canada is a long way, even from Boston. And treating a dog like, well, a dog is a lot worse than, say, accusing climate change scientists of manipulating data in return for money.

Which brings me to Texas Governor Perry. A rock has knocked out his chances, or more precisely, the paint on a rock has raised even Cain.

I could go on, but it hurts too much, doesn’t it?

I suppose the voters, 13 long months from now, could send one of the Republican Presidential candidates to Planet Washington. But I’m quite sure this room of clean tech mavens would then be much worse off, and I’m pretty sure Planet Earth would suffer dearly.

Ah folks, what did Benjamin Franklin say at the conclusion of the Constitutional Convention? We are giving America a republic, if she can keep it.

The Solyndra story should make us all wonder if we can keep our Republic going through the current age of unreason.

Here on Planet Earth, we all know that the miraculous Sun must become, as soon as possible, our primary means of creating cheap, abundant, clean energy. We all know that we need solar on every rooftop. We know we need great arrays of solar panels in the deserted deserts and high blades catching wind in the scarcely inhabited Great Plains. We agree to embrace preternaturally cheap natural gas as the interim replacement for coal, even in base load, for at least two decades, while we steadily expand real renewables to substitute for carbon fuel. We know that high tech building materials should substitute for the 20th century and 19th century buildings that house our 105 million homes and 6 million businesses. And we know that electricity, natural gas and algae biofuels should displace gasoline in our 200 million car and truck fleet.

These necessary, huge, affordable, and remunerative projects would in the aggregate attract several trillion dollars of investment, create 10 to 30 percent IRRs, and produce at least thirty million new job years. They would help, not hurt, economic growth; they would make our country safer, prouder, cleaner. And, the substitution of clean for brown energy, and efficient for inefficient consumption, would reduce the unemployment rate by about one to three percent every year for two decades.

This is the goal of everyone here. It is obtainable, practical and inevitable. We just need to do it sooner rather than later.

For the skeptical let me just remind that when I became Bill Clinton’s first chairman of the Federal Communication Commission cellular, cable, and TV were mostly analog; high speed referred to cars not broadband; and computers were for spread sheets not browsing. Every single communications device and virtually every computer in the country depend for full functionality on networks that were built from my time in government until yesterday. In these nearly 20 years – just like the 20 years I’m talking about for substituting a clean efficient energy platform for the one on which our economy rests today – about two trillion dollars of private capital built a brand new, digital, optical, processor-managed infrastructure for the information, communications and technology sector.  This innovation tsunami created vast fortunes, lost smaller sums for some, genetically modified our culture to become more entrepreneurial, produced the unforeseen tax revenues that led to a budget surplus by the year 2000, caused full employment, and created wage increases for every quintile of our income ladder in the 1990s, the only decade other than the 1950s in which that occurred in post World War II America.

This is exactly what we want to see and what is quite plausible in the energy sector.

(By the way, just as one example of what’s possible, already in very early innings of development algal fuels cost only two times the price of gasoline even in the United States, our country that foolishly suffers a ruinous trade imbalance to provide extra-cheap gas. And in time placing algae biodiesel facilities on an area less than a third the size of New Mexico will permit us to ban all gasoline, whereas corn grain ethanol would need all the land in what used to be called the Big 8 football conference to get the same result, and would also leave us without enough bread to eat.)

Here on Planet Earth, we want the government to do what it takes, and to make some mistakes, to kick start the renewable and efficient energy boom.

On Earth, we applaud the four pillars of the current Department of Energy clean tech strategy: innovation, policy, finance, and managerial discipline. Matt Rogers stated these when he ran the greatest single burst of renewable spending in the country’s history – the spending under the stimulus program. I helped, in a small way, under Carol Browner’s leadership to design that program and I’m proud of it.

But instead on Planet Washington, according to Congress, Solyndra proves the government always wastes taxpayer money, and is invariably incompetent.

This critique comes from a Congress that has a 14% approval rating.  And this is not a namby-pamby shoulder-shrugging kind of disapproval. Two-thirds – 66%! – say they “strongly disapprove.” We are looking here at a throw-the-bum’s-clothes-out-in-the-street kind of disapproval, a my-lawyers-will-serve-you kind of disapproval, a time-to-change-your-name kind of disapproval.

That’s worth taking into account when you read that this Congress claims that the Department of Energy should have known in 2009 that thin film cylindrical photovoltaic modules wouldn’t be cost competitive against silicon panels in the rooftop solar business for rooftop deployment in 2011. A billion dollars of private capital was behind Solyndra so apparently not everyone knew in 2009 knew what Congress says everyone should have known. In fact, Solyndra had been vetted for four years by the Bush DOE and wasn’t funded only because the Bush Administration refused to fund any technologies that could challenge carbon fuels. It’s also possible that the government debt in Solyndra will end up, like the loans under much-criticized TARP, getting paid off entirely or almost entirely.

But let’s not debate the merits of Solyndra. The big point is the big move of the Department of Energy in the Obama Administration. For the first time in its long and nuclear-focused history, the DOE has introduced a planned sequence of entrepreneurship and innovation into the renewable energy sector.  The innovation starts with government-sponsored R&D, manifested especially in ARPA-E, modeled of course after DOD’s ARPA, the birthplace of the Internet. Then it continues into support for entrepreneurs and project developers in the form of grants in lieu of tax credits and concludes at later stages with loans and loan guarantees. These have been aimed primarily at deploying a greater scope of breakthrough technologies – defined basically as projects commercial banks won’t touch because they are too big and too unproven. Secondarily, they were aimed at expanding the scale  

of deployment of proven technologies – here the goal has been to provide a little cheap taxpayer capital to attract much more relatively expensive private capital into the sector.

To this end, last week the DOE brought almost $20 billion of private capital into renewables by providing around a tenth of that in the form of taxpayer backed credit subsidies for primarily innovative and secondarily commercial deployments. It was right of Secretary Chu to make this decision. He was brave not to back down in the face of Congressional contumely.  I work part time at Skadden Arps, which was involved in some way in all the funded projects, so forgive me if this is hometown bias, but these are some of the largest projects of their kind in the world. I’m proud that they are in America first. Moreover, most are utility scale, supported by long-term PPA’s, and representative of the wise decision to reconcile the interests of utility distributors with the goals of expanding renewables.  These DOE supported projects have brought into renewables on an expanded basis NRG, Next Era, Goldman Sachs, Citi, Credit Suisse, and many other important and necessary players in the financial ecosystem. We need policies that encourage large entities to create a beneficial financial ecosystem to fund our nation’s conversion from carbon to clean. Moreover, while some criticized the DOE of 2009 as lacking venture capital expertise (a forbidden task under the policies of the Bush Administration), over the last two and a half years the department has built competence, credibility, procedures and policies that are ready to be continued and expanded.

Of course, on Planet Washington, Congress has stirred up Hurricane Solyndra in order to conceal its intent to dismantle all that DOE has done to create a sustainable policy for sustainable energy.

On Planet Earth we draw different policy lessons.

First, DOE’s new policies should be perpetuated in the form of one or more independent green banks. The Ex-Im Bank is a model; created and capitalized one time by Congressional action, it operates as a revolving fund and sustains a multi billion-dollar portfolio that helps to finance international trade benefitting American firms. It doesn’t make or lose money; it helps private firms make money. Senator Bingaman’s CEDA is crafted to look this way and is dedicated to breakthrough technologies. Congressman Van Hollen’s Green Bank looks that way and is dedicated to deploying conventional technologies. Both are needed.

Second, these green banks should streamline their processes. They should reduce application expense. They should provide loans and guarantees for a portfolio of initiatives. They should support long term and short term, small and large projects. Out of many, some will fail, but many will succeed, and we let the market, not Congress, decide what approaches will help save our Republic and Planet Earth.

Third, to build greater amounts of tier one capital, these green banks, by whatever name, should accept private capital, even if it requires a higher, although capped, return.

Fourth, every state should have its own green bank, copying Connecticut where under the leadership of Governor Malloy and Commissioner Esty the nation’s first state green bank, called CEFIA, was established by unanimous vote in the State senate and almost unanimous vote in the Assembly, just this summer. My organization, the Coalition for Green Capital, is now working with ten other states to craft similar institutions. Each state green bank can be dedicated to the special and perhaps unique circumstances of each state, since energy (unlike communications) is more local than regional, and more regional than national, in its geographic markets.

Fifth, the White House and Congress should pass an infrastructure bank bill but its reach should extend to the energy sector. In addition, the infrastructure bank should coordinate transportation, water, and electricity construction projects in order to save time and money, and minimize inconvenience to communities.

How do we know there is a continuing need for financial tools to advance the clean agenda? One proof is that there were around twenty other projects that DOE had to turn away this summer when Congress would not agree to continue the finance programs launched in ARRA. Another proof is that as long as the externalities of carbon are not captured by putting a price on carbon, then we have to lower the cost of capital for clean in order to offset the illogical advantages policy confers on carbon. Moreover, as long as Congress declines to eliminate the tax breaks for carbon fuels, it needs to create analogous advantages for clean in order to level the competitive playing field.

We cannot stop at finance in creating smart policy tools. In the 1990s we in the Clinton Administration decided to reduce taxes on e-commerce to nearly zero. Amazon was then a nascent company; electronic commerce a start up space. If the power to tax is the power to kill, why strangle this infant industry in the cradle? That policy worked out pretty well, and I’m sorry Borders and Barnes & Noble had done to them what they did to Ma and Pa booksellers, but that’s what we call creative destruction. So similarly why don’t we tax Warren Buffett as much as his secretary, but not tax at all the profits from the sale of any clean tech goods or services for, say, the next decade, with the possibility of renewal, just as was done with respect to the famous Bush income tax breaks?

Why don’t we reward, instead of punish, utilities that sell efficiency services or link up with Valley start ups to provide new efficiency solutions?

Why don’t we encourage utilities to merge so as to get the economies of scale that permit them to make larger scale investments in deploying proven technologies?

Why don’t we let utilities write off r & d expenses at bonus multiples, so that like digital and silicon tech companies they can take some of the burden of paying for innovation off the back of taxpayers? 

And why don’t you in this wonderful audience join with me in the embrace of risk and reward as the right policy for clean tech. That means telling Congress about the first rule of entrepreneurship: sometimes you succeed and sometimes you Solyndra. That means joining with businesses in every state to form coalitions that will not support climate change deniers and will support policies to battle the climate crisis. Finally, I’m also asking that you be willing to send a traveler like me to the Planet Washington with your support. Try rehundt@gmail.com and you’ll find me explaining how you can help. Finally, you can promise me that you have confidence that Planet Earth’s values and beliefs will prevail, and that we can keep our republic, even against the current odds.

Many thanks for letting me visit with you.

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