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Clean tech sector seeks long term support from Obama

LOS ANGELES (Reuters) - Clean technology companies welcomed nearly $2.4 billion for the sector in the Obama administration’s proposed budget released on Monday, but some industry watchers said it wasn’t enough for major changes in the emerging market or for long-term growth.

U.S. President Barack Obama takes a tour of DeSoto Next Generation Solar Energy Center in Arcadia, Florida, October 27, 2009. REUTERS/Jim Young

U.S. President Barack Obama’s new budget gave a shot in the arm for energy efficiency and renewable energy programs, and was a huge increase from $113 million in the previous budget. It also included various climate measures and an additional $36 billion in loan guarantees for nuclear energy.

The WilderHill Clean Energy Index, which includes solar power companies, battery maker A123 Systems and other clean energy companies, closed up nearly 3 percent on Monday.

However, J.P. Morgan analyst Christopher Blansett said that measures in the budget such as $500 million in credit subsidies for energy efficiency and renewable energy projects do not account for much in the “big picture perspective.”

“I don’t think people realize the scope of how much money really needs to be spent to make big structural changes in either our energy consumption, use or production,” Blansett said.

The emerging renewables and green technology industry -- which struggled in 2009 amid the credit crisis and a dearth of available financing for new projects -- still leans heavily on government incentives.

A bill to tackle climate change is stalled in the Senate amid opposition from lawmakers from coal-and oil-producing states, and many companies hope the United States will adopt a renewable electricity standard requiring more power from resources like wind and solar.

Blansett estimated that it will cost between $158 billion to $445 billion if the United States adopts a national electricity standard requiring 15 percent of all electricity in the country to come from renewable resources by 2020.

Privately held solar developer Recurrent Energy’s Chief Executive Arno Harris said that in the long term the U.S. government needs to provide direct support to renewables -- such as a renewable electricity standard -- and move away from tax-based incentives.

“We are seriously concerned there aren’t enough investors with tax appetite to basically provide the capital for the build-out of resources that we anticipate,” Harris said.

SOME POSITIVE STEPS

In the budget, the White House called for a “market-based” policy to fight climate change, but dropped prospects for revenue from a climate cap-and-trade system opposed by many lawmakers.

This absence of cap-and-trade legislation means renewable energy companies would have to be more creative in working with local governments, said Chief Executive Amit Chatterjee of Hara, which provides online software to help companies reduce their carbon footprint and is backed by Silicon Valley venture capital firm Kleiner Perkins.

“That means states and municipalities will have to step forward and really provide some of the backstop that I think they were hoping will happen in the cap-and-trade,” Chatterjee said.

Another area of contention among some of the green industry watchers was Obama’s support for the nuclear industry, which is slated to receive an additional $36 billion in loan guarantees for a total of $54 billion.

“This money could be far better spent on cleaner, cheaper, safer and faster ways to reduce emissions, such as increasing the amount of loan guarantees available to make commercial and residential buildings more energy efficient,” said Sierra Club Executive Director Carl Pope.

Still, some renewable energy trade groups, chief executives at clean tech companies and environmental groups welcomed a few of the measures proposed by the White House.

The budget “conveys the administration’s commitment to the continued growth of the solar industry,” said Rhone Resch, chief executive of the Solar Energy Industries Association, an industry group whose members include both U.S. and foreign solar power companies.

Resch said that the budget includes $302.4 million -- a 22 percent increase -- in funding for solar power programs.

The American Wind Energy Association echoed that positive reaction, citing the budget reflected a commitment to the wind industry, but called for the U.S. Congress to pass a renewable electricity standard with strong near-term targets.

Reporting by Laura Isensee in Los Angeles and Poornima Gupta in San Francisco; additional reporting by Steve Holland in Washington; Editing by Bernard Orr

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