There has been great speculation about President Obama's stimulus package.  Will it be enough to get the economy back on track?  Does it contain significant amounts of pork?  Will it include meaningful green initiatives?   In Silicon Valley we are waiting along with the rest of the nation with bated breath to see what the final bill contains. In the Valley, however, we have a different perspective than many others.  For decades, conventional wisdom has been to approach government policies with skepticism, disinterest and occasional scorn.  It is still a firmly held belief that government is an obstacle to innovation rather than a facilitator.  Additionally, subsidies are artificial and doomed to failure once the free market speaks.

Nowhere is the tension between government and innovation more evident than with regard to the so-called cleantech initiatives.  Once again the Valley is asserting its leadership in innovation with the position that government policy will be pivotal and essential to the success of the green economy so long as it is implemented in a manner that works.

We must embrace and engage government as an important ally to assist getting cleantech products and services off the ground.  One of the most daunting challenges for any innovation is market adoption. In cleantech, the problem is exacerbated because the incumbent landscape of large corporations typically has developed its own history of enlisting regulation and subsidies in their favor.  The government can and should assist innovative technologies to "cross the chasm" from development stage to fully commercialized production.

I fully subscribe to the premise that ultimately, the market will either accept or reject these products, but they must be given a chance to get to the market in the first place.  Government policies and assistance are sometimes the only way to bridge that gap.

President Obama stated that the emerging green economy is one of his highest priorities, and it can be a source of immediate and significant job creation.  Silicon Valley has already witnessed this reality with new silicon fabs being built in the Valley for the first time in a decade, only this time for solar instead of semiconductors.  This growth is still fragile and must be encouraged.

Fortunately we can make much of the existing legislation work with a little bit of effort.  There are a number of laws that are already on the books but are either unfunded or need modification to achieve their intended purpose.  It will be significantly easier to pass this legislation than pass entirely new measures.  The key will be to fund and expand these programs so they can generate green jobs, catalyze investment in clean energy and promote energy independence.  Specifically, I urge Congress to act on the following:

Energy Efficiency: We must upgrade our electric grid, much in the way that our interstate highway system was created 50 years ago, to enable hundreds, if not thousands, of new energy efficiency businesses, projects, products and jobs.  These improvements will also save consumers vast amounts on their utility bills.  For example, the Energy Independence and Security Act of 2007 created a number of worthy programs, including energy efficiency and conservation block grants that empower consumers to lower their own energy usage.  Unfortunately, this legislation has not been adequately funded.  These programs need money to accomplish their mandate.

Loan Guarantees: One of the biggest financing gaps for cleantech is financing early commercial facilities for new technologies. The amounts are too large for venture capital and too risky for traditional project financing. The Department of Energy has an existing loan guarantee program, which can be modified to resolve this dilemma.  Unfortunately, the program suffered in the past from lack of funding, bureaucratic roadblocks, and requirements that bias the program toward more mature technologies.  If properly recrafted and prioritized, the DOE loan guarantee program will help companies innovate in areas such as cellulosic biofuels and waste-to-energy.  It will result in pilot and demonstration plants that employ scientists, construction workers and production engineers.  Then, these companies can "cross the chasm" to build commercial plants employing thousands of workers to produce fuels at market prices with private capital.

Tax Incentives: In October, Congress extended the Investment Tax Credit for solar for eight years, but only granted a much shorter one and two year extension of Production Tax Credits for wind, geothermal and other forms of energy generation.  The PTCs must be extended for a significant amount of time, at least five years, to loosen the tight private credit markets that are the traditional source of financing for these projects.  This measure will give investors confidence to back next generation technologies that will be used in these projects.  There are literally hundreds of projects ready to employ thousands of citizens upon receiving funding. As President Obama remarked in his inaugural address "The question we ask today is not whether our government is too big or too small, but whether it works." In the cleantech arena, Silicon Valley needs Washington, and Washington needs Silicon Valley.  It is a partnership that will work.

This opinion piece is from an independent writer and is not connected with Greentech Media News. The views expressed here are those of the author and are not endorsed by Greentech Media.

Tags: congress, energyefficiency, grid, loanguarantees, obama, taxincentives