Clean Energy Investment and Urgent Action Needed

The Silicon Valley Leadership Group and Stanford’s Precourt Energy Efficiency Center held their annual Energy Summit this past Friday. If I had to characterize the overall sentiment of the Summit, I would say the themes that emerged were: clean energy investment and action are urgently needed; political gridlock is an impediment; and Silicon Valley runs the risk of losing its edge in terms of technological leadership.

Former Secretary of State George Schultz kicked off the conference with the observation that one can debate the merits of various policies, but “you cannot debate the facts.” Schultz, an economist by training and a former Secretary of the Treasury as well, noted that the effects of carbon dioxide and climate change are “externalities” or costs to society that are rarely accounted for.

In Mr. Schultz’s opinion, California and the nation need a policy that includes a price on carbon, thereby unleashing market forces to curb emissions. Applied Materials fully agrees with putting a price on carbon. He added that the so-called Dirty Energy Initiative aimed at suspending AB 32, the Global Warming Solutions Act, would be “an unmitigated disaster and would represent turning our back on a real problem.”

Current Stanford University economist Larry Goulder added that none of the studies of AB 32’s potential impacts come close to suggesting the Act will “kill” the economy, as some opponents are arguing. The overall impact on the California economy is likely to be negligible according to Goulder.

Perhaps the most upbeat and lively panel of the day was a group of venture capitalists from local firms, Vantage Point, Kleiner, Perkins and Mohr Davidow. The consensus of this group seemed to be that Silicon Valley can solve many of the energy challenges and make some money in the process. However, the present market situation is not encouraging in terms of U.S. competitiveness. Of the top 30 companies in three segments – wind, solar and advanced batteries – only four companies are U.S. based.

Alan Salzman of Vantage Point quipped, “If you want to educate our legislators, just put them on a plane to China.”

Of some relevance to Applied Materials, the VCs predicted the market for solar panels will grow to $100 billion annually from its current $50 billion and the LED market represents a $150 billion opportunity to change out our lighting infrastructure.

This panel was also rather disdainful of the effort to dismantle AB 32. “What is Plan B for California to compete in Green Tech?” one of them asked. Further, “it would provide a terrible signal to the entrepreneurial community and affect where they set up their businesses,” said another.

See 2010 Energy Summit for the complete Summit lineup and other materials.