Germany, U.S., Australia inject stimulus spending into cleantech

Several governments across the globe today approved new stimulus packages containing significant funding for the cleantech sector.

Some analysts say the government spending signals an acceptance of cleantech as a permanent fixture of the economy, while others have voiced concerns that the tens of billions of dollars isn't going to be enough.

"What we're seeing is a broad-based policy and cultural shift in the past several years that is becoming solidified with these stimulus packages," said Tom Burton, an attorney with the Energy and Cleantech practice at Mintz Levin, in an interview with the Cleantech Group today.

"It goes to show that from a policy perspective the efforts to promote clean, renewable energy and efficient use of fossil fuels are here to stay," he said. "It means we are in for a long and sustained time period where we will see growth in this industry."

The U.S. House of Representatives approved a $787 billion stimulus package that contained about $40 billion in clean energy and efficiency programs, plus $20 billion in tax breaks. The package was a compromise with the U.S. Senate, which was expected to pass the bill before adjourning today, then sending it to President Barack Obama for the final approval (see Smart grid could be early winner in U.S. stimulus package).

Germany's Bundestag lower house of parliament today backed a second stimulus package that injects €50 billion over two years into the economy. This follows a €31 billion package passed in November. Among other measures, the new stimulus contains €1.5 billion to boost demand for cars, including a €2,500 bonus to consumers to trade in inefficient vehicles. The country is also developing a new tax plan for car emissions.

Australia today approved a $42 billion (USD $26.5 billion) stimulus package, including money to insulate the ceilings of 2.7 million homes and build infrastructure. The measures are expected to reduce greenhouse gas emissions by 2020 an amount equal to taking more than 1 million cars off the road.

Also today, Spain approved a €4 billion stimulus to carmakers, including €800 million to refocus production on energy efficient vehicles. In all, Spain has launched over €74 billion in economic and financial stimulus measures.

But it's possible the spending in the cleantech sector might not be enough. A report this week from climate economist Lord Nicholas Stern urged governments to raise their spending on green policies and investments in economic stimulus packages to $400 billion in order to revive the global economy and lay foundations for future growth.

And a second report, this time from think-tank World Resources Institute, said that every $1 billion spent now on technology such as energy efficiency and renewable energy would generate 30,100 jobs and save the U.S. economy $450 million a year.

As a whole, European Union countries have proposed €200 billion in stimulus spending. And a number of other countries around the globe have unveiled their plans:

• In late January, Canadian Finance Minister Jim Flaherty unveiled a plan to establish a Clean Energy Fund to support R&D projects in fields such as carbon capture and storage. The government's budget also included a $1 billion green infrastructure fund for transmission lines to connect renewable energy projects.
• Earlier this month, France unveiled a €26 billion stimulus package, including €4 billion to improve rail infrastructure, postal service and energy services.
• China has enacted a plan for RMB 4 trillion ($585 billion) in government spending in 2009 to stimulate the economy. The government already spent RMB 120 billion in the fourth quarter of 2008, with about 10 percent of the money going to energy saving and ecological projects. This year RMB 350 million, or nearly 9 percent, is planned for ecological projects, many of which are connected to water conditions (see China's stimulus package boosts water desal, recycling).
• Italy's government last week approved €2 billion ($2.56 billion) in stimulus spending, including incentives to buy new cars and home appliances, in addition to about €80 billion announced in October.
• South Korea plans to invest $38 billion in green projects in the next four years to create almost a million new jobs. Sectors include recycling waste, increasing energy efficiency, forest conservation and developing renewable energy resources.
• Japan's stimulus spending includes $145 million in the first quarter of this year to encourage home solar power.

Meanwhile, the UK has not decided whether a fiscal stimulus package is needed beyond the £20 billion spent in November package for banks, which is expected to take six years for the country to pay off.

Burton noted that, while not all countries have approved stimulus spending in the cleantech space, the whole industry is set to benefit.

"The clean energy sector is intertwined on a global scale," he said.

The stimulus spending could free up project financing, which has drastically slowed for solar, wind and other renewable projects (see More deals, fewer dollars for cleantech in '09? and Cleantech investment breaks all-time record).

Cleantech developments making news in the past 24 hours

• Air-to-water technology is still cost prohibitive
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