This may sound odd, but I think Arlen Specter’s decision to switch from the Republican to the Democratic party might awaken the suddenly relatively dormant clean tech industry. No, I’m not expecting Specter to morph into Al Gore, but his decision to cross the aisle might embolden others in the White House and Congress to be more ambitious when it comes to crafting climate, energy, and environmental legislation. Specter himself has historically seemed fairly ambivalent about environmental issues, but that ambivalence might actually work in his favor going forward. More on that later.
The election of President Barack Obama led to no small amount of giddiness among environmentalists, and with good reason: during the campaign, Obama repeatedly called for increased investment in green technology, and he frequently spoke of the need to reduce emissions of carbon dioxide and other greenhouse gases. So here’s a weird little fact: during the last three months of the Bush presidency, venture capital investment in green technology was more than six times greater than what was invested in the first three months of the Obama presidency. True, the economy has cut venture capital investment in all sectors, but the economy was already in the tank in the last quarter of 2008 and clean-tech companies still managed to raise nearly $1 billion. So what gives?
I think part of what’s going on is that the election of Obama created great optimism about the future of green tech, hence the heavy investment at the end of last year, but now that he’s actually president investors are waiting to see what the new rules of the game will be. This isn’t the only factor at work–Dow Chemical’s decision to begin manufacturing electricity-generating photovoltaic roof shingles undoubtedly played a role in venture capital investment in solar power dropping from $460 million in the fourth quarter of 2009 to just $14 million in the first quarter this year. But the $30 billion designated for investment in clean energy in the stimulus bill is still largely unspent, indicating that a lot of green tech companies have decided to wait and see before making any bold moves.
Which brings me back to Specter. His colleagues in his new party may actually discover that Specter’s historical lack of passion for environmental issues is an asset, because he has taken no strong stands. Going forward, this means the political cost of voting with the Democrats on environmental issues is low, because he can’t be accused of reversing any strongly held positions. This is important because, after four decades as a Republican, Specter is likely to embrace opportunities to find common ground with his new party that don’t provide additional ammo for critics accusing him of flip-flopping. This, plus the expected arrival to the senate of Al Franken some time this summer, might prove enticing for the Obama team. The president has so far proven adept at getting congressional approval for his ambitious proposals by making a few key concessions that leave his top priorities intact. The presence of Specter and anticipated presence of Franken could well tempt Obama to reach for more when making climate and energy policy, which could in turn rekindle enthusiasm for–and investment in–green technology.