- The Washington Times - Monday, December 28, 2009

Gosh, it would be nice if green technology made as much financial sense as it claims ecological sense. But even if you have billions of other people’s dollars, wishing cannot make it so. That apparently is news to the Department of Energy, which spent $13 billion in fiscal 2009 on such efforts.

Idealism can’t change the fact that when real investors look at green technology and have to risk their own money, they are vastly more skeptical. That’s why private venture capital invested only $2.7 billion in the sector.

Energy Secretary Steven Chu knows plenty about energy, but not more than all the nation’s private banks and investors. Whether Mr. Chu likes it or not, the long-term viability of any new technology is directly connected to the ability to make money with it. Take ethanol; the government has dumped billions into it over decades, yet the industry is as fragile today as when the first drop of subsidy-fueled ethanol gushed into a gas tank. Take away taxpayer cash and federal mandates and, poof, the plants would close faster than the next crop of corn can sprout.

Despite the obvious risk of failure, the Energy Department ultimately has plans to spend $40 billion in grants and loans over coming years so federal bureaucrats can play venture capitalist. The National Federation of Independent Business estimates that most new businesses never make it to profitability. Green businesses - particularly green energy which must compete against easily and cheaply available alternatives like coal - will have an even tougher time. And that’s not even considering the untested nature of many green products - from exotic battery technology to science-fiction fuels - about to be slathered in federal largesse. Many exist more in someone’s imagination than in the concrete world of engineering.

With the federal government now the dominant financial player in the sector, politics, not profits, will ultimately drive development and stifle true innovation. Young tech companies are already tailoring their business models to get themselves a piece of the taxpayer pie, making Energy bureaucrats into industry kingmakers. The best and most viable products won’t necessarily have the chance to naturally rise to the top, unless they are marketed by companies that hire the best grant writers. When hiring workers, companies would be wise to consider where they live more than what they can do. Legislators will only care about the geography - so they can earn political points from constituents.

The Energy Department has even taken its deification of new “green” technologies global, with Mr. Chu announcing plans to spend $85 million to promote new technologies in developing countries. The money will be added to a $350 million, five-year international effort to place devices like solar lanterns in poor households and promote energy-efficient appliances. Brazilian housewives must have access to eco-sensitive dishwashers, after all.

Or maybe not. With domestic unemployment at 10 percent, and American workers faced with continued uncertainty, President Obama’s plan to front businesses with questionable futures and light homes in Third World nations isn’t a recipe for public enthusiasm. How about we let Americans keep all this money instead? They might invest in businesses that will pay taxes instead of consuming them, or even buy fancy green dishwashers for the housewives in Poughkeepsie and Peoria.