It’s not a popular thing to argue right now, but yes, there certainly is a vital role for government in support of cleantech innovation.
Let me start by acknowledging that I absolutely understand and quite often agree with the sentiment that government shouldn’t be in the business of venture capital. Market-based policies are, to my liking, almost always preferable to policies where government employees select and fund specific innovators or companies. Thus, the most effective way for governments to support cleantech innovation would be to price in externalities like climate change and dependence on imported energy, and then let the market sort things out.
But that’s not likely to happen anytime soon in the U.S.
So in the meantime, how should we view policymakers’ efforts to promote innovation and startups that would otherwise languish in today’s skewed pricing environment? It’s a very complex problem, which I’ll illustrate below.