Don't Pop the Green Bubble

Although there's no doubt that the photovoltaics industry is red hot right now, it looks and smells an awful lot like another dot-com bubble — ready to burst any minute. It seems to be part of a green movement that could well be little more than a passing craze. The hybrid Toyota Prius may be the latest status symbol, but for how long? More consumers may be concerned about global warming, but will they forget about the whole thing tomorrow?

The green bubble may well burst. To some degree, that's probably inevitable. When the dot-com bubble burst, a lot of companies that had tried to make a quick buck with the craze fell flat on their faces. Plenty of companies are undoubtedly rushing toward the sunlight now with no real plan as to how they will actually survive in a photovoltaics industry without government subsidies. However, like the Googles and Amazons of the dot-com generation, companies serious about the renewable energy market will survive and prosper.

Manufacturing is the most energy-intensive sector of the economy. In line with the green movement, IC manufacturers and other companies are taking steps to improve their use of energy — whether that means installing solar panels on their roofs, reexamining energy use, or other steps that will not only reduce CO₂ emissions, but also save them money in the long run. The latest Environment, Safety and Health (ESH) chapter of the International Technology Roadmap for Semiconductors (ITRS) devotes more attention to fab energy concerns, as well as sustainable development.

The National Association of Manufacturers (NAM, Washington) recently spoke out against legislation proposed by U.S. senators Joseph Lieberman and John Warner (Lieberman-Warner Climate Security Act). In short, the proposed legislation (S. 2191) has a goal of lowering U.S. greenhouse gas emissions 70% below the 2005 levels of almost 6000 million metric tons of CO₂ by 2050. NAM's problem with the bill has to do with what the association sees as its adverse effects on energy prices, jobs, income levels and such.

Of course, the impact on jobs and, therefore, income levels all hinges on the rising cost of energy that this bill would apparently create. "The primary cause of job losses would be lower industrial output due to higher energy prices, the high cost of complying with required emissions cuts, and greater competition from overseas manufacturers with lower energy costs," according to the report commissioned by NAM and the American Council for Capital Formation (ACCF, Washington).

But the stated impact on energy prices seems rather flawed — pointing only to a presumed rise in the cost of coal, oil and natural gas. The idea behind regulating CO₂ emissions is not to make manufacturers produce less, but rather to get them to produce in a smarter, more energy-efficient way. That might mean finding ways to reduce the amount of energy needed for any given process, and it might also mean finding other ways to fuel that energy. By relying on statistics that say such a proposal would cause the price of gasoline to increase 60–144% by 2030 (isn't it already on its way anyway?) completely ignores technological progress in the energy sector, not to mention any regard for our environment and future generations.

Although newer technologies such as solar, wind or biomass are currently high-cost energy alternatives, work is progressing to find new ways to bring that cost down through conversion efficiencies, production improvements, etc. According to the European Photovoltaic Industry Association (EPIA, Brussels), solar energy's grid parity with conventional forms of energy should be reached within the next seven years in southern Europe. Germany maintains its 50% market share for solar electricity generation, and currently derives more than 14% of its electricity from renewable energy. That superstar status in a country with little sunshine to speak of has been driven by a powerful government incentive program.

Germany's conservative Christian Democratic Union party is now looking to cut back the solar incentives in the country, according to a recent report from the International Herald Tribune. Some predict that this will kill the photovoltaics industry there, but the cutbacks won't necessarily be so detrimental. To get past the dot-com-like hype that's currently such a big part of the photovoltaics industry, manufacturers need to get more realistic about how to achieve their goals. Ultimately, it will not be through government subsidies, but rather through the necessary improvements in efficiencies.