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Investor: Renewable Energy Needs Federal Funding

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Investor: Renewable Energy Needs Federal Funding

Technology

Investor: Renewable Energy Needs Federal Funding

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LINDA WERTHEIMER, host:

A Senate committee last night gave the green light to some $31 billion intended to encourage green energy development. The spending would come in the form of incentives in tax credits as part of President Obama's economic stimulus plan. One man who stands to benefit is Ray Lane. He is a Silicon Valley venture capitalist. Lane says it's especially important for alternative energy to get a government boost right now.

Mr. RAY LANE (Managing Partner, Kleiner Perkins Caufield & Byers): Because of the economic decline across the world, the tax equity financing and project financing and even later-stage equity financing has dried up. So we have hundreds of wind projects and hundreds of solar projects and tens of transportation projects that will go abandoned if they do not get capital. The only source of that capital today is going to be some help from the federal government.

WERTHEIMER: In the form of what?

Mr. LANE: Loan guarantees would be first. Second would be tax incentives. And then finally there are outright grants.

WERTHEIMER: Do you have any concerns that given the fact that the federal government has had such a hard time persuading credit markets to thaw out enough to do anything, that they'd be willing to this, even presented with incentive?

Mr. LANE: Well, I don't think we have a choice. The whole renewable energy field has the possibility of fulfilling exactly what President Obama wants, and that is to solve multiple problems with a single solution. This will help to burn less foreign oil. It of course helps the environment. And it will create new jobs.

WERTHEIMER: Now, President Obama clearly believes that this - combining these goals works. What do you think?

Mr. LANE: I absolutely believe it. I have companies that I'm affiliated with - a solar thermal company that is ready to build projects that are 200, 300, 500 megawatts in size, which create thousands of jobs, that will create enormous amounts of energy. I have a car company that is developing a fuel-efficient vehicle that is over 50 miles per gallon and is very, very economical for consumers and can be purchased anywhere. These two projects will he haltered without getting capital.

WERTHEIMER: Now, one of the things that has always stood in the way of creating alternative energy sources is that the kinds of energy sources we use now are cheap.

Mr. LANE: Correct. The prices at which we sell electric cars or the prices at which we provide renewal energy from solar or wind must be competitive with current fossil fuel prices. Now, there may be some incentives that help it, but it must compete. Consumers typically will not pay a premium just to go green.

WERTHEIMER: So, enough money has to be invested at the front end to create the economies of scale, to make price possible?

Mr. LANE: That's exactly right. And so we'll see legislation in the next couple of years to price up burning carbon. So oil and coal will be more expensive. So solar, wind, electric cars will come down and compete favorably with coal and oil prices that will be priced up because they are soiling the environment.

WERTHEIMER: Ray Lane, thank you very much.

Mr. LANE: Pleasure talking to you.

WERTHEIMER: Ray Lane is a managing partner with the venture capital firm of Kleiner Perkins Caufield & Byers in Menlow Park, California.

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