Even before Barack Obama was elected, the assumption was that whoever was elected president, renewable energy and the green economy would get a huge boost. That still appears likely, but the results — at least short term — are less clear, according to some early assessments.

Economic indicators are mixed at this point, and while the sinking economy could create new green jobs in businesses that will help attack global climate change and also create a conduit for retraining parts of the workforce set adrift by dying industries, falling global oil and natural gas prices make the shift to renewable energy harder and divert potential investment away from the green sector.

Reports in last Sunday’s Los Angeles Times highlight the dilemma at the beginning of a new year and a new administration in Washington, DC. On the LA Times‘ front page was a report on the rapid growth in a Michigan-based supplier of semiconductors to the global solar energy industry. And on the front page of the paper’s business section was another report on the “dismal” results in the clean energy sector in 2008, far worse than the 34% decline in the Dow Jones Industrial Average last year.

“In the second half of 2008, renewable energy shares tanked,” wrote David Pierson and Edward Silver in a business article headlined, “Green Investing 101: In such dismal times, how do you navigate this risky sector? Should you try?”

An index called the WilderHill Clean Energy Index, following 51 green companies, was down 70% in 2008, compared with the Dow’s 34% drop, the authors said in the Times. They also cited five well-known clean energy mutual funds, all of which had dropped substantially in value during the last six months of 2008.

In the rust belt the assumption is that the Obama administration wants to put $150 billion into the renewable energy sector during the next 10 years, including pushing higher fuel economy standards, hybrid plug-in vehicles and other measures that will radically transform a seemingly dysfunctional U.S. automotive industry.

Hemlock Semiconductor Corp., located 80 miles northwest of Detroit, announced Dec. 15 a $3 billion expansion that could create hundreds of new jobs to supply a global solar industry. Ironically, Hemlock made the announcement the same week that Detroit’s Big Three automakers asked Congress for $17.4 billion in taxpayer help to stave off a collapse of their companies.

Hemlock has been “deluged” with applications from workers laid off from the auto industry, the Times reported, referring to solar as Michigan’s “brightest renewable star” because of Hemlock, a venture of two Japanese companies, Midland, MI-based Dow Corning, and a growing manufacturer of thin-film solar photovoltaic (PV) material called Solar Ovonic, which operates three plants in the state and has two more under construction. Most of their output is shipped to Europe and Asia where firms there turn it into various shapes of rooftop solar PV panels. Hemlock employs 1,400.

The proponents of a New Deal-like green jobs program point to a record $117.2 billion pumped into alternative energy technologies worldwide in 2007, and the fact that the cost of solar and wind developments and equipment has been slashed over the same period. But this ignores more recent economic realities — particularly the disastrous last six months of the year. Many clean energy companies are undercapitalized, leaving them vulnerable to the stock market meltdown and credit crunch. They no longer have the cash to fund the hefty upfront costs of major wind and solar projects, Pierson and Silver wrote in the Times.

“On top of that, the price of fossil fuels plunged, restoring conventional energy’s status as the low-cost alternative — costing investors lots of money. The Standard & Poor’s Ratings Services energy index lost 35.6% in 2008,” they said.

They quoted a co-founder of Abacus Wealth Management, Brent Kessel, as comparing the current downturn in the clean energy sector to the dot-com bubble bursting in 1998-99. Carefully researched and well-thought out investments in the clean energy companies will pay off, but it may take five to eight years to see the profits, said Kessel, who cautioned that in the recent past “fundamental principles of good investing” were not followed. To make the point, the Times report cites green mutual funds that were up by 20-30% in 2007 and plummeted 36-61% last year.

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