The New Greens Like It Big.(International Edition; POINT OF VIEW)

The green view based on small sources and market power will give way to one based on scale and subsidies.

The winds of economic destruction are flattening not just retirement accounts but also naive visions for a green economy. Public support for costly new green mandates is weakening, and government budgets to fund them are bleeding red ink. Plummeting prices of oil and other fossil fuels have made it harder for green to compete in the marketplace. IPOs of firms working on "clean tech" green energy that have fueled fantasies of the coming energy revolution have crashed to a halt. In all the bad economic news, a new face of green is coming into focus. Whereas the old view of green tech was based on many small, decentralized sources of power and a green economy that harnessed the power of the marketplace, the new version will rely more heavily on regulation and subsidies. It will also embrace the wisdom, true in most of the energy business, that bigger is better for weathering economic storms.

The market, it's now clear, is not a reliable force for driving the adoption of green technologies. Just as the role of government is rising across banking and other sectors of the economy, new green will be much more wary of market forces as the route to profit. Google dreamed, in its "RE

The carbon market may be another casualty of the poor economy. It became the darling of green economists because in theory it created a market price to encourage switching from high-carbon fuels that cause global warming. In recent years European countries have imposed caps on emissions of carbon dioxide and let firms trade emission credits. Cap and trade, however, has not done much to reward green energy. The cost of emission credits in Europe over the last year weren't even half what they would need to be to coax power companies to drop coal for natural gas. Those market forces have been even less effective in pushing zero-emission green energy into Europe's electric-power system. Green energy has taken off, but because European governments channeled direct payments to renewable energy, especially wind; carbon markets had little to do with it. Solar energy, which is more expensive than wind, is most successful in Germany and Japan, which are famous not for sunshine but regulatory subsidies.

On the logic that greenness could come from harnessing markets, governments from Washington to Beijing dreamed of creating "green GDP" accounts that would make it easier to manage each nation's economy with a fuller picture of ecological assets and liabilities. But politicians scuttled the schemes out of fear in part because of the transparency they would bring, and because of the difficulty of measuring true greenness. Dreams of green tax reform--in which government would replace growth-sapping ...