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to his fascinating band of underlings in the California bureaucracy to make things up as they went along. One particular PhD-packing philosopher of science, Tyrone Cashman, got to design the legislation that created what longtime California energy journalist Peter Asmus called, “America’s last great tax shelter,” otherwise known as the infant green tech industry.16 “With Governor Brown’s blessing . . . two diametrically opposed cultural camps—greedy exploitationists and well-meaning ecotopians—were brought together in a marriage of convenience that gave birth to today’s modern wind farming industry,” Asmus wrote in a 2001 book on the period.17

In those early days, tax incentives and guaranteed power purchase contracts were the wind industry’s lifeblood. It was a classic case of what innovation researchers call a “demand-pull” policy, in which the lure of money is used to draw private enterprise to a field of technological interest.18

Incredibly generous tax incentives were doled out on the basis of how many kilowatts of wind capacity one could install. On top of the 25 percent federal tax credit one could already get, the California legislature gave renewable energy developers another 25 percent deduction on state income tax. Crucially, this was a capacity tax credit that was not based on actual electricity production but rather on how many towers a developer could get in the ground and have generate some (any!) electricity by December 31 of a given year. Returns were practically guaranteed.19

On the plus side, the policy drove the installation of a lot of turbines. After the incentives went into effect in 1981, California became the world’s foremost laboratory for wind technology. Anyone with a tower and some blades flocked to lease land in three passes: the Altamont Pass east of San Francisco, San Giorgino Pass near Palm Springs, and Tehachapi, east of Bakersfield. In 1985 these three areas generated almost 90 percent of the world’s wind electricity.20 California had become the only real wind market on the globe at a cost of about $200 million a year in lost tax revenue.21

Cashman, who had spent time with the radical technology group the New Alchemists, didn’t mind introducing a little chaos to jumpstart the transformation of the nation’s energy system. He was—and remains—completely committed to natural systems.22 But renewable energy was competing against fossil fuel technologies that had been supported for decades by the government and had fully matured. Something had to be done to create new wind machines. The high-profile Department of Energy research program had succeeded only in finding out what didn’t work.23 Perhaps, Cashman figured, government could employ other means to guide people onto a cleaner technological path. “I wanted to break the vicious cycle. There was no wind technology because there was no capital. And there was no capital because there was no wind technology,” Cashman stated.24 The tax credits certainly solved the capital problem. Money poured in from all over. From 1981 to 1986 at Altamont Pass alone, $1 billion was invested in 6,700 wind turbines.25

To their dismay, investors and wind companies discovered the machines were not ready for the industrial-scale task they had been handed. Suddenly, for the first time ever, there was a real race to improve wind electric technologies. Because of the tax credits, investors made money on the plants immediately, but the wind companies had to survive on the revenue from the sales. This means that the better and cheaper the machine, the more money they could make. Almost without a doubt, the California tax incentives accelerated the technical progress of wind machines all over the world by providing people who wanted to buy them. The machines got bigger and better, and their operators learned how to use them more efficiently. The cost of the electricity they produced fell by an order of magnitude. Without the tax incentives, imagining how that might have happened is difficult.26

The tax incentives had serious perverse consequences as well. As has been