The state of play on green incentives in the stimulus bill
The following is a guest essay from Josh Dorner, deputy press secretary of the Sierra Club.
Greens were heartbroken last year when a package of tax incentives for clean energy and renewables fell short in a 59-40 vote during December’s energy bill battle royale in the Senate. Greens, renewables folks, and the Democratic leadership have been looking for a clear path forward ever since. As these particular incentives actually do stimulate the economy, attaching them to the economic stimulus package now being debated is attractive both on the merits (more on that below) and for political reasons.
First, some stimulus package is all but guaranteed to pass and be signed by the President (an increasingly rare outcome for legislation these days). As the Democrats have been pretty strict about offsetting new spending with cuts somewhere else, attaching green initiatives to this package sidesteps the issue of the finding the money to pay for them.
(For reasons unclear to anyone of sound mind, taking the money out of Big Oil’s hide bedeviled the energy bill’s clean energy tax package. Only in Washington could the idea of shifting tax breaks and subsidies away from Big Oil toward renewables — even as ExxonMobil reports a record $41 billion profit — not be a shoo-in.)
After the economic stimulus package negotiated between the White House and House leadership failed to include the energy incentives, the fight moved to the Senate. Sen. Maria Cantwell deserves major kudos for leading the charge. Though Senator Baucus, Chairman of the Senate Finance Committee, initially expressed skepticism about including the incentives in the stimulus package, Cantwell marshaled the support of nearly 40 other Senators — including key Republicans.
In addition to the support she pulled together, key players like Bingaman, Domenici, and Grassley, the Ranking Member of the Finance Committee, also weighed in favorably. Support became so strong that instead of offering the incentives as an amendment, a bipartisan deal was struck to simply incorporate them into the package prior to Wednesday’s markup. In the end, it was approved by the Finance Committee 14-7.
The $5.7 billion package includes quite a few goodies:
- 1-year extension of the Production Tax Credit — $3 billion
- Solar, fuel cell, and microturbine investment credits — $130 million
- Clean Renewable Energy Bonds — $400 million
- High-efficiency appliance credits — $323 million
- Energy efficiency credits for new homes — $61 million
- Energy efficiency credits for home retrofits — $1.5 billion
- Energy efficiency credits for commercial buildings — $153 million
Attaching these incentives to the stimulus package makes perfect sense. They are timely, targeted, and temporary.
Second, the renewables industry is running white hot right now and is one of the beacons of hope in these times of growing economic darkness. The industry already employs tens of thousands in the areas of research, production, and construction/installation. And its future looks even brighter. A study by the Blue-Green Alliance shows that a strong investment in renewables could create over 820,000 new jobs at thousands of existing firms across the country.
The results on the ground show that this isn’t some think-tank pipedream pushed by us greens. Gamesa of Spain now has three factories in Pennsylvania. Its first, in Fairless Hills (an area decimated by the collapse of the steel industry), employs over 500 people in good-paying union jobs. Newton, Iowa, a typical Midwestern small town, lost 1,800 jobs in December when Maytag pulled up stakes and closed its corporate HQ and factory after being bought by a competitor. By June of this year, a factory making wind turbine blades will open in the town, replacing about 500 of the lost jobs. This is just one of a half-dozen such projects in Iowa alone.
Finally, The New York Times reports today on California’s solar boom, highlighting one solar installer, SolarCity, that has expanded to 215 workers since its founding in 2006. Or SunPower, a manufacturer, whose sales tripled from between 2006 and last year, will probably hit $1 billion this year, and whose stock shot up 251 percent last year — more than any other Silicon Valley company.
On economic grounds alone — to say nothing of the importance of scaling up the production of clean energy posthaste — it would be criminal to suffocate the industry in the cradle just as it’s hitting its stride. Yet Congress has had the shortsightedness to do so three times in recent years — allowing the credits to lapse in 2000, 2002, and 2004. Instead of the surges in installed wind capacity we’ve come to expect (5200 new megawatts in 2007), those years saw anemic growth. The drop in growth from the previous year ranged from 77% to 93% during the lapsed years.
Letting these credits expire will not only prevent future growth in jobs and investments and put our march toward a clean energy future on hold, but the American Wind Energy Association estimates it would throw some 75,000 people of work in the wind industry alone. With the economy already shedding jobs, this is the last thing we need.
The future of the Senate version of the stimulus package looks a bit rocky. By including extensions of unemployment benefits and changing the structure of the underlying tax rebates, Senate Democrats appear to have ginned up the Republican filibuster machine (not that it sees much downtime these days). A final vote looks almost certain to be delayed until Wednesday, when Senators Clinton and Obama can take a brief respite from the campaign trail to bolster the Democrats in their march toward 60 votes.
Regardless of whether we get to 60 on a package with the energy incentives — and I very much hope that we do, it survives conference negotiations, and is signed by the president — we’ve already scored a huge victory for clean energy. We now have 40+ Senators on record as supporting these clean energy incentives, including Republicans like Dole, Allard, Sununu, Thune, Brownback, and Roberts. The House and Senate leadership have vowed to get ‘er done this year on renewables, so even if this particular energy package doesn’t make it over the finish line, we now have some serious ammunition for the next round.