Four democratic senators have introduced an initiative urging the Obama administration to suspend a U.S. Treasury grant program formed under the Recovery Act. The program enables renewable energy producers to receive grants in lieu of Investment Tax Credit payments, essentially providing valuable financing up-front rather than over a number of tax years. That program has spawned a revival in investments for clean energy projects in the wake of the worst economic crisis since the Great Depression, and is widely lauded by RE industry members.
However, senators Charles Schumer (D-N.Y.), Bob Casey (D-Penn.), Sherrod Brown (D-Ohio) and Jon Tester (D-Mont.) are concerned that components for these projects are coming from foreign companies. In other words, they believe funds intended to boost the U.S. economy should be doing just that, not bolstering economies overseas. I absolutely agree with the notion that U.S. dollars should not be spent overseas, but the problem goes deeper than a Recovery Act grant program and ends with one gaping hole in American clean energy policy: a national renewable electricity standard (RES).
The grants-in-lieu-of-credits program has been wildly successful, and its removal could be detrimental to green energy investing and deployment, as recently argued by wind industry representatives before Congress. The Recovery Act stipulates that all stimulus funding must be spent within the United States, and industry executives argue that it is…to the highest possible degree. The problem is that key components of a wind or solar installation may not be available in this country.
Now that manufacturing credits are in place, that sector of the RE industry is picking up. Those same wind power industrialists noted that several new manufacturing plants have opened up in the last year, but that the U.S. still does not have a complete supply chain in place. They also posit that had a national RES been in place at the time of the Recovery Act’s passage, even more manufacturing jobs would have been created. I agree. Foreign and domestic investors still see energy policy in the U.S. as unstable; and rightly so. Anyone with even a marginal interest in national politics can see how unstable, inefficient and unproductive Congress has been on every front over the last few years.
We need some sort of national policy for — which would act as a national statement on — renewable energy. There are a lot of pleasant pieces, mostly found within the Recovery Act, but the glue that holds everything together is missing, resulting in a fractured and frenetic political environment in which legislation succumbs to the will of one belligerent senator or corporate lobby. Even loud-mouthed pundits and talk show hosts seem to have more power than elected officials.
The best way to quiet this storm, to move forward rather than stumble and swear, is to enact that national policy. I’ve argued before for increasing import tariffs long sacrificed to free trade and corporate globalization. A national feed-in tariff the likes of which propelled Germany to the front of the global solar stage would be another vital step. But these and other steps, including grants and tax credits, will only be as strong as the renewable electricity standard backing them. Our lack of any unifying RES is stunting the U.S. renewable energy industry. We’re grasping at straws instead of bailing hay.
One need only look at states with aggressive RES to see their effectiveness. Arizona enacted its first RES in 2006 and (if sudden turbulence within that state subsides) will be home to the first American manufacturing plant of Chinese solar giant Suntech Power Holdings. Oregon instituted both an RPS and state-level manufacturing tax credits and is now home to German giant SolarWorld’s North American headquarters that includes a 550-megawatt manufacturing facility. California needs no introduction.
To really advance renewable power, we must have a national RES. I’d prefer it were accompanied by a national FIT and a strong carbon tax, but the standard is step-one in bringing everybody in line. It will give foreign investors the confidence to invest in power plants on U.S. soil. Nobody wants to pay the oft-exorbitant shipping costs involved in overseas transport, but investors don’t like risk — something the Recovery Act grant program has helped diminish, a decrease that a national RES would all but guarantee.
Another benefit of national RE policy would be the actual and permanent creation of all these high-quality green jobs so proudly touted in renewable rhetoric. We must bring manufacturing to our shores. Grants have and are bringing some, a reason why repealing that program is not the solution, but an RES would bring more. Too many jobs in renewable energy (i.e. power plant construction) are temporary.
We often hear how this or that incentive will add so many thousands of green jobs per year, leading us to believe that employment will steadily rise by 3,000 each year. Hooray! But in reality, most of those jobs are temporary and the same 3,000 workers who manned new jobs one year will man the same “new” jobs the next year. Solar and wind power plants require relatively little maintenance or manpower for operation. A sizable power plant might require only a dozen or two permanent employees.
So where in the world is our national RES?
It’s in Germany, Spain, France and – gulp – China. Along with our jobs and prosperity and clean energy economy. The world is on the cusp of truly transitioning into a 21st-century energy economy, one dominated by wind and solar and geothermal rather than coal and gas and oil. Right now, the United States is stuck on the edge, bickering amongst ourselves while the rest of the world passes us by.
As Leonard Cohen once famously rhymed about America, “It’s there they’ve got the range and the machinery for change.” Well, let’s get those machines (and our congresspersons) fired up. Let’s have our national renewable electricity standard and be a positive leader and force for change at home and abroad.
Sincerely, D. Harding
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