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Citing the possibility of job losses by the hundreds of thousands and the impact on a weakening economy, leaders of four major U.S. renewable energy trade associations Tuesday called on Congress and President Bush to extend production and investment tax credits that renewable energy developers, their financiers, and local and state governments are counting on to generate tax revenues and cleaner electricity.
"Congress will be raising taxes on clean, domestic, renewable energy sources and will undercut one of the fastest growing segments of the U.S. economy. With the nation facing a possible recession, it is difficult to imagine a worse time to destabilize America's rapidly growing renewable energy sector."
--Joint AWEA, SEIA, NHA, and GEA statement
"Already, we are seeing sales and new project announcements drop off," the associations declared in a rare joint statement at a news conference. The associations include the American Wind Energy Association (AWEA), Solar Energy Industries Association (SEIA), National Hydropower Association (NHA) and the Geothermal Energy Association (GEA).
"In the absence of immediate legislative action," the statement continued, "Congress will be raising taxes on clean, domestic, renewable energy sources and will undercut one of the fastest growing segments of the U.S. economy. With the nation facing a possible recession, it is difficult to imagine a worse time to destabilize America's rapidly growing renewable energy sector."
Coming on the heels of Tuesday's 0.75% reduction of the discount rate by the Federal Reserve and a declaration by Treasury Secretary Henry Paulsen that an economic stimulus package needs to be simple and short-term, the call for long-term extensions may be a tough sell for renewable energy advocates. But Linda Church Ciocci, Executive Director of the National Hydropower Association, said "if there is a better way or another way of doing it quickly, we're certainly open to that."
Rhone Resch, President of the Solar Energy Industries Association, tried simplifying it for lawmakers: "Do you want to write them (consumers) a check, or do you want to give them a job?"
Resch highlighted 80 utility-scale solar projects on the drawing boards collectively representing about 56,000 megawatts (MW) of electricity generating capacity, more than 20,000 permanent jobs and hundreds of thousands of construction jobs. "None of these projects will be built unless the investment tax credit is extended," he said.
For workers in Michigan where the automobile industry continues to unravel, the risks are in sharp focus for solar companies such as Hemlock Semiconductor, which Resch said has invested one billion dollars to expand plant capacity in Midland; ditto for Unisolar, a thin-film manufacturer that is creating hundreds of new jobs for six plants planned in Greenfield.
Randall Swisher, Executive Director of the American Wind Energy Association, said "major wind farm development companies are telling us that investment is drying up and they are being forced to put large projects in the pipeline for construction next year on hold."
Swisher told reporters that AWEA estimates about 75,000 jobs are now at risk, including more than 32,000 in the direct manufacture, construction and operation of wind energy facilities.
In 2007, the wind industry shattered previous record additions of wind capacity by installing more than 5,200 MW, an increase of 45% and representing an investment of more than $9 billion in the U.S. economy.
The production tax credit for wind facilities has expired three previous times over the past ten years: after 1999, 2001 and 2003. In each instance, capacity additions the ensuing year dropped at least 73%. (See chart above.)
Under the provision due to expire at year-end 2008, an income tax credit of 1.5 cents/kilowatt-hour is allowed for the production of electricity from qualified wind energy facilities and other sources of renewable energy. Adjusted for inflation, the current value of the credit is 2 cents/kilowatt-hour of electricity produced. It is useful only for utility-scale wind turbines. It does not apply to small turbines used to power individual homes or businesses.
The solar industry is seeking an eight-year extension of the 30% business investment tax credit and a six-year extension of the 30% residential investment tax credit, along with the elimination of an existing $2,000 limit on the residential credit. The industry also wants to eliminate the public utility exception to the investment tax credit and allow corporate and individual taxpayers to claim it against the alternative minimum tax, which is affecting more and more taxpayers each year.
During the buildup to passage of the new energy bill last summer, it once appeared that production tax credit for wind and investment tax credit for solar would find a way into a compromise. But both ended up on the cutting room floor in December. How might this year be different?
"The reason we were not in the energy bill at the end of the day had nothing to do with any lack of support for solar, or for wind, geothermal or hydro. It had to do with how that tax title was structured," Resch said. "When you go and survey Congress," he continued, "there are very few people who would stand up and say, ‘I don't support these industries.' 85% of the public supports the federal government extending these tax credits."
"When you start to look at how is this going to get done, the answer really becomes, it's a matter of politics and making sure that the bills that are put forth are going to get through this year. We're very hopeful that as leadership starts to structure both an economic stimulus bill or perhaps an energy tax title, they'll do it in a way that passes these tax credits early in the first quarter and not wait until late in the year," Resch said.
Karl Gawell, Executive Director of the Geothermal Energy Association, explained, "the biggest problem with federal energy policy is that it's roller coaster. They like you one day, they don't like you the next."
Gawell said geothermal plants take between three years and five years to develop. "The guy who's deciding today whether to start construction in February or March is looking at the deadline (expiration) looming at the end of the year because it's going to take him two years or two and one-half years to finally get that project online."
He counted 86 geothermal projects under development that are at risk in more than 12 states, representing 3,300 MW of electricity. That would more than double the industry's current electric generating capacity.
Jim Pierobon is a communications consultant based in the Washington area with an emphasis on energy and climate issues.
I think that we are all talking (actually, complaining) about the same thing on subsidies: those against any - for anyone, and those who are for everything for everyone. It all works out to essentially wish that everyone's pet energy source is being treated fairly (even "playing feild").
AND, as most of you know, big money = big influence = unfair advantage.
What we need to do is to constantly e-mail / write / call our State reprensentitives every month. If enough of us do it (I do) then we will start to be noticed.
"Already, we are seeing sales and new project announcements drop off," the associations declared in a rare joint statement at a news conference.
You can only blame your high prices for this. There is a way for Renewable Energies to rise above the esatblished infrastructure of energy providers and its not going to happen as long as your trying to ride on their coat tails mimicking what they do. Think about it. Your trying to sit down at their table, in their house, playing with their cards, by their rules. How can you hope to win under those circumstances?
Make new rules of your own for a start. Why would anyone want to become filthy stinking rich from the sale of any kind of energy? Especially when the human race does not need all of this energy. They only want it.
An American Citizen Urges Renewable Energy Leaders to Lower Their Prices So That Mainstream American Citizens Can Afford Renewable Energies.
That is to say, without having to jump through hoops in order to get U.S. Government tax incentives or getting loans that will have intrest to pay as well as principle. If you want to talk about having to pay for something out of more than one pocket then look no farther than the Renewable Energies Industries. They cry and they wine because they cant get the same U.S. Government subsidies as the Oil or Electricity providers. What if they got it? Wouldnt that make them just like the those providers? Do you really believe that this would make them lower thier prices? Dont count on it! They are no different than anybody else. They want as much as they cant get for as little as possible in return.
Companies who get these credits have to spend the money first. It is not a grant, or loan. It is not a big government "handout." These companies get a big discount on taxes. Since this industry is new, the credit has a minimal offset on existing tax revenue.
Wind is incredibly cheap when you consider how much of the cost is eaten up by legal fees, other bureaucracy-compliance costs and then land-lease costs.
If economies of scale applied to things so heavily regulated, shouldn't costs come down even further for wind, as people whip out the boiler-plate language faster?
I like solar better for de-centralizing power generation for cities, and the politics will probably take us there eventually.
The irony about Bush is, I hear he has solar on his ranch. It's not that he doesn't like it for those who can afford it.
I agree congressional corruption is a huge problem. Only one presidential candidate that I know of takes anti-corruption words into the temple and suffers booing in consequence.
I really wish someone could detail out these oil and gas "subsidies".
I'm not an expert either, but many of the tax breaks available to oil & gas industries are also available to other industries such as creating jobs.
Dave, well said. Congress is more guilty.
I've said it before, and history and proved it true. Bush will never take action unless he is sure that it is harmful to the country. If he can bring down our economy, and he's doing a great job at it, his oil and corporate buddies will get rich buying up assets for pennies on the dollar.
The day of celebration is less than a year away. I hope it's not too late for the renewable industry when Bush is finally gone.
Everyone would be better off if they just let all these subsidies end.
The primary industry that needs these welfare checks is Solar PV. Solar PV is still an over priced joke coming in at $.39 to $.21 per kwh (with an interest free loan for capital) against a national average electrical cost below $.10 per kwh (whole sale and includes the cost of capital loan) Source Solar Buzz.
At best, Solar pv is 2 to 4 times more expensive than normal power sources.
That's the truth. Its cheaper to dump it than to keep it.
In contrast, Wind Power comes in at as low as $.03 to $.06 per kwh and is competitive against other power sources. It doesn't need a subsidy, but its in line for one. Why pass up free money if a dumby (US tax payers) are going to give it to you?
Mr. Merrill.....We all know the exec. branch doesn't write policy (well except when they include all of the sneaky bill signing statements....sneaky for sure). But this is Washington and politics rule. It is a scratch my back scratch your back thing. And even though the Bushies in the White House don't write the policy, it is all the Buhies in the Congress that are mucking things up in America. This US Presidency, and Vice Presidency to be more accurate, has really made America weaker than it was when they arrived.
In any event I hope Congress wakes up and makes the right decision.
How many times do I need to remind you guys / gals that bashing "the current administration" is really off base and just shows your political feelings...not your intelligence (or in this case the lack thereof).
The US president does not write policy - nor can he vote in any of the congress sessions where 100% of the bills are passed or cut. He can only veto bills, which has been statistically rare. And remember, a veto still can't write / pass bills.
100% of your dissatifaction needs to be focused on your House and Senate representitives. Think people!
We need to step up to the plate and pass the PTC for wind and the ITC for solar immediately. Companies like ours are putting holds on next years projects and not hiring for the future due to the uncertainty of project economics. With the economy looking questionable, why would we kill an industry that could literally explode in the next 5 years creating 100's of thousands of jobs. I can tell you that a NO investment in ITC and PTC will have a far greater cost to the economy than a YES. As a developer, a no vote for the ITC and PTC means we will have 45 less jobs over the next 5 years.
John Curtis - Founder - Green Energy Capital Partners
www.GreenEnergyFinder.com
the question that will hopefully come out is:
Was BUSH blocking the oil subsidy grab or was he blocking the ITC?
In my business 101 class way back when, we talked about why buggy whip manufacturers went out of business. It because they failed to realize that they made accelerators, not buggy whips. Oil and gas companies make energy, not oil and gas. Their failure to change should not be our problem. If it can't happen during this administration, it surely will during the next.
The question is; who will want this kind of positive change on their legacy? Renewable energy is the proverbial irresistable force. The object in the way will move in November.
Yes, we need to ensure renewable energy tax credits continue but we need to also push for more progressive tax policies. Ones that get the market to tell the truth about the real cost of fossil fuels. We need to restructure the tax system by reducing taxes on work and income and raising them on environmentally destructive activities like polluting and wasteful resource use. We need to package eco taxes or carbon taxes or pollution taxes in a nice glossy presentation, one understandable by the mall generation, to build support for this tax revolution. A good commerical during the superbowl would be nice. Can tie in the Boston Tea Party and tax revolution with the New England Patriots. I am sure the American Coal Industry will have its Ads ready to go.
Thanks for the info Matthew. According to this source the subsidies are down to between $4B - $30B/yr. There is no question these should be eliminated.
Accounting for externalities has always been the larger issue. A carbon tax would do it. This would be a tax I would support even as a free market supporter.
Dave:
Should the next President show the same level of ignorance/contempt regarding the RE industry as to pledge to veto any Bill that removed the subsidies to Big Oil thus forcing the removal of the tax title we are discussing, the moniker of nincompoop (and more) shall be well deserved.
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