Don’t Throw Away the Crumbs

The Energy Bill just signed by the President does include residential and commercial 30% tax credits for fuel cells, photovoltaics and solar thermal, expedites larger geothermal and hydropower projects without sacrificing environmental safeguards and extends the production credit (PTC) for wind and biomass. The bill also includes tax credits for residential energy efficiency for old and new homes, and for specific energy efficient appliances.

The solarfuel cell credits are for two years (20062007 with solar capped at $2,000. The energy efficiency credits are at $1.80 per square foot (commercial buildings for heating, cooling, lighting systems and building envelope), a 10% credit to new home owners with energy efficiency qualified property (windows, envelope, water source/ground-coupled heat pumps), and appliance credits of $100 for washers (dishclothes) and dryers, and $75 for qualified refrigerators. The above tax credits total $1.3 billion of taxpayer support and the wind and biomass tax credit extensions and alternative fueled vehicles credits total $2.7 billion and $1.2 billion respectively. This $5.2 billion investment is borne by the American taxpayer presumably to drive emerging technologies into the marketplace and cut down energy imports and harmful pollution – and they do. But the remaining approximately $6 billion in subsidies to the oil and natural gas industries of $2.6 billion, and electric utilities (including nuclear) of $3.1 billion are another story. While the renewable energy credits are all set to expire after two years, the nuclear credits run to 2020, clean coal to 2015, natural gas pipelines to 2010, and coke gas incentives to 2009. Not only are these incentives given to mature (and very profitable companies) in mature markets with reasonably mature technologies – but in many cases they actually encourage energy imports. The Bill allows FERC to preempt State governments on siting Liquefied Natural Gas (LNG) ports to import more natural gas from the very countries from which we ostensibly are trying to wean our oil dependency. Aside from concerns about the crumbs from petroleum and natural gas proceeds falling into the hands of groups trying to harm our country, the Bill promotes nuclear power right after a recent National Academy of Sciences report affirmed that much of our nuclear waste storage is susceptible to acts of terrorism, aside that much of our uranium would need to be imported as well. The “Inside the Beltway” players within the renewable community have pleaded to keep the story positive. And yes, there are some important wins for clean energy deployment even without passage of national interconnection standards and a national renewable energy portfolio standard. But I have a harder time swallowing “the positive spin” when the ‘smoked filled room’ political horse-trading ended with only two year tax incentives extensions for renewable energy. The short term extension essentially threatens sustained orderly market development which is so vital to attract further private investment to the providers and users of clean energy. When the wind credit was allowed to lapse just a few short years ago, the wind energy market stalled at 30 percent of its market size that year. And of course in 1985, when the solar residential credits were allowed to lapse, they were not extended until 20 years later. With petroleum prices hitting well over $60 per barrel, natural gas prices at 40-year highs, terrorist prime targets explicitly focused on our national electric grid and nuclear power plants and repositories, a War in Iraq and Afghanistan, shaky governments in the oilgas producing nations of Saudi Arabia, Venezuela, and Nigeria – I am underwhelmed by the political result of the Energy Bill. So the politicians gave the American consumer some good crumbs for the short term, and a lot of the usual “pork” to their campaign donors to keep our country at risk for the long term – which negatively impacts our energy security, economic security, environmental security and homeland security. That’s how I see it — Scott Sklar About the author… Scott Sklar is president of his own policy and strategic marketing firm, The Stella Group Ltd., Washington, D.C. ( Previously, he served simultaneously as executive director of the Solar Energy Industries Association and the National BioEnergy Industries Association for 15 years. His book, A Consumer Guide to Solar Energy, was re-released in 2004 for its third printing.
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