How to Deal with Coal in Federal Legislation

On 03.09.11, In Opinion, By Ari Peskoe

In his state of the Union address, President Obama set a goal of generating 80 percent of US electricity from “clean energy sources” by 2035. President Obama was using a very inclusive definition of “clean energy sources”, leaving coal without carbon capture and sequestration (CCS) technology as the big loser. Obama provided no details of how the country could achieve this goal but left it to Congress to work it out. Any new Federal legislation that comes out of this goal should recognize that electricity markets differ by state, and each state has its own body of laws, regulations, and administrative decisions that govern electricity regulation. A flexible approach from Congress will enable further regulatory innovation by states, dampen the effects of market failures, and allow states to allocate costs to meet their current situations and long-term priorities.

The President was indirectly acknowledging that there are only two ways to significantly reduce CO2 emissions from electricity generation: either reduce the amount of electricity generated by coal combustion or capture and sequester the CO2 emitted by coal-fired plants. Coal combustion for electricity generation is responsible for approximately 30 percent of all U.S. greenhouse gas emissions. Within the electricity sector, coal is responsible for more than 80 percent of greenhouse gas emissions. While the percentage of all U.S. electricity that is generated by coal has decreased over the past 15 years, the total amount of coal combusted by the electricity industry has actually increased by 4 percent from 1996 to 2009, peaking at a 16 percent increase as compared to 1996 in 2007. Coal use is currently widespread throughout the country but concentrated in a handful of states.   (more…)

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Senate Democrats Unveil Plan for “Winning the Future”

On 02.17.11, In News, By Daniel Goldfarb

Senate Democrats have adopted the principles and rhetoric set forth in Obama’s State of the Union Adress in their new “Winning the Future” plan. Senate Majority Leader Harry Reid yesterday released his caucus’ plan to simultaneously cut spending and increase targeted investments in order to “out-build, out-innovate, and out-educate the rest of the world, so that the jobs and industries of our time will take root in America.“

In the face of Republican attacks on Obama’s budget proposal, Senate Democrats have produced a twenty point plan broken up into four focuses: “Deficit Reduction,” “Out-Innovate,” “Out-Build,” and “Out-Educate.” The strategy focuses on expanding and extending already existing successful initiatives such as the Advanced Energy Manufacturing Tax Credit (48C), the R&D Tax Credit, the Small Business Innovation Research (SBIR) and Small Business Technology Transfer (STTR) programs.

Also put forth are some new programs that have been previously proposed, the most notable example being the Clean Energy Deployment Administration (CEDA). CEDA has long been touted as an efficient way to bring clean energy technologies to market, helping them to avoid the “valley of death.” Other new itiatives would include an “America builds” bond program as well as a transportation authorization bill.

While Senate Democrats’ support of Obama’s innovation agenda is highly encouraging, it is yet to be seen what will be able to make it out of a House bent on deep spending cuts. Regardless, it is good to see an emerging consensus forming around policies that aim to stimulate innovation and American competitiveness.

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DOE Favoring Renewables or Reality?

On 02.16.11, In Opinion, By Daniel Goldfarb

At today’s Senate Energy and Natural Resources Committee hearing on the Department of Energy’s proposed $29.5 billion budget, both Democrats and Republicans expressed concern over increased funding for the DOE’s renewable initiatives while simultaneously cutting its spending on fossil fuels. Yet on a day when the Wall Street Journal reported on Exxon Mobil’s struggles to find new sources of oil, it seemed oddly out of touch for Senators to press Energy Secretary Chu for pushing renewable technologies over traditional fossil fuels.

Senator Murkowski, Ranking Member of the committee, pointed toward preferential treatment as a big problem in the new budget: “It seems to me that within the administration, you are picking those areas through the budget process that you would like to see advanced.” However, as Secretary Chu stated, “there are mature technologies and there are technologies that need more help,” challenging the notion that the Obama administration has simply ‘chosen’ arbitrary technologies.

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Nuclear Power and the Future of Post-Partisan Energy Policy

On 02.04.11, In Columns, By Alex Trembath

This is the second article in a series by Alex Trembath detailing opportunities for bipartisan cooperation on energy policy.

In the wake of cap-and-trade’s defeat, and as we begin a new session of Congress, common ground must be found on policy to renovate America’s energy infrastructure. Now may be the time to explore the possible benefits of renewing America’s once vigorous nuclear power production. Notably absent in recent advances in America’s energy portfolio has been nuclear power. Public safety fears stemming from Chernobyl and Three Mile Island have left nuclear policy in stasis for decades, but as our President aims to launch a new industrial policy and our nation trends towards a new national energy policy, it may be time to revive our commitment to this method of zero-emissions baseload power generation.

Nuclear power is unique among clean energy technologies in that Democrats tend to be more hesitant towards its production than Republicans. Indeed, it has a reputation for its appeal to conservatives -Senators Kerry, Graham and Lieberman included provisions for nuclear technology in their ultimately unsuccessful American Power Act (APA) with the ostensible goal of courting Republican support. The urgency with which Democrats feel we must spark an energy revolution may find a perfect partner with Republicans who support nuclear power. But is there anything more than speculative political evidence towards its bipartisan viability?

If there is one field of the energy sector for which certainty of political will and government policy is essential, it is nuclear power. High up front costs for the private industry, extreme regulatory oversight and public wariness necessitate a committed government partner for private firms investing in nuclear technology. In a new report on the potential for a “nuclear renaissance,” Third Way references the failed cap-and-trade bill, delaying tactics in the House vis-a-vis EPA regulations on CO₂, and the recent election results to emphasize the difficult current political environment for advancing new nuclear policy. The report, “The Future of Nuclear Energy,” makes the case for political certainty:
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‘Buy American’ Solar Provision Highlights the Role of Military Procurement

On 01.11.11, In News, By Staff

Guest contribution by Leigh Ewbank

On the heels of filing a complaint with the WTO against China’s subsidies for its domestic wind turbine manufacturers, President Obama signed an appropriations law that requires the Department of Defense to purchase American-made solar panels. The move appears to be the first instance of America leveraging its WTO complaint to boost its clean technology industry, and shows that the US is beginning to take clean energy competitiveness seriously.

Some will argue that the ‘buy American’ provision smacks of hypocrisy—that the administration is as guilty of the same behavior it has criticized China for. Others will argue that the measure counters the Chinese subsidies and is a legitimate way to bolster the US clean energy sector in an uneven playing field. Regardless of your position on the matter, the move shines a spotlight on the role of military procurement.

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Will New Congress Move First on Energy?

On 12.31.10, In News, By Teryn Norris

Politico reported yesterday in “10 to watch: Senators on energy“:

“With Republicans controlling the House and ramping up oversight and investigations of the Obama administration, focus at least initially in the next Congress will be on the Senate to lay a potential pathway for legislative compromise on energy and environmental policy.

“The Senate will set the energy agenda especially at the beginning,” said Paul Bledsoe, a senior adviser with the Bipartisan Policy Center and a former Senate Democratic aide.

“We are going to have a run at energy legislation,” Majority Leader Harry Reid said on CNN on Dec. 22.”

This builds on President Obama’s statement in a press conference on Dec. 22 that he plans to “immediately engage with Republicans” in an attempt to pass an energy bill in 2011.

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Deficit Reduction and Clean Energy

On 12.14.10, In Opinion, By Michael Craig

A 'Wall Stats' visualization of government spending in 2011

Obama’s freeze on federal employee salaries and Republican efforts to eliminate earmarks are two of the tangible signs that deficit reduction has, and will continue to be a hot topic in the near future. The 112th Congress will almost surely take up the issue, making it crucial to understand what impact serious deficit reduction plans may have on the nation’s clean energy industry. An apt starting point for this investigation is the ever-increasing array of deficit-cutting plans that aim to shape the national dialogue surrounding this issue.

Perhaps the most prominent deficit reduction plan released recently has been The Moment of Truth by the President’s National Commission on Fiscal Responsibility and Reform. The commission proposes two major reforms that would directly impact clean energy: cuts to discretionary spending and tax reforms. The discretionary spending cuts amount to an immediate $50 billion and a further $150 billion by 2015, divided evenly between security and non-security spending. The commission specifically proposes eliminating the Department of Energy’s applied research on fossil fuels, saving approximately $0.9 billion; reducing research, development, testing, and evaluation by the Department of Defense by 10%, which could lower the DoD’s ability to procure and develop alternative energy sources; and instituting a 15-cent per gallon gas tax, which would go toward transportation funding but could be a boon for hybrid and electric vehicles.

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Green Provisions Added to Bipartisan Tax Package

On 12.13.10, In News, By Nishant Shah

The contentious tax deal between President Obama and House Majority Leader Mitch McConnell (R-KY) got a little more interesting last week.  On Thursday evening, Senate Majority Leader Harry Reid (D-NV) revealed a bill that adds green energy tax provisions to the deal.  As Alexander Bolton writes in The Hill,

“To win over wavering liberals, Reid has added an ethanol tax credit, which Sen. Tom Harkin (D-IA) supports, and an extension of the Section 1603 cash grant program for the renewable energy industry, which Sen. Sherrod Brown (D-OH) favors.”

The White House has welcomed the news, as has Senator John McCain (R-AZ), who despite having “serious concerns” about the package, plans on supporting it.  Lon Huber and Alex Christensen wrote recently on the importance of extending the Section 1603 grant program, and renewable energy trade groups have strongly supported the measure.  Bolton goes on to note,

“The package includes other green-energy incentives that could win support among House liberals, who are disappointed the Senate failed to take up a comprehensive energy reform and climate bill this year. They include tax credits for biodiesel and renewable diesel; energy-efficient homes; alternative fuels; and a 30-percent investment tax credit for alternative vehicle refueling properties.”

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The Importance of Extending the 1603 Treasury Grant Program

On 12.09.10, In Opinion, By Lon Huber

Written by Lon Huber with contributions from Alex Christensen

Anyone working in renewable energy will tell you that when it comes to getting a project off the ground, financing is key. Treasury Grant 1603, found in the American Recovery and Reinvestment Act, was designed to address the front loaded costs to entrepreneurs of installing renewable energy. Otherwise known as the Treasury cash grant, this program has been a lifeline for an industry that has had to depend on a complicated tax code and the likes of Lehmann Brothers and AIG for financing. At midnight on December 31st of this year, the 1603 Treasury Grant Program is set to expire, and unless Congress renews it, the young renewable energy industries will be forced to compete in a tax system designed to the advantage of fossil fuels.

Without Treasury Grant 1603 the clean energy industry would not be enjoying the success it is today.  To effectively compete against a fossil fuel industry that is heavily subsidized by the federal government, the renewable energy industry has needed federal help to level the playing field.

Unfortunately, the lack of a strong national energy policy has required the renewable energy industry to become cost effective through tax credits. The problem with trying to stimulate an emerging industry with tax credits is that it fails to eliminate two central problems facing small businesses, large up front costs and lower initial profits meaning lower initial tax credits. Many new clean energy businesses did not have enough income to fully utilize these tax credits, forcing them to turn to large financial institutions like Lehmann Brothers for assistance in realizing the advantages of such credits. After the financial meltdown and the resulting lack of finance, it became next to impossible to take advantage of the tax credits in the same way.

The Treasury cash grant program provided a lifeline by transitioning the unfavorable tax credits to upfront payments not tied to a particular company’s income. This was huge help to renewable energy developers and did not cost taxpayers any additional money – since it merely shifted the tax credit to an upfront subsidy.

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Clean Energy Financing: First Steps Towards Post-Partisan Effort

On 12.01.10, In Opinion, By Alex Trembath

This is the first article in a series by Alex Trembath detailing opportunities for bipartisan cooperation on energy policy.

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Energy reform is quickly heading towards a hyper-partisan stalemate. As the Republican party takes control of the U.S. House, some advocates of a progressive energy agenda are calling for Congressional Democrats to regroup and “conduct guerrilla warfare” against the status quo. A consortium of climate scientists has recently rallied together to “to challenge disinformation and misinformation deployed in the policy wars over global warming.” All signs point to an intensifying battle between “climate hawks” and “climate zombies,” but little progress will be made if advocates continue to reinforce this hyper-partisan environment. Despite rampant cynicism, opportunities for bipartisanship exist, and the greatest potential for aisle-crossing lies in financing mechanisms for clean technology innovation.

Public funding and financing for technology-focused clean energy projects presents unique political opportunities that other government efforts lack. Unlike pollution regulations and top-down industrial mandates, financing for business has long enjoyed broad support from both ends of the political spectrum. Various policy tools aimed at ramping up federal dollar flow towards clean energy projects include feed-in tariffs, loan guarantees, credit enhancement, direct grants and tax credits. Many of these policies carry the potential for bipartisan support in Congress. (more…)

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