Reinstate the Popular Credit for Renewables

Posted July 17, 2008 at 2:23pm

Correction Appended

Earlier this month, acquiescing to objections by House Democrats, the Senate voted to block an overwhelmingly popular bipartisan plan to extend the tax credits for renewable energy and energy efficiency that are scheduled to expire at the end of this year.

It reminded me of the Peanuts cartoons where Lucy promised Charlie Brown that she would hold the football for him to kick. She always snatched it away, leaving him in a humiliating heap.

Most of us laugh at the hapless, trusting Charlie Brown. The consequences of Congress acting like Lucy should make us all weep with shame. In the real world, uncertain tax policies in the United States since 2000 are driving investments, jobs and cleaner, renewable energy projects overseas.

On May 20, I wrote an article for the Baltimore Examiner, “Congressional delays hobble renewable energy.” I wrote it after reading a column by New York Times columnist Tom Friedman titled “Dumb as We Wanna Be.” He recounted that “for almost a year now, Congress has been bickering over whether and how to renew the investment tax credit to stimulate investment in solar energy and the production tax credit to encourage investment in wind energy.” Since then, the bickering in Congress has gotten worse, instead of better.

In June, E&ENews reported that attendees at a renewable energy industry conference predicted that expiration of the tax credits would cause a sharp decline in renewable energy projects. “In 2000, for example, the amount of new U.S. wind-generating capacity plunged by 90 percent after Congress let the 1999 tax credits expire. The pattern repeated itself in 2002 and 2004, with new added annual capacity dropping 76 percent and 77 percent, respectively, in those years.”

Consider this announcement for a renewable energy industry conference in July:

“With no clear national energy policy, an upcoming presidential election, and the potential for renewable energy tax credits to expire — jeopardizing jobs and investment in the wind and solar industries — the renewable energy industry is in a state of flux.”

According to a study by Navigant, “116,000 jobs in the wind and solar industries (76,000 wind, 40,000 solar) and $19 billion in investment” in the U.S. will be lost in the next six to eight months if the credits expire.

It wasn’t always this way. Sens. Maria Cantwell (D-Wash.) and John Ensign (R-Nev.) worked together to craft S. 2821, which has 44 co-sponsors. Sen. Cantwell explained why she worked with Sen. Ensign on a bipartisan plan:

“The renewable and efficiency industries have been soaring, creating thousands of jobs and diversifying our energy supply. Newspaper headlines across the country have pointed to our country’s rising unemployment and declines in the manufacturing and construction sectors. At a time when people are uncertain about our economy’s future, we rose to the challenge and came to agree that losing valuable investment dollars and hundreds of thousands of jobs is not the answer.

“One thing we can do to help Americans avoid foreclosure on their homes is help them keep their jobs. By extending these tax incentives, we are not only providing certainty to these industries, infusing money into our economy, but creating high-paying, long-term jobs to help Americans get through these tough economic times,” she said.

The economic benefits for Americans from green-collar jobs are documented in “Renewable Energy and Energy Efficiency: Economic Drivers for the 21st Century,” commissioned by the American Solar Energy Society. It found that renewable energy and energy efficiency industries generated 8.5 million jobs and nearly $1 trillion in revenue in the U.S. in 2006. It projected that by 2030, with appropriate and consistent policies, these sectors could generate up to 40 million jobs and $4.5 trillion in revenue in the United States.

On April 4, the Senate voted 88-8, an overwhelming bipartisan vote on S.Amdt. 4419 to attach the language in S. 2821 to the housing bill. What changed since then? I introduced the companion in the House, H.R. 5984. It now has 117 co-sponsors, but only one Democrat. To overcome the opposition of House Democrats because it was not “paid for,” Sen. Ensign proposed a compromise to offset the $8 billion cost of the amendment with a one-twentieth of 1 percent reduction in discretionary spending over 10 years, with the exception of programs for veterans. The compromise was rejected by Democratic leaders.

Opposition by Democrats has foreclosed a bipartisan option to extend these tax credits that President Bush would sign into law. Variations on a formula preferred by House Democrats would extend these tax credits by including them in a much larger extenders package. This formula has been rejected by the Senate many times because of unacceptable tax increases to “pay for” the bills. The House Democratic options also face veto threats by the administration with nowhere near enough votes to override.

What next? Matt Ferguson, who leads Reznick Group’s National Renewable Energy Practice, laments, “There is economic impact from Congressional inaction and ambivalence on renewable energy tax credits. At a time when our economy could use a shot in the arm like the one renewable energy could provide, many of my clients instead are making those investments overseas — where they find more certainty. While I applaud the fiscal responsibility lesson Congress is trying to teach us, they are missing a key opportunity to use proven economic stimulus solutions that Americans want — creation of green-collar jobs, domestic investment by U.S. companies and homegrown innovation.”

A recent Gallup Poll reports that only 5 percent of Americans have a positive view of the economy. Solar power has grown annually an average of 18 percent with the federal credit. It grew 57 percent alone in 2007. Why dim this bright spot in our shaky economy? Time is running out for House leaders to support a stand-alone bill based upon the Ensign compromise. It addresses their concerns and would “pay for” extending the renewable energy and energy efficiency tax credits. The Senate already voted 88-8 for the bipartisan Cantwell-Ensign approach. Shouldn’t that be a no-brainer?

Rep. Roscoe Bartlett (R-Md.) is a member of the Science and Technology Subcommittee on Energy and Environment.

Correction: July 21, 2008

The article contained incorrect numbers from a Navigant study. According to the study, expired tax credits would result in 116,000 jobs lost in the wind and solar industries (76,000 wind, 40,000 solar).