What Are They Thinking?

by Scott Sklar, The Stella Group, Ltd.

A famous political columnist once labeled Washington, DC as the steering wheel of the nation -- not connected to anything. The recent Senate Finance Committee action sure seems that way to me.

On April 17, 2008 the Senate Finance Committee unveiled its package of extensions for expiring tax provisions, including energy tax incentives. The release announcing the package did not address revenue offsets but Senate Finance Committee Chairman Max Baucus (D-MT) will issue a statement addressing which revenue offsets he is using.

The energy tax provisions adds US $400 million to Clean Renewable Energy Bonds (CREBs) program, effective for bonds issued after December 31, 2008; extends Residential Energy Efficient Property including a 30% credit for purchase of qualified photovoltaic property and solar water heating property used exclusively for purposes other than heating swimming pools and hot tubs, as well as for the purchase of qualified fuel cell power systems, and extends the 30% business investment tax credit for solar energy property and qualified fuel cell property, as well as the 10% investment tax credit for microturbines — and the production tax credit for wind and biomass power all for ONE year through 2009.

Excuse me?

The Democratic Leadership is lambasting President Bush on his limp recent overtures addressing climate change. Speaker Pelosi, appearing with former Republican Speaker Newt Gingrich, debuted on Gore's new "We" ads for climate action this week. The Senate, just two weeks earlier, overwhelmingly approved Senator Cantwell's (D-WA) and Ensign's (R-NV) amendment to the housing bill that provided 8-year investment tax credit extensions, albeit without some of the ‘leftout' renewables, and a two-year PTC.

And the Senate Finance Committee Chairman's response to all of the above? The Chairman offers up a one year extension of the investment and production tax credits for renewable energy and energy efficiency.

Let's be clear — the one year energy tax extension proposed by the Senate Finance Committee is too short and not inclusive to meet stated Democratic Congressional leadership goals nor Administration goals of reducing energy imports, reducing greenhouse gas and regulated emissions, and reducing the negative impacts of higher energy costs on the economy.

The absence of clean energy tax credit extensions by Memorial Day is putting 200,000 US clean energy jobs at risk — including 76,000 in wind and 40,000 in solar — and risking the loss of US $19 billion in clean energy investments. A one-year tax credit extension eliminates most utility-scale solar, wind, biomass and geothermal projects. And by indiscriminately limiting certain renewables from accessing the tax credits, Congress just exacerbates U.S. energy, environmental and economic problems even more. Failure to include energy investment energy tax amendments for combined heat and power, ground-coupled heat pumps (also known as geoexchange or geothermal heat pumps), small wind, solar daylighting, and water energy (such as tidal, wave, freeflow hydropower, and ocean currents and thermal), as well as pipeline quality biogas within the production tax credits — is just throwing away another golden opportunity to address our challenges and grow our economy.

Now don't be fooled by reading articles such as the April 20, 2008 Michael Pollan article in the New York Times (The Way We Live Now: Why Bother?), where authors wring their hands and say "individual actions don't adequately address our problems." And while I get nervous by Gore's new "We" approach that many translate as "don't do it alone, only be green in groups" — he's right that collective actions, when aggregated, have greater impact (respectful nods to Gandhi, Mandela and King).

Now hear this Washington policymakers — tax incentives, bonds, government procurement requirements, national interconnection and clean energy portfolio standards — our accepted portfolio of policy tools — aggregate collective action while using the marketplace through the consumer as final decision maker. Nothing more in the American Spirit than that!

I am tired of the rhetoric overflowing this Earth Day addressing our global security issues when I see only inadequate or incomplete action by policymakers who should know better. You should let them know we will not be fooled, I sure am.