While our discussions aimed to support job-building
industry incentives, EPA regulations, and military
clean-energy initiatives, one topic continued to take center
stage: the production tax credit (PTC) for wind energy. Set
to expire at the end of this year, the PTC (which provides a
2.2 cents/kWh incentive for wind power producers) has come
to epitomize the lack of federal clean-energy commitment.
The inability to provide long-term certainty to investors
over the years has resulted in a jarring boom-bust cycle for
the U.S. wind industry. A market contraction this time,
however, would have far more negative impact, as the recent
supply chain build out in the U.S. means we have many more
American wind jobs to lose (domestic content of wind
turbines installed in the U.S. today is nearly 70 percent,
compared to just 25 percent in 2006). As many as 37,000 wind
supported U.S. jobs will be lost if the PTC is not extended,
according to analysis from Navigant.
What was surprising in our discussion of the wind PTC
with members of Congress was the general lack of
disagreement on the merits of supporting clean energy,
especially after the intensity of the right’s recent
Solyndra-fueled attacks on government involvement in clean
tech. One reason for this may be that wind energy has become
a critical source of local employment, investment, and tax
revenue in many rural – and red-blooded conservative
— communities across the nation. But supportive words, no
matter how welcome, are not action and do not change the
truth: that federal support for clean energy is being held
hostage by broader ideological battles and political
posturing that carry blame on both sides of the aisle.
Oddly enough, clean energy's best chances in the U.S.
might lie in the success stories of the fossil fuel
industry. Even those unfamiliar with energy have likely
heard about the U.S. shale gas boom, which has led to a
surplus of cheap electricity fuel that is leading a
transition away from dirtier coal (for now, for the sake of
making a point, let's ignore the serious environmental
concerns related to gas fracking). What is often overlooked
is that the technology enabling today's cost-effective
extraction of shale gas is a direct result of decades of
U.S. government incentives and technical support which
enabled private industry and investors to drive innovation
in the area of unconventional gas extraction (a great
overview here by
The Breakthrough Institute). Clean-energy technologies
deserve this same government support. In fact, they deserve
it for the same reasons — that, when made cost-effective,
clean energy offers significant economic and energy security
advantages to our nation. One argument against government
support for clean energy is a desire to not "pick winners."
But by not extending the same opportunities to emerging
energy technologies like wind and solar that were (and still
are) available to oil and gas, you are doing exactly that
— with winners in this instance being those technologies to
have already benefitted from decades of government
subsidies.
Ultimately, incentives should not be biased toward any
individual technology, one of many reasons the PTC is not
the best way to support clean energy in the long term. One
alternative worth exploring is the master limited
partnership (MLP) model, a method long used by the oil and
gas industry to source development capital (more about MLPs
and renewables here).
But for now — paraphrasing the thinking of one Republican
staffer we encountered — it doesn't make sense to abruptly
pull the rug out from under a young industry that is
starting to make a significant economic impact. Extending
the PTC is the simplest way to save today’s American wind
energy jobs, but before long Washington leadership will need
to have a conversation about how to level the playing field
in the energy industry and also encourage continued
innovation – eliminating handouts for mature, cost-effective
technologies (whether dirty or clean) while supporting, for
a limited time (say ten years) development of emerging
technologies that are just now reaching cost parity.
The anti-clean tech crowd in the U.S., invigorated by
partisan gridlock and the increased politicization of clean
energy, argues that government has no place meddling in
energy innovation. As if almost on cue during one of our
many walks across Capitol Hill this week, the space shuttle
Discovery circled overhead on its final flight before
retirement at the Smithsonian — a clear reminder of how
focused government support of technology in America has
inspired scientists, engineers, and entrepreneurs; ignited
national pride; and, most importantly, birthed innovations
that have strengthened U.S. economic competitiveness and
improved the fundamental quality of American life.
Continuing in this tradition, we owe it to ourselves to
pursue better energy — not just cleaner, but cheaper, more
stable and secure, and increasingly more American. Nothing
less than our nation’s status as an innovation powerhouse
hangs in the balance.
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