U.S. Renewable Energy Policy: the Ghosts of Past, Present, and Future

To use an analogy from Charles Dickens’s A Christmas Carol, renewable energy in the United States will be confronted by the ghosts of past, present, and future. When the Republican Party took control of the U.S. House of Representatives last month, many renewable energy advocates assumed that any progressive energy legislation would be tabled for at least the next two years. But a growing camp now believes that a Republican majority in Congress may actually increase the likelihood of passing meaningful federal energy policy.

Cannon House Office Building

Cannon House Office Building, where ACORE holds its annual Phase II conference – Flickr Creative Commons / cliff1066™

It was with this new optimism that the American Council On Renewable Energy (ACORE) held its eighth annual Phase II National Policy Forum on December 9 in Washington, D.C.  Phase II denotes the period (2000–2025) for implementing the new energy technologies that were researched, developed, and demonstrated during Phase I (2000-2025).

At the conference, a strong emphasis was placed on bipartisan collaboration. Many Democratic lawmakers had taken for granted that a significant U.S. climate and energy bill would be passed when President Obama took office in early 2009. Speakers at Phase II agreed that Democrats now have to rid themselves of their defeatist attitudes and concentrate on working productively with Republicans.

Many analysts believe that the proposed climate bill failed because it was over-ambitious, trying to solve climate change and revamp U.S. energy infrastructure in one fell swoop. Too many Americans were (and still are) skeptical of climate science. And after witnessing the excesses of Wall Street during the recession, the American public has been wary of a market-based system such as cap-and-trade in which financial experts profit from buying and selling emission allowances.

So why are renewables insiders now hopeful that progressive energy legislation, such as a national Renewable Portfolio Standard (RPS), will now be passed? For one, there is emerging consensus in the renewable energy industry that climate action no longer needs to play a central role in energy policy. Renewable energy legislation can stand by itself: it offers numerous benefits beyond cutting greenhouse gas emissions, such as increased energy security, green jobs, and reinvigorated science and math education.

Ghost of the Past

Moreover, history seems to be on their side. In 1994, the U.S. House passed a telecommunications reform bill that then failed to find traction in the Senate. Shortly after a midterm election that unseated the Democrats, GOP House Speaker Newt Gingrich introduced the Contract with America in early 1995, which strictly opposed stronger governmental regulation. By August, the House passed a new telecom bill that was largely unchanged; even so, the Senate eventually ratified it and the Telecommunications Act of 1996 was ultimately signed into law by President Bill Clinton in February.

Roughly three-quarters of the 1996 telecom bill remained the same, yet it forged partnerships across party lines and spurred good-faith negotiations. A national RPS could have a similar effect, currying wider favor by stimulating private investment in new energy infrastructure without direct appropriations from the federal government, removing regulatory barriers to entering the renewable energy market, and enhancing security and transparency for end-users.

Although a national RPS is not a new idea, Congress has lacked the necessary bicameral agreement and presidential support to sign an RPS bill into law. Over the last ten years, an RPS bill has been proposed and passed in either the House or the Senate during any of the last five Congressional sessions. Not only was an RPS passed in the predominantly Democratic House during the last two Congresses, but an RPS also was passed in a Republican-controlled Senate in the 108th and 109th Congresses (2003—06). This historical support suggests that a national RPS has a decent chance of passing regardless of which party holds majority in the Senate and the House.

Ghost of the Present

Some argue that in order to garner enough Republican support today, a national RPS would have to be rolled into a broader clean energy standard that includes other technologies such as nuclear energy and carbon capture and storage (CCS). Yet it appears that a surprising number of Republicans—conservative to moderate—are in favor of an RPS as an entity unto itself.

At the Phase II conference, both Republican Senator John Thune (South Dakota) and Representative Bob Inglis (South Carolina) spoke about their commitments to renewable energy development, although neither mentioned an RPS directly. Both lawmakers represent states whose representatives typically have not been publicly supportive of renewables and that do not have a mandatory state RPS. However, South Dakota does have a non-binding goal of generating 10 percent of its electricity from renewable sources by 2015.

As the debate over national energy legislation continues, industry is now turning its attention to smaller policy measures that also will have sizable effects on U.S. renewable energy infrastructure. The discussion du jour is over extending the U.S. Treasury’s 1603 Cash Grant Program, which makes upfront subsidies available to renewable energy developers in lieu of tax credits, using funds from the 2009 American Recovery and Reinvestment Act (ARRA). With 1603 set to expire at the end of the year for projects that have not begun construction by December 31, developers—especially of solar and small wind projects, which are eligible for cash grants equal to 30 percent of their total project costs—have been eager to move through the commissioning process. Large concentrating solar power (CSP) projects in California, in particular, will live and die by cash grants from 1603.

Last night Congress passed President Obama’s tax deal that extended the 1603 program through 2011. Extending the program offers clear benefits. By providing capital up front, subsidies from 1603 will help develop renewable energy projects that lacked other means of funding. Furthermore, 1603 is a funding mechanism that—rather than increasing taxes—determines when the monetary incentives will be delivered. An extension of 1603 will help create jobs and stimulate local and regional economies without putting any additional burden on American taxpayers.

Ghost of the Future

If the United States’ renewable energy industry can surmount the political obstacles that it faces today, then the prospects of long-term success of renewables appear significantly more achievable. Industry insiders are pointing to historical circumstances that lead them to be hopeful about the passage of meaningful renewable energy legislation over the next two years. May the renewable energy industry—and its political supporters—learn their lessons from the ghosts of past, present, and future.

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