During the recession, it was one of the few sectors to add jobs. Costs
of wind turbines and solar cells have fallen over the last five years,
electricity from renewables has more than doubled, construction is under
way on the country’s first new nuclear power plant in decades. And the
United States remains an important player in the global clean energy
market.
Yet this productive relationship is in peril, mainly because federal
funding is about to drop off a cliff and the Republican wrecking crew in
the House remains generally hostile to programs that threaten the
hegemony of the oil and gas interests. The clean energy incentives
provided by President Obama’s 2009 stimulus bill are coming to an end,
while other longer-standing subsidies are expiring.
If nothing changes, clean energy funding will drop from a peak of $44.3
billion in 2009 to $16 billion this year and $11 billion in 2014 — a 75
percent decline.
This alarming news is contained in a new report from experts at the
Brookings Institution, the World Resources Institute and the
Breakthrough Institute. It is a timely effort to attach real numbers to
an increasingly politicized debate over energy subsidies. While Mr.
Obama is busily defending subsidies, the Republicans have used the
costly market failure of one solar panel company, Solyndra, to indict
the entire federal effort to encourage nascent technologies.
The Republican assault obscures real successes that simply would not
have been possible without government help. Wind power is a case in
point. By spurring innovation and growth, a federal production tax
credit for wind amounting to 2.2 cents per kilowatt-hour has brought the
cost of electricity from wind power to a point where it is broadly
competitive with natural gas, sustaining 75,000 jobs in manufacturing,
installation and maintenance.
But the tax credit is scheduled to expire at the end of this year, with
potentially disastrous results: a 75 percent reduction in new investment
and a significant drop in jobs. That is just about what happened the
last time the credit was allowed to lapse, at the end of 2003.
This is clearly the wrong time to step away from subsidies. But it may
be the right time, the report says, to institute reforms, both to make
the programs more effective and to make them more salable to budget
hawks. One excellent proposal is to make the subsidies long term (ending
the present boom or bust cycles) but rejigger them to reward lower
costs and better performance.
The idea is not to prop up clean tech industries forever. It is to get
them to a point where they can stand on their own — an old-fashioned
notion that, one would hope, might appeal even to House Republicans.
