This post also ran on The Hill’s Congress Blog in advance of comments I’ll be making at this week’s ACORE’s National Policy Forum.
There’s a chill in the air that hints at the stormy weather ahead for renewable energy. After several years of success, the political winds have shifted and the water has grown choppy. We’re entering an election year when Americans are sincerely worried that our nation has lost its way in a world that looks increasingly unstable. In the resulting atmosphere of uncertainty, America’s rudderless energy policy stokes suspicion and fear.
What’s worse, our leaders seem incapable of pointing us in an inspiring direction. Despite polls that show widespread public support for renewable energy from both Democrats and Republicans, the industry has fallen victim to political gamesmanship and bi-partisan gridlock.
In some ways, the current environment feels a little bewildering because of the success we’ve had over the last few years. Whether through luck or design, the intersection of a few state RPSs and federal tax credits delivered a potent formula for demand that also facilitated large flows of capital across the value chain. A whiff of progressive optimism didn’t hurt either.
The growth and advances that resulted during this period have cemented solid gains. Wind and solar energy, once at the fringe, are increasingly accepted as part of the mainstream energy industry. And while it is still early days for smart grid, efficiency and demand management, they have earned a consistent priority in our national dialogue.
Unfortunately, the happy accident of American renewable policy now appears to be falling apart. State RPSs have not spread meaningfully to new states. Lacking any kind of coherent federal clean or renewable policy (not to mention carbon policy) to grow markets, demand for renewable energy will taper off.
Production tax credits are set to expire at the end of this year. And though the 30 percent Investment Tax Credit is on the books through 2016, the expiration of the 1603 Treasury Grant Program next month will starve the industry with an austerity diet of scarce tax equity.
We’ve gotten used to fixing these kinds of challenges with a ‘patch kit’ approach to public policy, pushing for the extension of a tax credit here or the expansion of a state RPS there. Given that the mood in Washington isn’t likely to get better anytime soon, I’m not sure that approach is going to work this year. The situation this leaves us in is not pretty. Without an extension of the 1603 Treasury Grant Program and PTC, developers will put their new wind and solar projects on hold and simply focus on completing construction of late-stage projects. Even if we were able to extend those programs, the tapering off of RPS-driven demand would soon slow investment in new projects as well.
Perhaps once we get through the election in November, the national discourse on energy will become less shrill. In a more constructive environment, we might create a vision of our energy future that finds broader support. And perhaps we could put something together that is a little more harmonized across states and disentangled from the tax code. But until we get there, I think the reality is that we’re looking at a slow period for renewables development and deployment.
Despite the approaching storm, I remain hopeful about the future of renewables in this country. I’m actually quite confident we will weather this storm as we have previous setbacks. That confidence stems from three things. First, I know the strength of the people in this industry, whose staying power is rooted in hope and optimism about building a better future.
Second, despite a near constant attack in the media, almost 70 percent of Americans still believe renewables deserve government support because they realize it is important and necessary. Finally, the transformation of our energy economy is an inevitable outcome, shaped by the economic reality of the declining cost of renewables and the finite nature of fossil resources.
On December 7, the American Council On Renewable Energy is holding their annual policy forum on Capitol Hill where I will be speaking about the importance of renewable energy to our economy and our environment. Congressional leaders from both sides of the isle will be speaking and bi-partisanship will be an important theme.
Perhaps this is a small ray of sunshine on our stormy landscape, a step towards putting the interest of the American people above politics. For everyone’s sake, let’s hope it is the first of many.