WASHINGTON — There was hope among climate activists in the U.S. that the federal stimulus to address COVID-19 might be the moment to both heal the economy and advance a long-overdue transition to clean energy.
Whatever they’d envisioned, the $2 trillion bill agreed to by the Senate in the wee hours of Wednesday morning wasn’t it.
As congressional leaders assembled the spending bill, the push for clean energy drew fierce opposition from Senate Majority Leader Mitch McConnell and conservative critics, who accused Democrats of trying to exploit the urgent need for coronavirus relief to foist an environmental agenda on a wounded country.
“Some folks in Congress and in other parts of Washington, D.C., are suggesting this is a bunch of liberals angling for the Green New Deal, and these are coastal elites that just want to pad their investments in clean energy,” says Bob Keefe, executive director of Environmental Entrepreneurs, or E2, a nonpartisan group of business leaders and investors. “It’s not.”
Most people in the clean energy sector are “boot strap-and-jeans guys,” Keefe says. “These are everyday Americans who are struggling.”
Here’s where stimulus negotiations currently stand.
The wind and solar industry asked for extension of tax credits and other supportive provisions. They were cut out entirely.
Solar power lobbyists have warned that half the industry’s jobs are at risk as a result of the pandemic. Some solar panels are stranded in other countries, and even when supplies are on hand, lockdown orders are preventing workers from installing panels. (Where oil refineries are generally exempt from shelter-in-place requirements, the waiver doesn’t extend to all renewable energy ventures.)
Wind developers are racing to get projects in service so they don’t lose some of the value of the renewable energy tax credits that will start being phased out for turbines next year. Colorado-based Scout Clean Energy, for instance, is racing to finish construction on a 200-megawatt project in South Dakota. At the same time, it’s seeking to renegotiate power-purchase agreements in anticipation that the work might not be done in time to claim the full production tax credit, says chief executive Michael Rucker.
Some renewable developers are asking Congress to create a refundable credit from the Treasury in lieu of existing tax credits, an approach that was used after the financial crisis a decade ago. Meanwhile, a collapse in financing is leading to canceled renewable projects nationwide.
“As the stock market tanks, tax equity markets are drying up, making it even harder for solar companies to utilize tools like the solar Investment Tax Credit,” says Abigail Ross Hopper, head of the Solar Energy Industries Association.
Democrats scored a win by nixing $3 billion in oil purchases for the Strategic Petroleum Reserve.
Republicans struck back by stripping out clean energy provisions Democrats had insisted were necessary to offset the spending on fossil fuels, such as a provision tying $33 billion in bailout money for airlines to a 50% reduction in emissions. A House provision for $100 million for alternative fuels research for airlines also was cut. Air travel accounts for about 2.5% of total carbon dioxide emissions globally.
Elizabeth Gore, senior vice president of the Environmental Defense Fund, calls that a missed opportunity. “As our country faces the onslaught of the coronavirus, we need quick action to protect our health and economy,” Gore says. “But Congress must ensure that federal assistance to companies does not make the climate crisis worse for our children by increasing pollution.”
Meanwhile, the Trump administration continues to sell new oil leases on public lands at fire sale prices.
Throughout the economic shocks caused by COVID-19—and the massive oil sell-off triggered by Saudi Arabia and Russia—the White House has continued to bolster fossil fuel in a variety of routine regulatory ways. For example, at the beginning of March, the Environmental Protection Agency expanded its proposed “Strengthening Transparency in Regulatory Science,” or “secret science” rule, which would restrict the agency’s use of studies that rely on confidential human health data. That includes much of the research about the harmful affects of air and water pollution.
On Monday, despite protests by conservation groups, the administration went ahead with the sale of the oil leases across four western states even though waiting for higher crude prices could generate more revenue for taxpayers/the government. Companies are also struggling to meet scores of deadlines—everything from air sample monitoring at oil wells to equipment certifications at power plants—because contractors and suppliers aren’t universally exempt from lockdown orders. The EPA is likely to waive a slew of compliance obligations for numerous polluting industries, including potentially delaying a summertime switch to cleaner-burning gasoline. The EPA is likely to waive a slew of compliance obligations for numerous polluting industries, including potentially delaying a summertime switch to cleaner-burning gasoline.
There will be more stimulus action to come.
“This is going to help businesses stay afloat for now, but we really need to shift from economic triage, which is what this stimulus bill does, to something that’s more long-lasting and that can really get America back to work,” says Keefe. “We did it in 2009. We can do it again now, and clean energy really needs to be a part of that.”
The American Recovery and Reinvestment Act of 2009 delivered a $90 billion infusion into renewable energy and energy efficiency that’s credited with driving a rapid expansion in the sector, including the creation of 3.4 million jobs.
That legislation created the Advanced Research Projects Agency-Energy grant program and provided seed capital for companies developing cutting-edge solar, battery and other technologies. The 2009 stimulus package also created the so-called Sec. 1603 grant program for installing fuel cells, hydropower, solar, wind and other energy systems.
Renewable energy advocates remain cautiously optimistic that Congress will dedicate funding in future stimulus bills to clean energy programs and expand tax incentives propelling wind and solar power in a future stimulus package, even if it has to come as a trade for spending on oil or other Republican priorities. Electric vehicle proponents see an opportunity to expand the existing credit and lift manufacturer-specific caps. New weatherization and efficiency programs—even initiatives to retrofit street lights—are also being pitched as a way to help curb energy use and emissions while creating new jobs.
Renewable power developers have also asked for provisions to help ensure projects can secure financing and meet requirements to claim tax credits despite supply chain hold-ups caused by the coronavirus. “Making these adjustments to existing tax credits would provide the industry the flexibility needed to accommodate COVID-19 delays without costing the federal government any additional money,” Tom Kiernan, head of the American Wind Energy Association, said in an emailed statement.
Democratic presidential candidate Joe Biden used his Wednesday livecast in part to advocate for future green stimulus. “We’re going to have an opportunity, I believe, in the next round here to use my green economy, my Green Deal” to generate “economic growth as consistent with the kind of infusion of monies we need into the system to keep it going,” he said.
Even after the coronavirus threat subsides, however, debt accumulated while responding to the pandemic threatens to stifle investment in renewables.
Said Height LLC analyst Benjamin Salisbury said in a research note to clients: “A growing concern among environmentalists is that expected significant additions to the federal debt burden will reduce the appetite for environmental spending in future years.”
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