The State of Clean Energy in the State of the Union

January 27, 2012 | 9:22 am
Jeff Deyette
Director of State Policy and Analysis

Clean energy played a prominent role in Tuesday’s state of the union speech, lauded as an effective way to spur American innovation and investment, and create jobs. But several of the initiatives President Obama highlighted require legislative action. Will Congress finally cooperate?

President Obama delivers the 2012 State of the Union address

Source: White House

Don’t raise taxes on the wind industry

The President’s clean energy priorities start with the extension of several tax credits for renewable energy deployment, clean energy manufacturing, and energy efficiency in buildings and industrial processes. At the top of the list is the production tax credit (PTC) for wind, which is set to expire at the end of the year. The PTC has been a primary driver of renewable energy technology and innovation, and it is needed to help developers maintain access to financing, plan for the future, and to protect jobs. A recent report by Navigant Consulting found that 54,000 wind industry jobs would be created or saved with a 4-year PTC extension. If the policy is left to expire, as many as 34,000 jobs could be lost.

Time is running out and Congress will need to act quickly in order to maintain the wind industry’s momentum. The pace of new project announcements beyond 2012 has already taken a nose-dive, and just two-weeks ago, Vestas—a leading global wind manufacturer—warned of the potential for laying off 1,600 U.S. employees if the PTC is not extended (in addition to the 2,300 lay-offs they’ve already announced overseas). Congressional leaders should follow the President’s lead, and extend the PTC along with the other clean energy incentives at the next opportunity, which could be as part of the potential payroll tax extension package in February.  Voice support for the PTC extension to your members of Congress.

Making clean energy the standard

For the second year in a row, President Obama also used his state of the union speech to encourage congressional enactment of a clean energy standard (CES). Last year, he called for the United States to produce 80 percent of its electricity from “clean” energy sources by 2035. Unfortunately, Congress didn’t take up the challenge. But President Obama is right to restart a national conversation about creating long-term markets for increasing renewable energy and other low-carbon energy sources. A well-designed CES can be an effective tool for harnessing American ingenuity toward affordably and reliably moving our nation to a cleaner, more sustainable energy system. This is already being demonstrated by the 29 states (plus the District of Columbia) that have adopted renewable electricity standards.

Dry Lake Wind Power Project, Arizona

Source: Iberdrola Renewables

However, it is critical to get the details of policy right. Any CES legislation that moves forward should prioritize the strong deployment of truly clean and renewable energy sources, including wind, solar, geothermal and sustainable sources of low-carbon biopower, along with major improvements in energy efficiency. It should also avoid giving windfall profits to those that don’t need the policy support, such as the natural gas industry, or owners of existing nuclear power and large-scale hydropower facilities. UCS analysis has shown that this strategy can achieve or even exceed the president’s clean energy goals, while also driving economic development, improving public health, and saving consumers billions of dollars annually on their energy bills.

The ball is in Congress’ court

Of course, President Obama cannot extend tax credits for renewable energy and energy-efficient technologies or implement a clean energy standard without action from Congress. So far, they have been largely uncooperative, though there are some indications of bipartisan support emerging for the tax credits. If members of Congress don’t want to listen to President Obama, perhaps they should check-in with their constituents. Polls consistently show broad public support for federal policies that promote renewable energy, and the president’s clean energy initiatives elicited some of the strongest position reactions amongst a focus group of swing voters listening to the state of the union. That ought to get their attention.