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No Tax Breaks: No Renewables



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Today’s Greenwire (subscription required) reports that Congress is expected to adjourn without passing an extension of some $15 billion in tax credits for wind, solar, geothermal, and other renewable energy sources. The credits are set to expire on December 31 unless Congress, well, renews them. Congress might do this in a lame-duck session after the November elections — or it might not.

Anyway, what’s interesting is what proponents are saying about the competitiveness of renewable energy.

Nobuo Tanaka, executive director of the International Energy Agency (IEA), says that “setting a carbon price is not enough” to boost global electricity production from renewables (including hydropower) to nearly 50 percent by 2050. That’s curious. Why wouldn’t beating the hell out of fossil-fueled electricity suffice to secure a 50-percent market share for renewables? The Executive Summary of IEA’s new report, Deploying Renewables, provides no explanation, and the full report, alas, costs €80, or roughly $114, to download.

Perhaps Tanaka implies that pricing carbon is more likely to grow nuclear power than wind farms, absent tax privileges for the latter. The U.S. Energy Information, for example, projects that the “levelized costs” (fixed costs, fuel costs, and incremental transmission costs) of new wind generation will exceed those of new nuclear plants in both 2015 and 2030.

Greenwire says that for the geothermal industry, “which has 3,000 megawatts of power online currently and more than 100 projects lined up to double that amount of power,” the prospect that Congress may not renew the tax credits “will likely mean holding off on projects — or downsizing and speeding them up before the current credits expire.”

Along the same lines, Christian Real de Azua of the Wind Energy Association warns that, “A failure to extend would be disastrous. We’ve seen what happens in the past.” Azua notes that previous lapses in the tax credits cut back construction of new wind installations by as much as 90 percent.

In addition, Greenwire reports, “A report by Navigant Consulting in February projected that 116,000 jobs and $19 billion in investment dollars could be lost without federal action in the solar and wind industries,” and that “already, 21 large ‘utility-scale’ solar projects have been put on hold because of the congressional stalemate.”

Not even state mandates requiring utilities to produce a certain percentage of power from renewable sources will “salvage the situation,” says Alexander von Welczeck of Solar Power Partners, a developer and financier of solar projects. This is true even in Welczeck’s business base of California, “which has put policies in place to generate hundreds of megawatts of solar capacity,” Greenwire says.

So there you have it from the horses’ mouths. Not even penalties on carbon-dioxide emissions combined with Soviet-style production quotas may be enough to sustain the renewable energy industry. To “compete,” renewables also need windfall profits from special tax breaks.



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