Currently, the issue of climate change appears to be on the back burner as governments are focused on the financial problems that have shaken the global economy. It could be several months before politicians return to focusing their attention on long term problems like global warming.

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Government Guaranteed Revenues for Large Renewable Energy Players

Unlike other industries, renewable energy has government-guaranteed revenues. However it is likely that as the credit crunch plays out, the re-bounders will be big utilities who are not reliant on banks for short term loans rather than start-ups who do.

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>>More on renewable energy tax credits in Congress

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After failing to pass the extensions 8 times so far this year, the bill was approved by an overwhelming 93 to 2 majority. The only two Senators voting against the extensions were Republicans Crapo (ID) and Kyle (AZ).

Five Senators did not vote on the issue, and Republican presidential hopeful John McCain made his record on the issue a stunning 0-for-9 this year alone, answering the question many had whether he would finally show up to vote on this critical energy policy issue. In all fairness to Senator McCain, both Senators Obama and Biden also recorded an absent vote. One can only assume that Biden and Obama (and perhaps McCain) were tipped-off by their colleagues that the vote would be a landslide and chose not to come to Washington for the vote.

The cynic in me says that the only reason it passed this time is because we are so close to the election, and failing to pass the legislation is not a black mark that Senators want on their record in this critical campaign season, where the Democrats are poised to get a veto-proof majority of more than 60 Democratic Senators.

Next, the bill must be approved by the full House of Representatives in a vote later this week.

For the second time this week, the Senate has voted to block progress on a bill designed to extend Renewable Energy Tax Credits. Although the Bill, that enjoys broad cross-party support, gained a majority of 52-44, Republican opposition meant that it fell just short of the 60 votes needed to proceed.

News that progress on the $17.7 billion package of tax breaks could now be delayed until after the presidential elections in November has been greeted with dismay by the renewables industry. Rhone Resch, President of the Solar Energy Industries Association warned that if the tax credits were allowed to expire at the end of this year it will “result in the loss of billions of dollars in new investments in solar.”

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Breaking ranks with the the state’s increasingly important solar industry, Ensign said that efforts by the Solar Energy Industry Association to force his hand on tax breaks had in fact had the opposite effect of “personally alienating” him and other senators.

In a scathing letter, later released to the press, Ensign accused the lobby group of squandering goodwill by accusing him of favouring “billionaire hedge fund managers” over job creation in Nevada. Indicating the depth of his feelings on the issue, he went on to say “It is rare to have such overwhelming bipartisan support in today’s political climate but the solar industry had it and your association’s leadership squandered it.”

Nevada solar executives had privately become increasingly unhappy with the Senator’s record of voting against bills containing the tax credits. Ensign said that he opposed the bills because the funds for tax breaks would have been raised by increasing the burden on the oil and gas industry. Earlier this spring, he co-sponsored an alternative approach, calling for tax credits without the corresponding offsets. It made it through the Senate by a vote of 88-8, but has become bogged down in the House.

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[UPDATE 1: The Consumer First Energy Act which would impose a 'windfall profits tax' on big oil companies, and the Renewable Energy and Job Creation Act both failed to move on. The second of those two contained a one year extension of the Production Tax Credit. The votes were largely along party lines. Kate Shepard at Grist provides a good review of the two bills in this report.]

The PTC has been the single biggest policy driver of renewable energy development in the U.S., and the short one and two year extensions (as well as the absence of those extensions) have produced a ‘feast-or-famine‘ cycle of renewable energy growth in the United States, where all new development is virtually frozen in place, awaiting a tax incentive. As it currently stands, the PTC will expire at the end of 2008.

According to the American Wind Energy Association (AWEA), studies show that 116,000 jobs and more than $19 billion in clean energy investment are at risk from a failure to extend the PTC and other renewable energy tax credits.

Thus far, the biggest hangup for extending the renewable energy tax credits has been the question of funding. Ironically, the Democrats have become the party of fiscal responsibility in Congress, and do not want to pass the bill without a way to pay for it.

Last week at WINDPOWER 2008, I had the opportunity to sit down with Greg Wetstone, Senior Director of Government and Public Affairs for AWEA, and Tom Gray, the Deputy Executive Director. The pair told me that the tax credit issue was really one of fiscal ideology. And that unfortunately, many in Congress had been using the renewable energy tax credits as a “political football.”

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Photo credit: NREL

A new study by the American Wind Energy Association (AWEA) found that U.S. manufacturers dominate the world’s market share of small wind turbine sales. Comparatively, global sales of larger, utility-scale turbines are led by companies like Denmark’s Vestas, Spain’s Gamesa and India’s Suzlon, who are also hungrily eying the U.S. market.

The 2007 Small Wind Turbine Global Market Study reports that about half of U.S. manufacturers’ sales are made overseas, and the other half satisfies about 98 percent of the small wind demand here at home. Small wind systems are defined as those with 100 kilowatts (kW) of capacity or less, and in 2006 nearly 7,000 Americans purchased them for their homes, farms, or businesses.

The key to building up the market for small wind, according to AWEA and other wind power advocates, is to provide stable federal tax credits and incentives. Ron Stimmel, AWEA’s small-wind advocate, pointed out that “small wind is the only renewable energy technology without a federal-level tax credit.” At $10,000 - $55,000 each, small wind turbines aren’t cheap.

It’s good news that, for once, the U.S. is leading the way in something small, clean, and local. Whether it’s for a community school, a farm, or a home, small wind allows people to reduce their reliance on dirty energy and create their own clean source. American wind power of any size, however, suffers from unreliable federal policies, like the production tax credit (PTC) for large wind that has to be renewed every few years. Wind farm construction increases quickly when the PTC is renewed and dies off as it nears expiration. This boom-and-bust cycle is bad for the wind power economy and our energy system. We need consistent incentives for a versitile energy source that can power a utility or a farm down the road.

Alternative Energy Retailer
AWEA Small Wind Turbine Global Market Study
State Energy Conservation Office
Union of Concerned Scientists