In the past couple of weeks, we have seen strong affirmation of support for renewable energy in the UK and China. What will the new Obama Administration do to keep up?
In the UK, greater clarity emerged on how Feed in Tariffs with Contracts for Difference (CfDs) will work to give firm prices to developers of wind and other renewable energy generators. Billions of pounds sterling have been set aside to make sure that the Gigawatts of planned generation (much of it in Offshore Wind) actually get built.
Meanwhile, in China, Xi Jinping and Li Keqiang are now set to take center stage as top Politburo Standing Committee members. Mr. Li in particular is expected to have a great deal of influence over China’s energy policies, and renewable energy advocates have confidence in his leadership. RECharge News quoted Jessica Ng, analyst at BNEF, “As vice-chairman, Li has already had significant influence on the country’s energy policy so there will unlikely be major policy shifts. However there is speculation that Li may be more ambitious on clean energy and climate change.”
Much of the innovation in wind, solar and other renewables – going back to the 1980s – has been done in the US, but the markets have moved to Europe and Asia. Nearly half the world’s new wind turbines this year will be erected in China alone. By contrast, the US wind industry expects to comprise less than 10% of the world market in the coming five years.
Of innovation going on now, the lion’s share of today’s startups have emerged and been venture-funded by groups in the US, especially California and Massachusetts. Yet the US government’s on-again/off-again policy – the wind Production Tax Credit that has lapsed three times, and is in danger of disappearing again in a month’s time – has scared away investors, forcing many of the startups to look abroad for sales and partners who can take them beyond the venture capital stage.
So what can the Obama Administration do to support renewables?
Second, continue the strong mandates for energy efficiency and renewable energy in the US Military.
Third, make sure that the Wind PTC gets renewed as part of the annual “tax extenders package.” The wind industry is prepared for a “phase-out” of the incentive over several years, but it needs to be in place for 2013, or we will go over our own “fiscal cliff” – the US wind industry will grind to a halt as developers focus elsewhere (e.g., Canada and Latin America), and 37,000 jobs will be lost by New Year’s Day (click here to read more about the impact of the PTC on the wind industry).
(One could also ask that polluting forms of energy – fossil fuels – be finally relieved of the completely unjustified subsidies they have been receiving for a century or more … but perhaps that would be asking for the impossible.)
Fourth, as part of a comprehensive package on electrical infrastructure, we need legislation that will help build transmission infrastructure. Some of this can be and will be done by the states, but backbone infrastructure is inherently interstate, and should be thought of as similar to the Interstate Highway System. If the Federal Government has jurisdiction over I-80 from coast to coast, then it surely must have jurisdiction over the power lines running alongside this road. The building of such modernized grid infrastructure will be a boon for jobs in the short term, and renewable energy in the medium-term, because one of the main obstacles to reaching “20% Wind Energy by 2030” (as outlined in the Bush-era report from the DOE) is insufficient transmission.
Fifth, we need to continue to deal with polluting forms of energy, notably coal, where several older plants will need to finally shut down after 50+ years of operation. The EPA has been doing a good job under Obama of progressing the laws that in some cases have been in place for over a decade, but just never quite got implemented.
But we also need new legislation that addresses the health impact of coal. A Harvard Medical School report recently estimated the health cost of coal at 18 cents/kWh – this is three times the cost of wind energy (click here to read the report)! So the next time you hear “coal is cheap,” say “coal is not cheap for the kids in cities with asthma.”
The health care costs are not borne by the coal industry or the electric utilities that burn coal. If they had to bear these costs, no one would ever build another coal plant in this country.
Finally, carbon dioxide (and other greenhouse gases or GHGs) are also a form of pollution. The country has been in deep denial about Climate Change for about a decade, but there are signs – based in part on the extreme weather events that we have been experiencing in the Northeast (Hurricane Sandy) and the Midwest (100-year droughts) – that public opinion is shifting. The Obama Administration should take advantage of this momentum, crystallized by statements from New York’s Governor Cuomo and Mayor Bloomberg, and propose legislation defining GHGs as pollution. This public dialogue will bring out the facts and the fantasies of the Climate Change “debate,” and once the American people see what that really looks like, they will be happy to levy taxes on the polluters – possibly using these proceeds to fund the Wind PTC and other incentive programs for clean energy.
If the new Obama Administration acts quickly and decisively, there is still time for the US to take its place among the global leaders in clean energy. But with Europe and China pressing forward as quickly as they are, time is running short.
-Chris Varrone and the Riverview Consulting Team