The “Valley of Death”

Posted on December 17, 2007
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by Willy Ritch

When you look at the Senate’s failure to pass an energy bill with tax credits for clean energy, it might seem like Congress is doing nothing to help us make a transition to renewable energy. It’s worse. They’re actually doing damage to the industry.

As Marianne Lavelle points out in a blog at US News and World Report, financing for clean energy projects depends on some sort of predictability, and the way Congress deals with clean energy is anything but. Under the proposal the Senate just defeated, a 2 cent/kwh federal tax credit for renewable energy would have been extended until 2011–not exactly a long term commitment, but long enough to give investors a reason to sink some money into new projects, according to Lavelle. (Her post also has some quotes from a renewable energy guru at Google who says the energy bill is sending some projects for a walk in “the valley of death.”)

Writing at GreenOptions.com, Maria Surma Manka says the expiration of this Production Tax Credit (PTC) will have immediate and measurable effects on the construction of clean energy projects.

That uncertainty of the credits’ renewal means that renewable energy projects could come to a standstill. In past years, as an extension of the PTC comes down to the wire, wind projects have stopped 6-8 months before its expiration. If that trend holds true, we could see a similar slow down in 2008 if the PTC isn’t renewed quickly.

It does look like there will be an energy bill going to the President in the near future. It has higher fuel efficiency standards for new cars and trucks—let’s not forget that. But by abandoning incentives for clean energy and leaving intact massive subsidies for the oil and gas industry, it falls considerable short of the kind of national energy policy we need. It is, as Forbes.com called it, “The Incredible Shrinking Energy Bill.”

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