August 2, 2011

Debt Deal Puts States Back in the Clean Energy Driver’s Seat

By Lewis Milford

The recent debt ceiling deal announced this week means two things for clean energy. One, forget Washington as a source of significant new funding and programs for a long time. Two, look once again to the states to keep momentum on clean energy alive.

The first point is fairly indisputable. Virtually every energy commentator has lamented how future, severe cuts to energy and environmental programs are an inevitable result of this new deal. Billions of dollars will come out of most clean energy and environmental programs for the next ten years, probably permanently below last year’s continuing resolution budget levels. DOE and Interior and EPA will see big hits to their programs. Unrealistic dreams of a new carbon tax are finally being put to rest. The cuts could well come to various renewable incentive and tax credit programs.

The second point of returning to the states is the only realistic answer. As Washington conducts a slash and burn campaign to gut clean energy and environmental programs the states are acting more responsibly. Just as they did under some rough times in Washington from 2000 to 2008, the states once again are stepping up their clean energy game.

Connecticut is the first state in the country, under Governor Malloy, to create a new green infrastructure bank, something that Washington has been unable to do. In Virginia, Republican Governor Bob McDonnell recently signed several initiatives into law: one would create a Clean Energy Manufacturing Incentive Grant Program; another raises the net metering limit for homeowners; and two others create a means for voluntary contributions on electric bills to a fund that will use proceeds to fund solar systems at residences, businesses, and nonprofits.

At the same time, Oregon and Massachusetts have created innovative new solar support programs (“Solarize Campaign”) that support communities and neighborhoods to use their collective purchasing power to help residents overcome the financial and logistical hurdles of going solar. The State of New Jersey is using its renewable portfolio program to support offshore wind and offering tax credits to build the associated supply chain to create local jobs and lower transmission investment costs.

Sure, some states are cutting back, or raiding some of their clean energy funds. But that is the rare exception. For the most part, we see steady state funding, and a renewed emphasis on the economic development benefits of clean energy programs, along with a raft of new economic development programs across the country. States are creating clean energy incubators, workforce training programs, technology innovation efforts and looking to major new projects like offshore wind to boost local manufacturing and employment.

So what gives with this schizophrenic state versus Beltway shift? It’s on old story. In Washington, the lowest common denominator policy prevails. The fossil fuel industry has enormous concentrated power to influence key lawmakers to do nothing on clean energy. It only takes a few no votes to kill federal legislation.

In the states, Governors of both parties tend to do what works, what creates jobs and brings in new industries. And for them, clean energy is the new nonpartisan economic driver. It is much harder for opponents to stop the spread of experimentation in 50 states.

This is clear from a recent study by the Brookings Institution that showed how renewable energy is one of the fastest growing industry sectors in the last ten years. It is perhaps the one bright spot in this bleak economy.

Governors get that story, and focus laser like on jobs. Unfortunately, some of our Washington politicians are now solely enamored of debt reduction and have forgotten the 16 million unemployed.

But the states have not. That is good news for clean energy. Now if only Washington understood how to work more with the states and ride that clean energy wave that is breaking outside the Beltway.

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Associated CEG Initiative(s)

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