After decades of subsidizing fossil fuels, it's clean energy's turn to get bountiful federal support, President Obama said in his State of the Union address on Tuesday.
On this issue the president emphasized two goals. The first was to pass a federal clean energy standard to require utilities to buy a certain percentage of their electricity from cleaner sources by 2035; the second, to act on expiring tax credits and pass new ones, including a new $5 billion subsidy to prop up clean energy manufacturers.
The policies are meant to eliminate risk to private investors and accelerate the boom in renewable-power plant construction. Obama said they'll help "double-down on a clean energy industry that's never been more promising."
But do the country's clean energy advocates, analysts and investors agree? InsideClimate News asked several leading U.S. players to weigh in on the president's policy choices.
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Rhone Resch, president and CEO of the Solar Energy Industries Association, the trade group for the American solar industry, said the president's calls for a clean energy mandate and tax breaks cut "to the heart of energy development overall."
Traditional energy sectors, like oil and natural gas, have benefited from heavy support for nearly a century, so it's only logical to similarly use public money to build a renewables sector with staying power, he said. For example, federal subsidies for oil and gas have averaged nearly $5 billion a year dating back to 1918, compared with $370 million a year for renewables between 1994 to 2009, according to a report from DBL Investors, a venture capital firm in San Francisco. (For the third year in a row, Obama has called on Congress to end subsidies to oil producers.)
Resch said long-term government support could bring down the price of renewable power so it can compete more easily. The cost of installing solar panels in the U.S. has already dropped nearly 30 percent since 2010, due mainly to temporary subsidies from the economic stimulus and the Section 1603 cash grant program.
"By having longer-term policies that provide stability for businesses to scale up both their manufacturing and their installations, we'll see costs continue to come down—such that solar, wind and other technologies will be cost-competitive with fossil fuels," he said.
Daniel J. Weiss, a senior fellow and director of climate strategy at the Center for American Progress, a liberal research organization, called the two policies "a jump-start for the clean energy economy."
Like other clean energy supporters and industry executives, Weiss said tax breaks "level the playing field" between green technologies and conventional energy sources. A federal clean energy standard would guarantee market certainty and spur private sector investment, he said.
"That's exactly what our economic competitors are doing in Germany and China," Weiss added, echoing Obama's warning that without greater federal support America would cede its wind, solar or advanced battery industries to manufacturers in those countries.
But Timothy Newell, a senior adviser at U.S. Renewables Group, a private equity firm that manages more than $750 million in assets, said that if the goal is to build the clean energy economy, then Obama missed a third, crucial component: to subsidize early-stage clean technology research and development.
"Investing in the basic research and technology, which will then ultimately be deployed by the private sector ... is one of the most fundamental and successful roles of government in terms of building our economy," Newell said. "Those three things together—as the legs of the stool, so to speak—form the foundation of policy support for the industry that's needed."
Frank Maisano, an energy and environmental expert at Bracewell & Giuliani, a law and lobbying firm in Washington, said he's not optimistic that Obama's approach can spur a renewables boom, especially in the short term. An abundant supply of natural gas, which is now the cheapest option for new power generation, is likely to steer energy developers away from renewables and toward the fossil fuel, he said.
As part of his energy goals, Obama announced plans to crank up natural gas development and urged Congress to pass tax credits for companies to convert trucks from diesel to natural gas.
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