Mixed bag for green tech in Washington dealings

An extension to renewable energy grants and corn ethanol subsidy are part of a tax deal while funding for clean-energy research and development appears flat.

Martin LaMonica Former Staff writer, CNET News
Martin LaMonica is a senior writer covering green tech and cutting-edge technologies. He joined CNET in 2002 to cover enterprise IT and Web development and was previously executive editor of IT publication InfoWorld.
Martin LaMonica
3 min read

Grants for renewable energy projects are part of a planned tax bill being brokered in Washington, but incentives for manufacturing are not included and clean-energy research spending will remain flat at best, according to reports.

Even though corn ethanol subsidies have increasingly come under fire, the Senate is expected to vote on a tax deal on Monday that includes an extension to a 45 cents per gallon tax credit for blenders, reports E2 Wire today. A 54 cent per gallon import tariff, designed to protect the U.S. corn ethanol industry, was also extended through 2011.

Over the past few days, wind and solar industry lobbyists were working furiously to extend a grant program that directly affects large-scale renewable energy projects. Last year, the Treasury Department starting making grants available for renewable energy investments in lieu of tax credits. Because of the meltdown of the financial markets, tax equity had dried up almost entirely, making it very difficult to finance renewable energy projects.

Denise Bode, CEO of the American Wind Energy Association (AWEA), said yesterday in a statement that the one-year extension of the "Section 1603 investment tax credit" would stave off a wrenching slow-down of wind manufacturing and installation.

"Factories across the country will restart production lines, recall workers, and avoid layoffs that would have followed the loss of this key incentive for wind energy. With consistent policies like this one, wind energy can generate 20 percent of America's electricity within 20 years, and employ half a million Americans," she said.

The grant extension is estimated to cost almost $3 billion while extending the ethanol tax credits will cost over $4.8 billion, E2 Wire reported, citing estimates from the Joint Committee on Taxation.

Because the lack of available tax equity and the large size of wind projects, the renewable energy grant program is particularly important to wind, according to GE, the largest U.S. turbine manufacturer. The cash grant in lieu of tax credits is important but less vital to solar, according to some executives, VentureBeat reported yesterday.

One program that many companies took advantage of but appears to be left out is "clean-energy manufacturing credits," which provided a tax incentive for U.S. manufacturers to invest.

Meanwhile, a House spending bill to keep government operations running includes no additional funding for research agencies, including those related to clean energy research next year, reports Science. Regardless of what the Senate version of the government spending bill looks like, the outlook for energy research and development looks bleak in 2012, reports Technology Review.

Last week, Energy Secretary Steven Chu argued that the U.S. needed to increase R&D spending particularly in clean energy in order to compete with other countries, saying that China's rapid embrace of clean technologies is a "Sputnik moment" for the U.S. Other prominent business people and academics have also called for boosts for research and development over many years to promote innovation in green technologies, including the President's Council of Advisors for Science and Technology (click for PDF) and business leaders at the American Energy Innovation Council.

One research program that does appear to have funding for next year, although it's unclear how much, is ARPA-E (Advanced Research Projects Agency-Energy). The agency was created a few years ago but was not funded until last year through the federal economic stimulus plan. The mandate for ARPA-E is short-term projects that are high risk but have the potential for technology breakthroughs.