Latest on the hostage negotiations:
A popular program to give wind and solar companies cash grants for renewable-energy projects appears close to being extended through a tax package that is being negotiated in the U.S. Senate, Democrats said on Thursday, as renewable energy companies pushed hard for a deal.
"I've heard that we've made progress," Sen. Dianne Feinstein (D., Calif.) told reporters. It's "our understanding is that it's in," Feinstein's chief of staff said.
Sen. Tom Harkin (D., Iowa) told reporters that the program would be extended for one year. Sen. Ben Nelson (D., Neb.) said that "it was my understanding that it would be included, but I don't have confirmation of that as of right now."
The details emerged after a group of 17 Democratic senators wrote Senate Majority Leader Harry Reid (D, Nev.) that they would "have trouble" supporting the tax package unless the cash-grant program were extended. The broader tax package would extend for two years tax cuts enacted under U.S. President George W. Bush.
Companies have been clamoring for an extension of the renewable-energy cash-grant program, which expires at year's end.
The program allows solar and wind power facilities to obtain federal grants equal to 30% of the cost of installing new facilities. The program got its start in the 2009 economic stimulus package, when companies that had previously qualified for tax credits for building renewable-energy projects began losing money, making the credits worthless.
Ben Nelson got his corn money, so he is happy. And with big boys like General Electric pushing for the renewable energy grants to be continued, chances are it is going to happen – but notice the fine print.
One year. One year. Bang your head on the keyboard. All the protests taken into account, it looks like the overall deal is going to pass anyway, so we better get what we can out of this right now. But as Krugman said:
Unemployment benefits aside, all of this is very much second-best policy: consumers would probably spend only part of the payroll tax break, and it's unclear whether the business break would do much to spur investment given the excess capacity in the economy. Still, it would be a noticeable net positive for the economy next year.
But here's the thing: while the bad stuff in the deal lasts for two years, the not-so-bad stuff expires at the end of 2011. This means that we're talking about a boost to growth next year – but growth in 2012 that would actually be slower than in the absence of the deal.
President Obama is taking a very big gamble when he says that this tax deal will create "millions of jobs". He better hope it does, or face it folks, he's out anyway. And while it would be great to see something like Governor Granholm suggested yesterday, a "Jobs Race to the Top" (come up with a better name though) centered around renewable energy – it's hard to imagine how something like that gets through Congress at this point.
Fossil fuel teabagger-types have pushed new House Energy and Commerce Committee chair Fred Upton to lurch to the right and recant his previous position on renewable energy. In July of 2009, Upton claimed that he was "fully supportive of offering incentives for clean-energy jobs in Michigan", but just recently he called them a "crutch" and vowed to clamp down on support for the industry – while he promoted more exploratory drilling for oil on federal lands. Yee-hah.
Hard to tell where this goes from here. There are indications that many Republicans still support the idea of green jobs, and the hard-core campaign rhetoric is fading now – John Kasich in Ohio is backing off repealing that state's RPS goals for one prominent example. Others will probably follow suit before they lose those jobs to other states. The race will be back on.
And as I said not-so-tongue-in-cheek before, it might be better if we just start lobbying the big corporations like Dow and GE and BP instead. They are pulling the strings on these guys – God knows sound fiscal and environmental policy always takes a backseat to profits. Incentives will continue to get renewables off the ground and get them to profitability – and any delay in this area means the Chinese will continue to eat our lunch for us. No time to waste. Take this year, and cross your fingers for the future. This could go either way.
Mr. Immelt, can you help us out here?