THE RIGHT BACKING FOR NEW ENERGY

Clean-energy subsidies are vanishing. What should replace them?

Brad Plumner, April 18, 2012 (Washington Post)

"Clean tech has…benefited from billions of dollars in subsidies from Congress, through various energy and stimulus bills. As a result, many industries…have taken lengthy strides…But…[Beyond Boom & Bust from the Brookings Institution, the Breakthrough Institute, and the World Resources Institute shows that]…clean-energy subsidies are disappearing fast, as the stimulus winds down and various laws and tax credits expire. Back in 2009, clean tech got $44.3 billion in federal support. By 2014, that will have shrunk to just $11.1 billion…

"The new report…is the first to examine in detail which policies are actually expiring and when. All told, Congress has created more than 92 different programs dealing with clean tech — everything from production tax credits for wind power to advanced manufacturing credits to loan guarantees for nuclear power…And, by 2014, 70 percent of these programs will have vanished."

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"The authors argue that letting all of these programs expire could cause the clean tech sector to ‘go bust,’ as budding energy technologies like solar, wind, and even next-generation nuclear plants are currently facing pressure from ultra-cheap natural gas and from subsidized competitors in China…[T]hat doesn’t mean all 92 of these programs should simply be extended as is. For one, that likely won’t fly politically…it’s not good policy on the merits to keep forking money over to solar and wind and geothermal producers without a real sense of larger aims…

"[T]he report suggests that Congress should rejigger its clean-energy subsidies in several ways. First, it should focus heavily on research and development. And second, the subsidies that are geared toward deploying new technologies — the credits and policies that help wind turbines sprout up and nuclear reactors get built — should be structured so that they reward improvements in performance…[Feed-in tariffs] for wind and solar power that get smaller over time…[force] the technology to keep improving in order to stay profitable…The ultimate goal of these policies…is to push clean tech so that it can eventually stand on its own and compete with older, more established fossil fuels…"