Clean Energy Stakeholders Await Clarity from Fiscal Cliff and Presidential Reelection
Clean energy and jobs were one of the many issues that reelected President Barack Obama and Mitt Romney were on opposite sides of during the race. Romney was a strong proponent of coal energy and oil and gas drilling, and, though his campaign professed otherwise, was seen to be much less so for wind and solar energy.
President Obama, of course, has championed green tech and clean energy jobs since the beginning of his first term, through federal subsidies and programs for the wind and solar industries, aiming at long-term energy dependence and growth of what he has repeatedly dubbed “tomorrow’s economy.”
On paper, both private and public boosters of green technology and clean energy should be energized by another four years of Obama. After all, the president is clearly a proponent of both, and the assumption is that his administration will continue to push forward on renewable energy. And that give green jobs and employment in clean energy sectors a major lift.
But according to several experts, there won’t be any dramatic uptick anytime soon.
The group Environmental Entrepreneurs, or E2, which bills itself as “a national community of individual business leaders who advocate for good environmental policy while building economic prosperity, just released its third-quarter Clean Energy Jobs Report, and the news isn’t quite as good as it had been.
E2, which is affiliated with the National Resources Defense Council, says that while there were more than 10,800 new jobs announced in the clean energy sector in the third quarter, it represented just a quarter of the number of such jobs established in the first quarter. And worse, there was no gain in wind industry job numbers in the third quarter. That’s right: zero.
A big factor in the slowdown, according to Judy Albert, E2′s executive director, is the much-ballyhooed fiscal cliff. The Production Tax Credit, which has been in existence since 1992, offers generous aid and incentives to the wind energy industry and has created tens of thousands of jobs, but with the threat of its termination looming, capital investments have halted.
As the PTC is set to expire on Dec. 31, it is still unclear whether Congress will avoid the fiscal cliff and renew it. And as shown in the chart below, when the PTC has expired in the past, devastating job cuts in the wind energy industry followed.
“The wind tax credit issue is the biggest reason for the jobs slowdown,” Albert says. “In the first half of the year, there was a full-steam-ahead approach (with wind energy). But companies just started to pull projects when they saw the wind turbine tax expiring, just as it has happened before. We’ve seen jobs go down as much as 80 percent when the tax has expired in the past, so that’s a big piece of the puzzle.”
Arno Harris, the CEO of Recurrent Energy, a San Francisco-based solar project developer, says that from his conversations with people in the industry, they “are mothballing their turbines for a while.”
A second factor in the green job slowdown is that the money from the 2009 federal economic stimulus is running out, leaving renewable energy companies short on cash.
“But it hasn’t had as much of an effect as it would have five years ago,” Albert says, “because the industry is much more mature than it was in 2007 or 2008. Wind and solar can stand on their own two feet a little bit more, and they’re not as wholly dependent on government subsidies and stimulus as they were before.”
Harris agreed, saying that since wind and solar are now increasingly competitive with gas-fired electricity, they aren’t as heavily dependent on subsidies.
Mary Anne Hitt, the executive director of the pro-environment Sierra Club’s Beyond Coal Campaign, says part of the green jobs slowdown came from the relentless discussion of coal and fossil fuels during the campaign.
“I think everyone heard and saw the Romney campaign pushing coal, and the millions and millions of dollars spent by the Koch brothers (Charles Koch and David Koch of Koch Industries) trying to crush green energy were on TV all over the place,” Hitt said. “And with the election being [a close race], cleantech executives didn’t know who would win and how much they should expand, because a Romney win would’ve meant a very different approach from the White House.
“So if I were a cleantech executive,” Hitt continued, “I would’ve been nervous last quarter about growing and adding staff.”
But even with Obama’s reelection, the experts seem cautiously optimistic.
Harris, whose company has a 2.5-gigawatt pipeline and signed energy totaling 500 megawatts of solar energy, says having Obama, who believes in the future of wind and solar, in the Oval Office for another four years is huge for stability’s sake. But “individual specific policies are unlikely to have a big short-term impact,” Harris says, though he adds that the long-term view is important.
“It’s really important to have a stable policy environment where the companies developing projects can have a roadmap in front of them, where they know where they’re going and that the government, for the next four years at least, will be supporting their ideas and projects,” he says. “Without that, it’s difficult to plan ahead.”
Still, Albert cautions that hiring may not pick up right away until Congress and Obama settle the looming issue of the fiscal cliff, the Dec. 31 deadline when the Bush-era tax cuts are set to expire and automatic cuts in spending are due to kick in.
“Corporations like predictability before they hire, and they like cash, and I think right now they’re going to wait until there’s some clarity on what the tax issue looks like before they do more hiring,” Albert says. “They want to see what Congress and the president do as far as a framework of what revenues and taxes will look like.” But she adds, “They want to also eliminate the volatility and the price going up on fuel and energy, so I think that, for their own corporate objectives, they’re going to continue to invest in measures that go toward sustainability.”
Harris, whose company employs 114 workers, expects Recurrent Energy to continue growing. Fiscal cliff or not, he is pleased that the White House will continue to have a leader who believes in his industry.
“We have someone who knows government support plays a crucial role in this area, and he understands why it’s important to continue to put resources into clean energy,” Harris says of the president. “It makes us feel much better about the direction we’re going.”