On Tuesday, President Obama was elected to a second term after campaigning on a platform of higher taxes for the wealthy and continued government investment. While debate will rage for months (years? Please, not again) about what this means for America, we can say with some certainty what it means for clean tech in this country.
With respect to certain initiatives, neither candidate would have been able to do much, as we prepare for a still-divided Congress. The Presidency does matter in a number of ways, however, even in terms of certain legislation, where his support or opposition alone could go a long way to determining the outcome. One such initiative is the Production Tax Credit for Renewable Energy (PTC). Originally enacted in 1992, this incentive provides a credit of 2.2 cents per kilowatt-hour (kWh) over ten years for a range of renewable energy generation facilities. The PTC has been operating on a short-term basis, requiring Congressional renewal every few years. Dealing with this uncertainty has been an on-going challenge for many renewable energy developers resulting in “boom and bust” cycles, and the current iteration – which was most recently extended under the 2009 stimulus package – expires at the end of the year. While there’s no guarantee that the PTC will be successfully renewed, Governor Romney said during the campaign that he would allow the credit to expire. We need a long-term policy in order for investors to have confidence in the profitability of these projects, and there’s no indication that we’re nearing such a deal. But Governor Romney would have provided the kind of certainty the industry really isn’t looking for.
Another way the federal government has helped renewable energy is through the Department of Energy’s much talked about loan guarantee program. Although it became the center of national attention after the California solar company Solyndra went bankrupt in 2011 after accepting $535 million in federal loan assistance, the program has actually been associated with quite a few successes. This report, conducted in the wake of the Solyndra crisis by a former Treasury Department official under President Bush, determined that, overall, the program is working well. While it did identify some potential improvements, the investigation didn’t come close to discrediting the integrity of the program, as the pundits were quick to do last year. It provides assistance to both manufacturers and power plant developers, and while I don’t think Governor Romney ever said he’d cut the program entirely, he would almost certainly have pushed for significant and damaging changes. Its funding authority expires at the end of the year, so new funding would have to be included in future budgets.
Governor Romney’s positions on a number of other critical issues remain unclear. Under President Obama, Corporate Average Fuel Economy (CAFE) standards are not going anywhere (on track for 54.5 mpg by 2025), and there’s reason to believe that tax rebates for plug-in hybrid and electric vehicles will keep flowing. Romney appears to be opposed to both the fuel standards and the tax incentives, although he hasn’t been very vocal about exactly where he stands on these (which is fine, because I think most people are sick of hearing politicians talk about the auto industry). Whether or not you think they are good uses of government regulation or funds, they’re definitely good for the technologies that continue to enable such innovation.
The Verdict: In a number of ways, the President can have an impact on renewable energy and other “clean” technologies. The Production Tax Credit and DOE’s loan guarantee program in particular have played a central role in innovation and development in recent years. While some things can’t happen without Congress, both campaigns were clear about which direction their candidates would go on the initiatives the President does control. For clean tech, Tuesday’s outcome was a victory.