The fate of the Section 48(c) tax credits for technologies like geothermal and biomass power
Senator Ron Wyden directly addressed the future of the renewable technologies left out of 2015’s major tax and budget package. Giving hope to many in the industry who work with these technologies, Senator Wyden outlined a plan to get an extension on critical tax credits beyond the end of 2016. “What's going to happen now is because we were able to secure the short term on both trains -- taxes and policy -- we'll go to a long-term FAA bill right when we come back,” Wyden said. “And we're going to make sure that we have those 48(c) provisions are in…” reported E&E News.
The FAA bill in question is being addressed currently in the Senate. ACORE weighed in on the bill, voicing support for inclusion of the tax extenders for renewables. While Finance Committee Leadership did make an attempt to attach the clean energy extenders left out of the December package, unfortunately the extenders were removed from the bill in the waning hours of negotiations this week. This was reportedly because the package became too large as a result of the addition of other unrelated tax measures, a phenomenon that critics termed “piling on.” ACORE is monitoring the situation closely, but we do not expect the extenders to be re-attached at this point. The best hope for extension of these credits is most likely action in a “lame duck” session at the end of the year.
The future of the Clean Power Plan, as outlined by EPA’s Acting Chief, Janet McCabe
When the Supreme Court unexpectedly stayed the EPA’s landmark rule on carbon pollution, the Clean Power Plan, many industry observers were uncertain on what to expect from the agency going forward. At ACORE’s National Policy Forum, for the first time, a senior EPA official directly addressed industry issues as they related to the Clean Power Plan (CPP).
Setting a hopeful tone, McCabe told the audience, “The Clean Power Plan, I think, for many states represented a sensible way to move forward.” She communicated EPA’s willingness to work with states interested in moving forward, saying, "While fully respecting the existence of the stay, we have said that we will continue [to work with] any state that is seeking assistance or support from us while they continue to take these sorts of actions, we stand ready to provide that assistance to them," reported E&E News.
And perhaps most importantly, McCabe emphasized that the EPA isn’t giving up any ground on their rule just yet. Calling speculation on changes to the 2022 start date for CPP compliance “a little premature,” McCabe highlighted the agency’s hope that minimal time would be lost to litigation, and that any clarifying work completed in the meantime will be done in a manner that is in full compliance with the stay. ACORE member and former EPA general counsel during the Clinton administration, Gary Guzy, currently senior of counsel at Covington & Burling LLP, echoed this course of action. "There's nothing that at least I read in the stay that says that EPA has to stop all of that kind of thinking and work and interaction and guidance," said Guzy, in an interview with E&E News.
Bill Becker, who is Executive Director of the National Association of Clean Air Agencies, participated in the Forum panel on the CPP and warned that if the rule should be overturned in court, states will press forward and a patchwork quilt of clean power regulation will continue spreading across the country, ultimately leading many CPP opponents to seek Federal action.
The future of public policy for the renewables industry
The discussion at ACORE’s Forum always centers on the next evolution of energy policy for renewables, but this year drew extra attention in the wake of 2015’s tax credits extension for wind and solar. Under the deal, the Production Tax Credit (PTC) is extended through 2020 and will decline in value each year after December 2016 until it is phased out entirely. The Investment Tax Credit (ITC) will be drawn down gradually through 2022.
Keynoting the Forum this year, Senator Chuck Grassley (R-IA), the “father of the PTC,” celebrated the success that on-going tax policy has encouraged for wind energy. In ACORE’s press statement from the event, the Senator noted, “in Iowa, a state that just became the first in the nation to generate over 30 percent of its power from wind energy, we’ve seen the economic success story behind renewables up close and personal. There are more than 6,000 good wind jobs in Iowa, and the clean energy opportunity is available to every state in the country.”
The head of the American Wind Energy Association, Tom Kiernan, did emphasize the need to continue to encourage success by ensuring a smooth transition between tax policy and the CPP, “We've got to make sure the policy, the credits go far enough such that when the CPP kicks in, or Clean Energy Incentive Program kicks in, there's a smooth transition,” reported E&E News.
Rhone Resch, CEO of the Solar Energy Industries Association, had a similar message from the solar industry on the important intersection of tax policy and regulatory implementation of the CPP: "I think where we are positioned right now is very positive," Resch said, "and as the Clean Power Plan ... goes through the legal process and we're working with states on the implementation side of it, they know that solar is a cost-effective option that's going to be available."
Also on the minds of conference participants was the new climate commitments made at COP21 in Paris. In the effort to limit the global average surface temperature increase to below 2ºC above pre-industrial levels, over 180 countries have committed to Nationally Determined Contributions (NDCs) that collectively move the world toward this critical goal.
The Paris agreement has also opened discussion about using another section of the Clean Air Act – section 115, International Air Pollution – to address greenhouse gas emissions from the rest of the U.S. economy (beyond the electricity sector) to achieve the targets in the U.S. NDC
Former EPA Deputy Administrator Robert Sussman, currently an adjunct professor at the Georgetown University Law Center, participated in the Policy Forum panel on the Paris Agreement and commented that “Section 115 is a flexible tool that is legally defensible and can enable us to address greenhouse gas emissions on a multi-sector basis.” This follows on suggestions from Clean Air Act experts, who have argued that Section 115 could be used to direct states to achieve reductions across sectors, though it would be controversial.
There is no question that the Paris commitments are far more ambitious than the objectives of the CPP and will almost certainly require additional federal action, whether under Clean Air Act Section 115, or under other authority. Clearly, the renewable sector must be fully engaged on strategy, education and outreach to aid public officials as they seek a pathway to achieve the required greenhouse emissions reductions.
ACORE is Ready to Lead
From ACORE’s point of view, there’s no doubt that wind and solar are well-positioned from a national public policy standpoint for the next few years. But as noted above, the other technologies like geothermal and hydropower are still lacking longer-term certainty. Plus, as state renewable portfolio standards begin to plateau, there will be a need to renew those commitments as well. Some states are stepping up – Oregon just passed a 50 percent by 2040 commitment, as have California and New York (both 50% by 2030) – but the 29 states plus D.C. that have RPS policies must experience recommitment across the board. ACORE will serve as a voice for the entire renewables industry, and continues its mission to advance the renewable energy sector through market development, policy changes, and financial innovation.
I hope you found this quick overview useful. As you can see from the links below, a surprisingly lengthy collection of news stories emerged from the various discussions at this year’s Policy Forum. I encourage all of you to join us at our next conference when the focus shifts to finance. We’ll be at the Grand Hyatt Hotel in New York City on June 21 and 22 for the Renewable Energy Finance Forum – Wall Street. It should be a very interesting couple of days. We look forward to seeing you there.
For more press coverage of the 2016 National Renewable Energy Forum, see below:
- Five Takeaways from National Renewable Energy Policy Forum 2016 (Environmental Leader)
- Wind-and-solar messaging roars on despite rule freeze (E&E News)
- Sri stays in place, Inhofe wants drones and Poehler fined for wasting water (Bloomberg Government)
- Grassley sees no need to change wind tax credit phase out schedule (Politico Pro)
- Grassley: No Need To Extend Wind Tax Credit (Politico Morning Energy)
- McCabe: EPA will give states nuts-and-bolts help on stayed rule (E&E ClimateWire)
- McCabe Says 'Premature' To Speculate Whether ESPS Deadlines Delayed (Inside EPA)
- Tax extenders debate rekindled? Wyden pushes to revive energy breaks set to die off (Politico Pro)
- Wyden Eyes FAA Bill As Extenders Lazarus Pit (Politico “Pro Report”)
- Tax Extenders Debate Rekindled? (Politico Afternoon Energy)
- Wyden eyes aviation bill for renewable power tax breaks (E&E News)
- 2016 National Renewable Energy Policy Forum: What’s Next? Driving Growth in a New Policy Landscape Explores a World of Clean Power Plans and Favorable Tax Incentives; Exposes Potential Cracks (Advanced Biofuels USA)
- Working on renewables (Politico Morning Tax)
- Shifting Clean Power Plan Deadlines ‘Premature': McCabe (Bloomberg BNA)
- Tech money, lobbying power boost renewables (Argus Media)