WHY TAX CREDITS ARE NEEDED, WHY OIL SUBSIDIES ARE NOT
With expertise in both economics and energy, Severin Borenstein, E.T. Grether Professor of Business Administration and Public Policy in the Economic Analysis and Policy Group of the Haas School of Business at the University of California at Berkeley AND director of the University of California Energy Institute AND a faculty member in several other UC Berkeley departments, is the ideal expert to address the oil and gas industry’s objection to the U.S. House of Representatives’ plan to fund vital New Energy Production Tax Credits (PTCs) and Investment Tax Credits (ITCs) by shifting money away from what the New York Times called “wholly unnecessary” subsidies to oil and gas.
First, the oil and gas industry position, reasonably stated by Ray Connolly, spokesman for the American Petroleum Institute: "We need to produce as much domestic energy of all types as possible, and that includes renewable energy…But the way to encourage it is not to change the tax law in such a way that provides a disincentive for domestic oil and natural gas development."
Now Borenstein: “Oil companies don't need exploration tax breaks because the U.S. will never produce enough oil to affect the world market…And as long as Americans remain unwilling to pay the true cost of fossil fuels -- taking into account pollution, traffic congestion and greenhouse emissions, for example -- shifting the money into renewable energy is a good idea…It won't make a huge difference in the overall energy supply, but it will make a huge difference in whether renewables continue to grow…If we cut them off, it will choke the market."
A recent report indicted that if the tax credits are not extended it could cost the U.S. up to 116,000 jobs and $1.9 billion in investments in 2009. Not a great plan under any circumstances, it would be downright stupid of the Senate to let that happen to a booming industry in a sluggish economy.
Congressman Jerry McNerney (D-Ca): "Oil companies are making record profits. This allows us to shift a subsidy from a highly developed, established business that is highly profitable that doesn't need the tax subsidy."
A lot of this investment goes to Europe and China without those tax credits. (click to enlarge)
Solar, wind tax credits may expire
Lisa Vorderbrueggen, March 25, 2008 (Contra Costa Times)
Congressman Jerry McNerney (D-Ca); Mark Tholke, project manager, wind energy company enXco;
They don't provide the jobs but the Inheritor-Investor class likes the fossil fuels industries anyway. (chart from the Union of Concerned Scientists - click to enlarge)
McNerney and New Energy industry representatives held a pre4ss conference March 24 to talk about the serious blow to the local economy the Senate’s refusal to extend Production Tax Credits (PTCs) and Investment Tax Credits (ITCs) to the New Energies.
The current tax credits expire at the end of 2008.
The press conference was held at Walnut Grove Elementary School in Pleasanton, Ca., but it could have been any community in the U.S. and the implications of the Senate’s refusal to fund the ITCs and PTCs would be relevant.
Given the proper incentives, the Renewable Energy (RE) industries will provide a lot of jobs to a lot of Americans over the next quarter century. (click to enlarge)
The U.S. House of Representatives sent a bill to the Senate funding the PTCs and ITCs by shifting $17.65 billion from unnecessary subsidies to the oil and gas industry. The Senate seems determined to reject the bill on the grounds that subsidies established in the past to buoy a struggling oil and gas industry remain vital to an industry rolling in hundreds of billions in profits over the last 2 to 3 years.
(slide from Bree Raum at AWEA - click to enlarge)
- Congressman McNerney: "Inconsistent support from the government is allowing this technology to go overseas…We want to make sure we institute policies right here in the U.S. that encourage and help renewable industries become settled."
- Tholke, enXco: "It's crucial that the federal government deliver an extension…I can see no other route than layoffs if we can't get a production tax credit extension. It's so tremendously valuable to wind energy production and viability, and without it, we can't compete."