GOT TAX CREDITS, CAN’T GET FINANCING: WHO WILL FIX THIS?

Stuart Cohen decided the answer to his skyrocketing home power and heating bills was a solar panel installation. Estimates showed he could cut his monthly bill from $500 to $200 with a $38,000 system. He was for it – but the bank wasn’t. Cohen couldn’t get financing.

It’s possible the recently enacted financial rescue package, containing both a long-term extension of solar energy investment tax credits and measures to improve the availability of loans, will help.

Kevin MacLeod, owner, KPS Solar and chairman, Long Island Solar Energy Industries Association, on what the solar business on Long Island would be like without the package: "We'd be looking at a disaster here…"

Cohen knows his dilemma is the nation’s: "I don't know how they're going to fix the economy…They've got us in so deep." In other words, how can the next President and his Congress make sure there is money to finance what the tax credits incentivize?

Has this experience moved Cohen toward either of the presidential candidates? Cohen: "I don't vote for anybody…I don't believe in them."

Whoever can make people like Cohen into believers can win the presidency. Making them believers may require the candidates to tell the truth and admit their New Energy development ambitions will be hamstrung, if not ruined, by the $9+trillion national debt that will be the result of the $700 billion rescue package.

According to Mark Harrington, the writer who described Cohen’s dilemma, these are the challenges the next President will face if he is going to break through the impasse: “Finding ways to bring down high prices of gasoline and home heating oil…Increasing clean-energy sources such as wind, solar, nuclear, and the number of hybrid/electric vehicles amid a slackening economy…Cutting greenhouse gas emissions…Expanding and modernizing the system of power lines and pipelines used to deliver energy throughout the nation…”

Both candidates’ plans, as assessed by analysts: Long-term strategies with high costs.

Exception: A windfall profits tax/consumer rebate from Obama.

Martin Cantor, director, Long Island Economic and Social Policy Institute/Dowling College: "All these new energy sources have a huge capital investment that has to be picked up by the ratepayer because the federal government doesn't have the money for it…I think they are going to have to back off a lot on their shopping lists."

McCain's centerpiece: 45 new nuclear power plants by 2030, at a cost of $6 billion per plant. But, with most of the federal budget tied up in the rescue plan, there’s a problem.

Jerry Taylor, senior fellow, the conservative Cato Institute: "The nuclear energy industry tells us they can't borrow any money from Wall Street ... unless the federal government underwrites those loans…"

Obama's centerpiece: $150 billion investment in building New Energy, including the development of 5 million "green-collar" jobs.

Ashok Gupta of the Natural Resources Defense Council calls NOT spending money on such a plan "narrow thinking… We have to look to technology, energy efficiency and renewables to be the answer…That's the only way - to invest our way out of the [economic] problems."

McCain could, of course, say the same about his plan.

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Credit crunch creates Catch-22 on energy
Mark Harrington, October 6, 2008 (Newsday)
and
Economy may disrupt candidates’ energy plans
Mark Harrington, October 6, 2008 (Newsday)

WHO
Stuart Cohen; Presidential candidates John McCain and Barack Obama

WHAT
- Catch-22: Tax credits for installing a solar system don’t mean anything if there is no money with which to finance a solar installation.
- After Newsday writer Mark Harrington profiled an energy consumer and portrayed his dilemma, Harrington assessed the candidates’ energy policies.

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WHEN
- Cohen’s dilemma is current.
- The election is November 4.

WHERE
Cohen lives in Deer Park, NY.

WHY
- Cohen’s energy bills: Long Island Power Authority (LIPA), $495/month (electricity); National Grid, $30/month (natural gas for the kitchen stove and clothes dryer); $697 to fill a 200-gallon home heating tank to fuel the furnace for the winter.
- The Newsday summary of the candidates’ energy positions, verbatim:
MCCAIN -
DRILL, BABY. DRILL. Would push to expand domestic oil exploration and production and lift the moratorium on drilling in the outer continental shelf. Wants to expand the use of domestic natural gas, and would commit $2 billion a year for clean-coal development.
NUCLEAR POWER. Calls for constructing 45 new plants by 2030, which cost upward of $6 billion each. Around 20 percent of U.S. power is produced by nuclear reactors.
CLEAN CARS. Proposes a tax credit of $5,000 for Americans who purchase new, zero-carbon-emission cars. Also has proposed a $300-million prize to an innovator who can come up with vastly improved battery technology for use in electric cars.
RENEWABLE ENERGY. Would encourage development of wind, solar and other technologies by standardizing the "patchwork" of tax credits that make them commercially feasible. Calls for an "evenhanded system of tax credits" until the market develops to the point that they are no longer necessary.
OTHER INITIATIVES. Supports a cap-and-trade system to encourage a new market for pollution-reducing ideas and technologies. Calls for greater deployment of smart meters and a modernized electric grid. The cap and trade system allows corporations or national governments to trade emissions allowances under an overall cap, or limit, on those emissions.

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OBAMA -
RENEWABLES. Proposes spending $150 billion over 10 years to spur deployment of wind, solar, geothermal and other technologies. Wants 10 percent of U.S. electricity to come from renewables by 2012, and greenhouse gas emissions reduced by 80 percent by 2050.
GAS PRICES. Calls for immediate relief at the pump for U.S. citizens through a $500 rebate for individuals, $1,000 for couples - financed by a windfall profits tax on oil companies. Would push to eliminate loopholes for oil market speculators.
CLEAN CARS. Proposes putting one million new plug-in electric vehicles on the road by 2012 with the help of a $7,000 tax credit for the purchase of each clean vehicle, hybrid or electric. Would provide $4 billion in "retooling" tax credits and loan guarantees to domestic car companies converting to the cleaner vehicles.
ENERGY EFFICIENCY. Would push to reduce the nation's electricity demand by 15 percent by 2020. Wants to make all new buildings zero-emissions, which means they would release no pollutants into the environment, by 2030.
OTHER INITIATIVES. Backs "safe and secure" nuclear energy, but only if issues of proliferation of nuclear fuel and waste are addressed. Backs a cap-and-trade system of anti-pollution credits, and development of zero-carbon clean coal.

QUOTES
Geoffrey Dabelko, analyst, nonpartisan Woodrow Wilson Center: "The financial crisis may constrain or delay the opportunities for doing all that…"