Environment & Energy
Related: About this forumRenewable/Efficiency Spending In ARRA In 2009 Did Far Better Than Thought; No Such Plan Now
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Joseph Aldy, the sole economist on Obamas energy and environment transition team whos now a professor of public policy at Harvard University, said that one way to see the enormous success of the Recovery Act was to compare the U.S. Energy Information Agencys pre-2009 predictions for wind powers growth with reality. We blew it away, he said. And when I mean blew it away, I mean that by 2011, we were up to what the EIA forecast we would have installed by 2030. The world in which we had 80 gigawatts of wind by 2020? No one envisioned that.
So how did they do it? $90 billion, for starters. The federal government had never spent so much money to support clean energy. But it wasnt simply the direct boost from stimulus spending. Browner said that one of the most innovative parts of the Recovery Act was a move to turn tax credits into cash for energy developers. Then and now, federal tax credits help cover the cost of many renewable energy projects, even though most small energy companies dont owe enough taxes to the government to take full advantage of them. Developers would typically sell the tax credit to big banks, for something like $0.90 on the dollar. They would get the cash they needed, and somebody would get the tax credit, she said.
The financial crisis upended everything, and markets of all kinds collapsed, taking banks down with them. That tax credit market disappeared, like literally overnight, Browner said. Some of the biggest players in the market were financial firms like American International Group, or AIG, the now-defunct Lehman Brothers, and others which either collapsed or teetered on the edge of bankruptcy. So the Recovery Act did something unprecedented. Instead of the tax credit, the federal government offered developers cash for up to 30 percent of their project costs, unlocking a bottleneck at the heart of renewable projects and ultimately pouring $25 billion into green energy. Developers soon started building new solar plants and wind farms again.
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Its hard to imagine any of this legislation getting passed without a new occupant of the White House and a Senate taken over by Democrats. In the decade since passing the Recovery Act, Congress has shown little interest in supporting clean energy nothing like the $90 billion invested under the Recovery Act. The massive $2 trillion rescue package passed by Congress in March didnt include any climate-friendly provisions; in fact, some media outlets have reported that fossil fuel companies have recently received millions of dollars in loans intended for small businesses.
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https://grist.org/energy/obamas-recovery-act-breathed-life-into-renewables-now-they-need-rescuing/