Federal Funds For Green Energy Drying Up–What’s Next?
Energy Secretary Steven Chu addresses the media at the National Clean Energy Summit while Senator Harry Reid of Nevada and John Podesta of the Washington-based Center for American Progress look on. Both Reid and the Center for American Progress were sponsors of the summit.
Jude Joffe-Block
August 31, 2011

LAS VEGAS -- In remarks at the National Clean Energy Summit in Las Vegas, Vice-President Joe Biden said America has a choice: Lead the world in renewable energy innovation, or fall behind.

In the southwest, renewable energy has been touted as a way to transform the regional economy and create jobs. It's supporters point to the region’s sunny days, pockets of geothermal activity, windy spots and large stretches of empty land. The promise of this new industry has become something of a mantra of political leaders-if not yet a widespread reality.

"If we don't lead in this new energy technology, we are going to follow," Biden said Tuesday, before a crowd of more than 700 at the Aria Hotel Resort and Casino Convention Center. "And I'd hate like hell to be trading the importation of oil for the importation of new technologies. Neither is very acceptable."

But as Biden and other political leaders pledged support for more government investment in green energy, the federal funds that subsidize the budding industry are threatened.

At the summit, the energy firm Enel Green Power North America announced it will begin construction on a new project in northern Nevada combining solar photovoltaic technology with geothermal–the first hybrid plant of its kind.

The Enel project, and most large-scale renewable energy plants under construction, benefited from federal subsidies. According to public records, Enel's geothermal plant received tax credits in the form of a grant of more than $40 million from a fund created by the American Recovery and Reinvestment Act, better known as the stimulus.

"We will need subsidies for a little while, but not certainly for the indefinite future," said Secretary of Energy Steven Chu at a press conference announcing the Enel project. Chu said the cost of producing solar energy is dropping and renewable energy is likely to be competitive with traditional forms of energy in the next 10 to 20 years. "And it is certainly going to be less than we need for other energy companies, like oil and gas," Chu said of the needed subsidies.

The Obama administration has invested over $90 billion in clean energy and energy efficiency through stimulus funds, according to Chu.

But many of those stimulus dollars are scheduled to expire in the very near future. One pot of money will dry up at the end of September. It has awarded federal loan guarantees to more than 30 renewable energy projects, most of which are in the West.

At the summit, Chu spoke of the need to create a long-term federal funding structure to support renewable energy.

The expiring subsidies have everyone from entrepreneurs to state governors concerned. In a recent letter, a bipartisan association of 24 Governors asked the White House to extend an expiring tax credit for wind projects for seven additional years.

"It is important to have consistency in policy to support the continued development of wind manufacturing in the United States," the letter read.

And other federal initiatives to underwrite clean technology are at risk of being de-funded in future budget negotiations in Congress. Federal financing for clean energy promises to be a looming fight in Washington.

"They say our economy is too fragile for us to be bold," said Biden of those who oppose public investment in renewable energy. "Well, I say to you, if we don't make these investments, if we don't set these goals, we are going to lose."