Lame Duck Congress to Take Action on Grants?

Will the political change in Washington spell doom for meaningful progress in clean tech? That’s the question being asked by many since the mid-term election swept a Republican majority into power in the House of Representatives.  With deficit reduction as the rallying cry of the legions that have taken half of Capitol Hill, the survival prospects for clean energy legislation heading into next year seem remote. Make no mistake; Americans have given their consent to a new group of politicians, many of whom still doubt the reality of climate change and have announced their eagerness to reverse course on the major legislative initiatives that have emerged from the Obama White House.

Signaling a drive to use the lame duck Congress to try to preserve the administration’s clean tech plans from the budgetary axe, Vice President Joe Biden last week underscored White House support for a program of federal grants set to expire at the end of the year.

“We have to continue to invest in clean energy, so we’re also calling on Congress to extend a program that has been really successful,” Biden said.

Funded by the American Recovery and Reinvestment Act of 2009 (Recovery Act), the Section 1603 Treasury Grant Program has been praised by sustainable energy developers for providing readily available infrastructure grants of up to 30 percent of project costs. Originally offering tax credits as a method of attracting financing, the program was altered to supply direct grants to further stimulate demand for investors.

According to the Solar Energy Industries Association (SEIA) , the program has supplied critical financing for more than 1,100 solar energy systems in 42 states, including 97 solar thermal installations.  Responsible for the creation of thousands of jobs in construction and installation, 1603 has helped to bring 1,000 megawatts of solar-electric capacity online this year, enough power for up to 220,000 homes, the SEIA said.

The 1603 program has been enthusiastically endorsed by the key players in the solar industry.  Testifying before U.S. Senate Committee on Environment and Public Works early this year, Robert Gillette, Chief Executive Officer of solar powerhouse First Solar, warned about the consequences of allowing the program to expire “just as it is critically needed to bring projects on line and attract investors for new development projects. It is vital that the grant program be extended though December 31, 2012 in the upcoming Jobs Bill.”

The program has been especially beneficial to wind power projects, which received more than 80 percent of the nearly $2.6 billion in Section 1603 grants that had been disbursed by the first quarter of this year.  The possibility of the demise of a key channel of support for windpower is a matter of grave concern to the industry, which already experienced a 71 percent decline in installations from last year.

Referring to a study by the U.S. Partnership for Renewable Energy Finance, the SEIA cautioned that a refusal to extend the 1603 program could result in a 56% decline in the renewable energy sector as a whole.

“The renewable energy industry is facing a crisis, a market cliff at the end of the year, requiring urgent action,” said Michael Eckhart, President, American Council on Renewable Energy. “The impact of the financial crisis goes on, and if not addressed, the situation risks losing thousands of jobs that were just created.”

Now waddling toward the precipice, the lame duck will be gone before we know it. Perhaps it is time for the climate constituency to rethink its tactics; perhaps it is time to mobilize.

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