Tax Policy

Pew's Cuttino discusses outlook for clean energy incentives, state action on renewables policy

As Washington lawmakers consider extending clean energy tax incentives, how are states faring on their renewables policies? During today's OnPoint, Phyllis Cuttino, director of the Pew Clean Energy Program, discusses a new series of policy briefs analyzing state clean energy economies. Cuttino also weighs in on the heated congressional debate over the production tax credit.

Transcript

Monica Trauzzi: Hello, and welcome to OnPoint. I'm Monica Trauzzi. With me today is Phyllis Cuttino, director of the Pew Clean Energy Program. Phyllis, thank you so much for coming back on the show.

Phyllis Cuttino: Oh, thanks for having me. Always a pleasure.

Monica Trauzzi: So in the heat of the congressional debate on tax extenders, Pew has released a collection of policy briefs that take a look at state clean energy economies. Want to quickly get your take on what we see happening on the Hill, the ongoing challenges surrounding clean energy incentives and the impact of sort of these short-term deals. What's the impact on the broader picture?

Phyllis Cuttino: I think it's devastating, this boom-and-bust cycle of renewing tax incentives for a very short time. You know, they're talking about a one-year extension now with this new package. It just does not allow investors or businesses to really plan and invest, and so we've seen it time and time again that when you do have this uncertainty, investors will look for some other place to put their money and, you know, I really feel for the wind industry because they have been subject to this boom-and-bust cycle over and over and over again, and we should have equal treatment for all energy technologies.

Monica Trauzzi: And does the wind industry benefit from a retroactive renewal of the PTC? We're hearing a little bit about that.

Phyllis Cuttino: Yeah, I mean, not too much. What they have said repeatedly is what they really would like to have is some certainty for a certain amount of time. I mean, in the deal that was originally negotiated, of course, there was a phaseout, so the PTC went out to 2017, but it was phased out, and the wind industry said this is something we could accept and live with because by that time, we really believe that we'll be over some of these market barriers and cost competitive, and it allows a certainty to plan for the future and, you know, a retroactive one-year extension. We're all going to be back here talking about this once again next year. And it doesn't matter, frankly if it's just the PTC or the R&D tax credit. All of the industries that are looking at a one-year renewal aren't happy.

Monica Trauzzi: And heading into next year, how optimistic are you about the playing field for clean energy as we head into a Congress that will be controlled by Republicans?

Phyllis Cuttino: Right. Well, it's interesting. I mean, one of the things that we have heard from both the Democrats and Republicans is they'd like to look at tax reform, comprehensive tax reform. We certainly would support some kind of a tax package that would promote parity across all technology, so equal treatment. And, of course, a diverse energy mix. I think that's in America's best interest. So perhaps there's an opportunity to reopen that conversation. Max Bacchus, before he left to become the ambassador to China, had put out a plan that was a technology-neutral plan that was based on emissions reductions and kind of performance of technologies with emissions reductions. So I don't know if that's the answer going forward, but you know, we'd be interested in seeing what the committees are going to put out, and we certainly are going to be active in that debate.

Monica Trauzzi: Of course. And let's dig into those policy briefs. Talk about Texas. That state generates the most electricity in the country. The PUC there also just submitted comments on EPA's clean power plan, saying the rule could cause reliability challenges. So how does clean energy fit into their portfolio?

Phyllis Cuttino: Well, you know, it's interesting because Texas, of course, is a real leader when it comes to the clean energy economy. They have -- they're number one when it comes to wind. They're number one when it comes to industrial energy efficiency. They are a growing solar market. Certainly led by local policy in San Antonio and Austin, which is really spurring that market, so I think they were 13th last year when it came to solar additions. So, you know, Texas is, of course, a state, just like North Dakota, that everyone thinks of as kind of an oil and gas state, but look, you know, they have a diverse portfolio and, you know, they have put policy in place. They have a renewable electricity standard that they've met 15 years ahead of time so, you know, they have been a state that has put some clean energy policy in place.

You know, a newcomer, frankly, to the scene is Georgia. Georgia just announced that they're going to try -- the PUC there is requiring 525 megawatts of solar by 2016, and the effect on the market has been immediate. It is the fastest-growing solar market in the country, and jobs in the solar industry have shot up 225 percent in a year. So this is the kind of impact that policy has. You know, if you look at North Carolina, another of the states in our brief, before they put into place their renewable energy standard, there was not one solar farm. And now, you know, there are 300. So it's really remarkable what long-term policy can do. So it doesn't matter if it's at the state level or at the federal level or even at the international level. That predictable policy is what really matters.

Monica Trauzzi: And one of your briefs is on Michigan. We actually just saw a huge power outage in Detroit. An aging infrastructure is being blamed for a lot of what happened there. How is that state's strong manufacturing sector pushing the clean energy economy?

Phyllis Cuttino: Well, and, you know, Michigan was one of the first states in the Midwest to adopt a renewable portfolio standard, a modest one, but they did. And the impact has been that they have really been able to capitalize on their manufacturing base when it comes to wind. So not only are they deploying wind, but they're also manufacturing wind components, you know, advanced materials, and so that's -- you know, that's another thing that we found in these eight briefs, that no matter what the state is, states are capitalizing on their own unique resources, whether it's, you know, wind in Texas and in North Dakota or it's biomass in Maine and in Georgia, solar in Georgia and North Carolina, states are really capitalizing on their unique natural resources and then they're also harnessing kind of their state's inherent strengths. So whether or not it's manufacturing or innovation, that has really been driving both deployment and investment. And, you know, we looked at just eight states, and what we found is, over the last five years, more than $23 billion was invested in those states when it came to clean energy, and if you look ahead, out 10 years, $83 billion could be invested. So I think there is real incentives for governors and state legislators to kind of stay the track, the path when it comes to policy.

Monica Trauzzi: A handful of states have had success with green banks. Should states be looking into green banks as a source of investment for clean energy projects?

Phyllis Cuttino: We have found that that certainly has been productive for some states and, you know, that's another thing. Each state does different policies, whether at their regulatory or financing or other, and it's -- you know, it's been very individualized with no one-size-fits-all approach with these states. You know, another cases in Georgia, for instance, they have a very wealthy incentive for electric vehicles. Well, they're number one in sales in EVs in the country, Georgia.

Monica Trauzzi: How much of a threat are efforts by ALEC to roll back state renewable portfolio standard? They've really ramped things up this year.

Phyllis Cuttino: They did. You know, and we have seen -- we have -- we're about to release Pennsylvania and we will release Ohio, our Ohio brief next year, but those are two states that have really taken a hard look at their clean energy policy and have either put it on pause or have drawn back from it, and they have seen a decline in investment as a result. So I think state policy leaders should really look at ALEC's efforts and really measure the impact of policy uncertainty or drawing back from policy and what that will mean. So I think it's unfortunate when we have a weakening of clean energy policy. Not sure why clean energy is such a target of ALEC's.

Monica Trauzzi: All right. We're going to end it there. Thank you for coming on the show, as always.

Phyllis Cuttino: Thank you.

Monica Trauzzi: And thanks for watching. We'll see you back here tomorrow.

[End of Audio]

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