Energy Cornucopia

I've just spent the last several hours scanning through the conference version of the American Recovery and Reinvestment Act of 2009, a.k.a. the "stimulus bill." This is the final version of the bill that President Obama will sign into law in Denver, Colorado, later today. Anyone who was fretting that the stimulus would not place sufficient emphasis on energy should be reassured--unless they include nuclear power within their definition of energy. Among its many other features, the bill provides a cornucopia for renewable energy and efficiency. Merely summarizing all of the energy provisions of the bill would take up a week's worth of my blogging. After skimming it, however--all that could be done in the time available--I can't help wondering how much of it can actually be spent rapidly enough to have a noticeable effect on the recession in which we find ourselves.

Perhaps as a result of the urgency surrounding its passage, the Congress's stimulus bill process was hardly a model of constituent transparency. As of this writing, neither of the sites upon which I usually rely for legislative text, http://www.govtrack.us/ and the Library of Congress's http://www.thomas.gov/ site, displays the final conference version of the stimulus bill. The White House website has links to the bill at the US Government Printing Office, split up into 5 separate downloadable files. It's not clear whether Members of Congress or their staffs had machine-readable versions of the final bill prior to the House vote on Friday. As it is, I was starting to worry about repetitive strain injury of my index finger, simply clicking through a document search on "energy" in these files.

The highlights include $16.8 billion under the heading of "Energy Efficiency and Renewable Energy", with $3.2 B for energy efficiency & conservation Block Grants, $5 B for the Weatherization Assistance Program, $3.1 B for state energy programs, $2 B for grants to advanced battery manufacturers in the US, $2.5 B for applied research, development and deployment, along with another billion split among alternative fuel vehicle pilot projects, transportation electrification, and energy efficient appliance rebates and Energy Star. And this is only a fraction of the money for energy. There's $4.5 B for Electricity Delivery and Energy Reliability, $3.4 B for Fossil Energy R&D (including clean coal and carbon capture and sequestration), $6 B for loan guarantees for renewable and transmission technologies, and another $1.6 B for energy-related "science"--not further described. I also saw money for the federal government to buy energy efficient motor vehicles, for energy efficiency and renewable energy career training, and more references to "energy and green retrofits" of buildings and facilities than I could count, with significant dollars attached.

As I noted in a recent posting on wind power, the Production Tax Credit (PTC) for wind and other renewable energy was extended by three years beyond its slated expiration at the end of 2009. By itself this provision guarantees that "stimulus" spending--or in this case revenue reduction--will continue through at least 2023. As expected, developers of projects eligible for the PTC were also given two other valuable options. They can either make a one-time election to receive a 30% energy investment tax credit (ITC) in lieu of the PTC, shifting the tax benefit from future actual generation once a project is up and running to the year of construction, or they can apply to the Treasury Department for a tax-free "Section 1603" grant equivalent to either the PTC or the ITC amounts, during 2009 or 2010. There's also a new 20% tax credit for energy research. The big loser here was nuclear power, with the Conference striking $50 B in loan guarantees for new plants.

You don't have to be a big believer in the merits of a fiscal stimulus to see that if all this money hit the ground this year and next, it would certainly have a big impact on the energy industry in general, and on renewable energy, in particular, including investors in the sector. But if the above sums conjure up images of new electric power transmission lines to carry all that new renewable power to where it's needed, an article in today's Washington Post ought to impart some caution. Among other projects, it looks at the Sunrise Powerlink of the San Diego Gas & Electric Co., which was proposed in 2005 and might be finished in 2012. And the Wall Street Journal recently examined the track record of the Department of Energy, which will have authority over large portions of these appropriations, in distributing loan guarantees under a 2007 program. Setting up the approval and accountability systems to manage and monitor additional billions of dollars will be a huge undertaking in its own right, entailing the twin risks of creating impassable bottlenecks or funding scams and scoundrels.

I encourage my readers to browse the bill, if you have the time. You'll find plenty of language in there about oversight and periodic reports to Congress, and I'm sure your Congressman and Senators would be delighted to receive an email from you, emphasizing the need for them to follow through on these requirements. They might also want to think about granting fast-track permitting authority and immunity from frivolous lawsuits for any projects funded under the stimulus, to prevent this from becoming the American Recovery and Reinvestment Act of 2016, instead of 2009.