LAS VEGAS--The Obama administration is trying desperately to head off what many economists say is a coming crash in the clean-energy industry. To make the case, Vice President Joe Biden on Tuesday equated spending on clean energy during a recession to spending on crucial weapons and technology during a war, previewing a theme likely to recur this fall as the White House and Democrats try to save what’s left of the federal clean-energy budget.
“If we shrink from deciding we’re going to lead in the area of renewable energy, then we will make the worst decision we’ve made in this nation’s history,” Biden said, delivering the keynote speech at the fourth annual National Clean Energy Summit, hosted by Senate Majority Leader Harry Reid, D-Nev.
In the next year, the small but growing U.S. clean-tech sector, which President Obama sees as crucial to transforming the nation’s energy economy, will face a trifecta of challenges: Roughly $30 billion in federal spending the industry enjoyed in the 2009 stimulus law will come to an end; the congressional panel charged with slashing $1.2 billion from the federal deficit this fall will likely target the government’s existing clean-energy tax credits, subsidies, and research funding; and new energy policies that Obama once hoped would spur massive market demand for renewable energy—such as a national clean-energy mandate or a price on carbon pollution—will be halted in Congress with a Republican-controlled House.
“Big clean-energy projects that have relied on a combination of federal tax incentives, subsidies, and loan guarantees are almost certain to see that go off a cliff this fall,” said David Victor, an energy-policy expert at the University of California (San Diego). “It’s going to be a big problem for the industry.”
Energy Secretary Steven Chu and Navy Secretary Ray Mabus joined Biden and Reid for the energy summit, a gathering of alternative-energy advocates that for the past three years has set the table for the congressional clean-energy agenda. The leaders sounded a defensive note, acknowledging that the industry’s government support is under attack, and urgently sought to make the case to keep clean-energy spending even as other government programs are slashed.
Biden cited a host of government spending programs on clean energy—the same ones likely to come under the deficit super committee’s budget scalpel—and said that while they do cost the government money, the benefits to the economy are worth it.
“There are 66 wind turbines being built in Spring Valley, Nev., thanks to the clean-energy manufacturing tax credit called 48c,” Biden said. “Yes, it costs taxpayers $2.3 billion—but this is supporting 60,000 jobs across the country.”
“In the budget debate, we had the first thing the other gang wanted to do was get rid of all these incentives,” said Biden. “ 'They are not worthy,’ they argue, ‘they cost too much money, we can’t afford it.’ I say if we don’t have these incentives, if we don’t set these goals, we are going to lose.”
Biden equated investing in clean energy as the economy struggles to investing in technology and crucial infrastructure during a war.
“Had we listened to those voices in 1774, private enterprise and the government would not have collaborated to build the rifles with interchangeable parts that we needed to win the Revolutionary War,” Biden said. “If President Lincoln had listened to those voices during the Civil War, he wouldn’t have paid private railroad companies $16,000 for every 40 miles of track on the Transcontinental Railroad they laid down. And if President Eisenhower listened to those voices in ’57, he would never have invested $25 million in a program called ARPA ... which eventually created the Internet.... President Obama and I are not going to listen to those voices, and I hope to God you aren’t, either.”
Chu echoed those themes. “We have to take actions to reduce the federal deficit. In these hard times, people argue that we cannot afford to make continued investments in clean energy. Even if we could afford it, others argue that the best thing the government can do is ‘get out of the way’ of business, and let the free market work.... We will be facing hard budget choices. But even in times of national stress, and even as we focus on job creation, we must do so with our eye on the future.”
But the Democrats were speaking largely to the converted at the conference, and conceded that saving clean-technology funding will be a fierce fight, especially as Democrats try to cut roughly $4 billion in annual subsidies currently enjoyed by the oil industry.
“We would hope that our Republican friends would join us, but we recognize that there’s a lot of political games being played,” Reid said. “But it’s so clear to me that we have to wean ourselves from fossil fuels. It’s a fight we’re going to have and we think that we can win this.”