The political firestorm that erupted when solar-panel maker Solyndra defaulted on its federal loan is sure to affect clean-energy tax credits that are set to expire at the end of the year, an overwhelming majority of National Journal’s Energy and Environment Insiders say.
Several clean-energy incentives will end on Dec. 31 if Congress does not renew them for at least another year. These include the Treasury Department’s 1603 grant program for renewable energy and tax credits for the ethanol industry. Last year, Congress passed a tax package in the 11th hour that included both.
This time around, however, Insiders think that such programs may become collateral damage of the Solyndra scandal. Nearly 85 percent of Insiders say that the politics surrounding Solyndra will hurt the chances of extending the 1603 program.
“The House has gone after the White House like an angry pit bull on Solyndra. There is no way they are gonna let the 1603 program through,” said one Insider.
Though the 1603 program is entirely separate from the Energy Department’s loan-guarantee program that assisted the now-bankrupt solar company, it holds the same political value for its opponents. The program, which allows renewable developers to take advantage of a 30 percent grant in lieu of future tax credits, was created through the stimulus bill—just like the loan-guarantee program.
“Republicans have pushed the anti-Solyndra, anti-clean-energy narrative so aggressively that they are willing to throw the baby out with the bathwater and the basin it was in as well,” said one Insider.
Some Insiders argued that opponents of the incentive were going to let it expire anyway—with or without the Solyndra controversy. One Insider said that the 1603 grant program is “too expensive to survive in this fiscal environment,” and another said that Solyndra is just a “convenient excuse” for the GOP to do what it was going to do regardless.
“I think it’s much less about Solyndra, and more about the fact we’re in a deficit situation,” explained one Insider.
The deficit situation and the general fiscal environment in Congress won't just affect the 1603 program, but it will also affect the tax credits for the ethanol industry. Seventy-five percent of Insiders said that Congress will not pass any tax-extenders package before the end of the year.
"The age of big spending on marginal sources is over for now," said one Insider.
Both programs barely made the cut last year and "the odds of an extender package are well below 50 percent" this time around, said another Insider.
Will the political firestorm over Solyndra hurt the chances of extending the 1603 program?
- Yes 84%
- No 16%
“Ironically, the Treasury grant program (in contrast to [the Energy Department’s] loan-guarantee program) has been extremely well-managed. Nonetheless, Republicans—who hate the grant program anyway—will use Solyndra to oppose an extension of the grant program.”
“The 1603 grants are too expensive to survive in this fiscal environment regardless of Solyndra (which did not receive a 1603 grant). But Solyndra is certainly making it harder for renewable supporters in Congress to muster any further support.”
“Unfortunately, it has become the lightning rod that people will remember.”
“Hurt but not extinguish, is my guess.”
“Even GOP cravenness won’t stop this successful program.”
“Solyndra is a convenient excuse for House conservatives who, as Rep. [Cliff Stearns, R-Fla.] explained it, want to leave the $2.3 trillion clean-energy market to China to kill 1603. They would have killed it without Solyndra.”
“I think it’s much less about Solyndra, and more about the fact we’re in a deficit situation, the programs are expensive, and as far as Section 1603, the tax incentives themselves remain.”
This article appears in the December 7, 2011 edition of NJ Daily.