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.”
Will Congress pass a "tax extenders" package before the end of the year that includes the following:
- Treasury Department grant program for renewable energy 9.4%
- Ethanol subsidies 9.4%
- Both 6.3%
- Neither 75%
Treasury Department grant program for renewable energy
"Despite all the tough talk about reducing spending, it is shaping up to be business as usual with respect to both the extenders and the approps bills."
"The 1603 grants barely made it through last year's cut, and another extension does not appear viable right now. The biofuel blender's credit will get cut again, but not completely."
"The ultimate survival subsidy—they may not last forever, but likely to make the cut this round."
"No way on either of them. In fact, chances of ANY extenders this year, except maybe the payroll-tax cut, are slim to none."
"I can't imagine ethanol subsidies dropping out just before an election year—too risky for both parties, even though it's absolutely the right thing to do. And I'm going to be optimistic and say that 1603 will make it through by the skin of its teeth again this year, because it's got such strong industry backing."
"Dysfunction reigns! Nothing will get done."
"The age of big spending on marginal sources is over for now."
"What used to be easy in past Congresses is no longer easy, and the odds of an extender package are well below 50 percent."
"There is no momentum for ethanol subsidies whatsoever. Other energy extenders will likely be extended and retroactively extended sometime next year."
National Journal’s Energy and Environment Insiders Poll is a periodic survey of energy policy experts. They include:
Jeff Anderson, Paul Bailey, Kenneth Berlin, Andrew J. Black, Denise Bode, Kevin Book, Pat Bousliman, David Brown, Neil Brown, Stephen Brown, Kateri Callahan, McKie Campbell, Guy Caruso, Paul Cicio, Douglas Clapp, Eileen Claussen, Steve Cochran, Phyllis Cuttino, Kyle Danish, Lee Dehihns, Robbie Diamond, David Di Martino, Bob Dinneen, Sean Donahue, Jeff Duncan, John Felmy, Mike Ference, David Foster, Josh Freed, Don Furman, Paul Gilman, Richard Glick, Kate Gordon, Chuck Gray, Jason Grumet, Christopher Guith, Lewis Hay, Jeff Holmstead, David Holt, Skip Horvath, Bob Irvin, Bill Johnson, Gene Karpinski, Joseph T. Kelliher, Brian Kennedy, Kevin Knobloch, David Kreutzer, Fred Krupp, Tom Kuhn, Con Lass, Mindy Lubber, Frank Maisano, Drew Maloney, Roger Martella, John McArther, Mike McKenna, Bill McKibben, David Miller, Kristina Moore, Richard Myers, Aric Newhouse, Frank O'Donnell, Mike Olson, T. Boone Pickens, Thomas Pyle, Hal Quinn, Rhone Resch, Barry Russell, Joseph Schultz, Bob Simon, Scott Sklar, Bill Snape, Jeff Sterba, Christine Tezak, Susan Tierney, Andrew Wheeler, Brian Wolff, Franz Wuerfmannsdobler, and Todd Young.
This article appears in the December 7, 2011, edition of NJ Daily.