When I moved to Washington D.C. last September I was thrilled by the idea of living in the Capital of the United States. At the same time I had some concerns regarding the sustainable energy scene and how the current federal policy and cutbacks would affect the industry.
During the past few months I found myself talking to many organizations in D.C. area working for the promotion of renewable energy and energy efficiency policies and programmes in the United States and internationally. I saw a vibrant community of dedicated professionals and experts that are working hard everyday to support the continuation of federal policy and programmes for a sustainable energy future such as the ENERGY STAR program[i], the Appliance and Equipment Standards program[ii], and the Weatherization Assistance Program[iii] to name a few.
Is this enough?
In my professional experience I learned about the importance of both the “bottom up” and the “top down” approach. One drives the other, and vice versa. A strong coordination between the two is essential to reach success. When this coordination is weak, there may be a slow down in the entire process that will cause delays and loss of opportunities.
This may happen in the next coming years with the energy policy of the current U.S. administration. However, the process will continue. While the Federal government is fixing to withdraw the Paris Agreement and to cutback incentives for the sustainable energy, the “bottom up” side is growing stronger and will advance the journey towards a low carbon economy.
Several States, cities and businesses in the United States already showed their strong commitment to step up and lead the way to cut greenhouse gas emissions through continuous investments in renewable energy and energy efficiency technologies. This was further confirmed in the “American’s pledge”[iv] submitted during the COP 23 in Bonn, Germany, last November 2017. They realized the many benefits of clean energy from an economic, environmental, financial and health point of view.
The figure below shows the U.S. Non-Federal networks supporting the Paris Agreement.
During the COP, the EU and California agreed to increase cooperation on emissions trading and zero-carbon transportation[v], which could drive other nations to follow the same path.
A recent report on “The Growing Demand for Renewable Energy Among Major U.S. and Global Manufacturers”[vi] finds that 83% of the largest manufacturing companies analysed have set goals to cut their greenhouse gas emissions and 25% have established ambitious renewable energy targets. According to the study, the reasons to invest in renewable energy are the reduction of energy cost, diversification of energy supply, and price volatility risk reduction. Corporate innovation and competitiveness is also part of the motivation to go green. Additionally, the report finds that many manufacturers are actively involved in the energy policy advocacy in their respective States.
The new U.S. tax package
Businesses and individuals are now going over the details of the new tax package signed into law by President Trump just before Christmas. Impacts of the new provisions remains to be seen, however, the good news is that solar, wind, and other clean energy tax credits are preserved (Sec. 3501, Subtitle F – Energy Credits), as well as the tax credit for new plug-in electric vehicles (Sec. 1102, Subtitle B – Simplification and Reform of family and Individual Tax Credits). The bill terminates the permanent credits for solar and geothermal property after 2027 (Sec. 3501, Subtitle F – Energy Credits).
With regards to the energy efficiency, the bill expands the expensing of certain depreciable business assets to include qualified energy efficient heating and air-conditioning systems (Sec. 3201, Subtitle C – Small Business Reforms). On the other side, the bill repeals the authority to issue tax-credit bonds and direct-pay bonds that may affect the uptake of new energy efficiency and clean energy projects at the State and at the local level (Sec. 3603, Subtitle G – Bond Reforms).
According to the American Council for an Energy Efficient Economy (ACEEE), there may be additional tax efforts through the so called “extenders bill” for advancing the energy efficiency in buildings and industry[vii].
Although the Federal level is taking a different direction in a global perspective, the new tax bill seems to preserve many of the tax benefits for clean energy technologies. There are a lot of organizations out there advocating for the continuation of the many programs and policies supporting renewable energy and energy efficiency throughout the country. And several States, cities and businesses have already joined forces and will play a fundamental role in the “clean energy transition” game.
About the Author: Silvia Zinetti, a regular contributor to EiD, is a sustainable energy expert and policy advisor, based in Arlington, Virginia.
[vi] The Growing Demand for Renewable Energy Among Major U.S. and Global Manufacturers, David Gardiner and Associates, September 2017 https://www.dgardiner.com/dga-publishes-white-paper-growing-demand-renewable-energy-among-major-u-s-global-manufacturers/