Effects of the Fiscal Cliff deal on green energy and investment

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Job losses are only partially due to the threat of expiring tax credits. According to the Washington Post, the wind energy tax credit is worth $22 per megawatt hour, and covers up to 30% of the cost of the project, so the possibility of losing that tax credit could would have cut wind energy installations from a record 12,000 MW in 2012 to 2,000 in 2013 is sobering enough, but it’s the erratic nature of our energy policy that’s really keeping wind from becoming a true force in our energy mix.

By keeping the wind energy industry guessing, Congress and the President are not allowing investors to really jump into the fray. Google has led the way in investing in clean energy. They’ve invested almost a billion dollars in solar and wind projects, enough to help generate 1.8 GW of power. How much Google would have invested without tax credits is anyone’s guess. Also anyone’s guess is how much MORE investors (both institutional and individual) would invest if we had a consistent energy policy.

(If you’re interested in biofuels, here’s some thoughts on stable government policy and biofuel investment, and Gas2.org did a great job covering the fiscal cliff regarding biofuels and alternative transportation credits).

The additional problem, and one we harp on regularly here at Inspired Economist, is that coal, gas, and oil are subsidized, too…both literally and figuratively. Make dirty energy have to account for its true costs, and the cost of coal would exceed that of wind by a 3:1 margin. So extending the wind energy tax credit…should that have even been on the table? That tax credit, I’d argue, should be permanent so long as we continue to subsidize dirty forms of energy with direct subsidies and by paying for health care for all the ailments it causes.

Photos from Shutterstock

 

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