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What President Obama's Budget Means for Our Clean Energy Future

David Murray, Program Assistant, Energy and Transportation, New York City

Earlier this month, President Obama submitted his proposed FY 2015 Budget to Congress which proposes to continue the powerful momentum of renewable energy growth from 2013.

This year’s proposed budget contains $27.9 billion directed to the Department of Energy, a 2.6% increase from last year.  Feel free to sift through the 208 page document on your own; but thanks to several tantalizing hours awaiting the delayed True Detective finale, yours truly had plenty of time to piece through the budget and see how it will help bring clean energy options, like wind and solar, to communities across the country. So what does the President want to do?

Keep the Wind Industry Thriving

Drive through the Plains and you’ll see American made energy at its best. South Dakota and Iowa already meet over a quarter of their electricity needs from wind; not only do we need to keep that number growing, but offer the rest of the country clean energy options. That’s why President Obama not only wants to extend the Production Tax Credit, but make it permanent.

Texas Wind Farm- Courtesy Wikipedia Commons

The PTC is a federal tax credit that has helped to level the playing field for clean energy projects, such as wind farms or geothermal projects, so to compete with fossil fuels that have enjoyed billions of dollars in government subsidies over many decades. The PTC has spurred wind development across the U.S., bringing much needed investments and jobs to states. Unfortunately, when Congress lets the Production Tax Credit expire, like it did in 2013, it creates a sharp decline in industry growth and layoffs.

Making the PTC permanent, would provide investors a clear signal that wind is a good investment for years to come. It would help secure the industry’s 85,000 jobs, and open up new opportunities across the country to innovative projects. If you want to read about them, check our affiliate Environmental Entrepreneurs’ (E2) website, Clean Energy Works for Us. Hearing the stories of clean energy workers across the country will make you proud of the President’s commitment to further bolster the industry.

Solar Policy Works, But Needs Changes

Solar power in the U.S. grew an astonishing 41% last year, making 2013 a record year for installations. The President hopes to continue that momentum by directing $282 million in discretionary funding for solar. E2 tracked more than 21,000 jobs announcements in the solar industry last year- not just in the Sun Belt, but in untraditional states like Tennessee, Utah, and Ohio. A recent census by the Solar Foundation revealed more than 140,000 Americans employed in solar, representing a near 20% increase in employment growth since 2012.

Works Install Solar Panels on Walmart Store - Courtesy WalmartHowever, industry advocates are a bit concerned a key policy change from the budget. The President suggested letting the Investment Tax Credit (ITC) expire in 2016, and replace it with a Production  Tax Credit thereafter. What   exactly does that mean?


Don’t fall asleep yet, I promise to be quick. The ITC is important to solar energy because it helps attract third party financing, or investors to shoulder some of the high up-front costs of solar power. By providing a 30% tax credit for commercial and residential installations, the ITC has enabled companies like SolarCity or Sunrun to install panels without the company or owner shelling out the cost of the system. Instead, banks or financial institutions can pay the up-front cost, and receive the tax credit for the investment. Third party investors were critical to last year’s solar boom.

Industry advocates fear a production tax credit for solar – as proposed by the President- will not keep the industry’s momentum. Solar installation could only receive the credit after the project is up and running, thus it would be more difficult for solar developers to attract third party financing. At NRDC, we believe there should be a suite of incentives for solar energy, distributed across the value chain. The industry should be supported by research grants, manufacturing and investments tax credits, as well as strong net metering and interconnection standards to facilitate grid integration. 

Feel like diving in more to federal and state solar policy? Nathanael Greene explains more here in a recent post.

Taxpayers Can Stop Paying for Industries to Continue Polluting the Planet.

The President suggested Congress rethink the $8 billion in oil and gas companies have received annually, affirming the U.S. “should not devote scarce resources to subsidizing the use of fossil fuels produced by some of the largest, most profitable companies in the world.” Burning fossil fuels chokes our planet, devastates our mountains, contaminates our air, and pollutes our water. As my colleague Franz points out, the industry is mature, wealthy, and wields extraordinary global power. So why does the U.S. government keep shelling out cash to them? Good question. We could ask one of the oil industry’s 700+ lobbyists, or consider the influence of $141 million in lobbying expenses can buy.

President Obama hopes to slash fossil fuel subsidies by $4 billion, a solid start to shifting the government’s priorities away from dirty sources of energy and toward a cleaner future.

Let’s Unlock the Best of American Innovation

During the space race, President Eisenhower launched the Defense Advanced Research Projects Agency, or DARPA, which was designed to pursue research and development of pioneering technologies that would strengthen national security. Eisenhower knew this technology wouldn’t receive enough private sector investment because of the risk, thus DARPA could get the ball rolling on revolutionary ideas. Sure enough, the agency would later be credited for developing the internet (!), GPS, speech recognition and cloud technology.

Fifty years after the creation of DARPA, President Bush saw United States security interests were deeply rooted in energy, and created Advanced Research Projects Agency-Energy, or ARPA-E. ARPA-E projects have attracted $625 million in private investment; program funding has led to the formation of twenty-four new companies. One company, Ideal Power, received ARPA-E funding in 2011 to develop cheap, lightweight electric power converters. Last December, Ideal Power announced it had raised $17.5 million for its initial public offering.

That’s why President Obama hopes to allocate $325 million to ARPA-E, a 16% increase from last year. This type of funding is critical to ensuring the best renewable technologies reach market penetration and that the U.S. is the global leader in advancing them.

Our Clean Energy Future Rests in Congress’s Hands

How each chamber edits the Budget is crucial, that’s why it’s important our leaders – Republican and Democrat alike- to know how vital the President’s proposals on clean energy are to keeping our economy strong.

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