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Federal Stimulus Provides Bonanza for Clean Energy Industry

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  • Dec 22, 2020

Extension of tax credits for the solar and wind industry, funding to advance storage technology, a $10 million grant to the Department of Agriculture for a pilot program to provide financial assistance for development of renewable energy in rural communities, and $35 billion in funding for clean energy research across different types of technologies are just some of the sops for the energy industry in the 5,600- page federal government’s latest stimulus package. In a first, the bill also establishes a five-year tax credit for offshore wind farms.

Online publication Utility Dive has a good roundup of the main features of the bill for the energy industry. The bill is also good news for utilities floundering in debt due to non-payment of electric bills. It provides $25 billion in rental relief, money that can be used for overdue electric utility payments.     

While the $900 billion stimulus amount is lower as compared to the $2 trillion package passed by the federal government earlier this year, the latest bill is notable because it has been passed after an historic presidential election. As such, it can be said to represent a study of the government’s priorities for recovery from the current economic crisis.    

“The Energy Act of 2020 provides a down payment on the technologies that will be critical to reducing greenhouse gas emissions in the power sector, industry, and buildings and addressing climate change,” stated Joe Manchin (D- W. Va.), one of the bill’s co-sponsors. “This focus on research, development, and demonstration will create high quality jobs and ensure the United States continues to lead the world in the clean energy future.”

The bill has mostly received a positive response from energy advocates and industry folk. But, as with all policy proposals, there is scope for improvement. A Dec. 17th letter from the American Energy Innovation Council (AEIC) calls for increasing funding in ARPA-E to $1 billion to develop new technologies for decarbonization of the economy. A subsequent panel discussion concluded that carbon capture and green hydrogen should be priorities for new energy tech. The stimulus bill has awarded $35 million to ARPA-E until Sep. 2022.   

Another area where the bill falls short is Environmental Justice (EJ) legislation. Environmental equity has become a flashpoint in recent debates about energy, leading to proposals like the Green New Deal. Low-income communities are disproportionately affected by pollution unlike rich communities, who have failsafe options. Apart from providing funds to low-income communities, the bill does not mention their plight with regards to pollution or access to clean energy. However, the Climate Equity Act, introduced last year by Vice President Kamala Harris and Rep. Alexandria Ocasio-Cortez (D-NY), should move the needle on that front.

Matt Chester's picture
Matt Chester on Dec 22, 2020

Hopefully this is just the beginning-- positioning the energy transition as a jobs and economic recovery opportunity is too great of an opportunity for all involved to pass up on

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