Issue to Watch: Renewable Energy
By Jim Malewitz, Staff Writer
Although Congress’ “fiscal cliff” deal temporarily extended several key renewable energy incentives, including the wind production tax credit that many governors have loudly supported, investor confidence remains shaky. Lawmakers in several states are looking for ways to boost certainty for that sector, which has grown significantly in the past several years, but has yet to gain equal footing with long-established energy sources, such as coal and natural gas.
“At a time when Washington can’t or won’t act, states are stepping up and launching ambitious, sophisticated new experiments,” says Mark Muro, policy director for the Brookings metropolitan policy program.
In some states, however, advocates will see increased push back on policies that have been credited with spurring renewable energy production, either because of short-term budget concerns, or ideological disagreement. The American Legislative Exchange Council (ALEC), for instance, is backing legislation that would weaken energy portfolio mandates, policies enacted in 29 states that require utilities to produce a certain percentage of energy from renewable sources. The group of conservative lawmakers argues the mandates increase electricity rates.
Here’s a look at four states considering major proposals:
Lawmakers in Hawaii will consider whether to revise a wildly popular renewable energy tax credit that has sparked the state’s solar boom but opened a major hole in the state budget. The 35 percent tax credit has catapulted the islands into the nation’s top 10 producers of solar energy, but the state estimates it lost $172 million in 2012 alone. Last year, aiming to cut down multiple claims being filed by taxpayers, Governor Neal Abercrombie’s administration changed the definition of what constitutes a qualifying “solar system.” That move sparked fury — and a lawsuit — from some solar-energy advocates, who argue the change would stunt the industry’s growth. Experts expect a flurry of proposals, including legislation that would scale back the credit over time. Even some solar advocates have endorsed that idea.
After Democrats reclaimed the state House and Senate in November, environmentalists are optimistic lawmakers will enact major incentives for renewables, most notably legislation that would require utilities to generate 10 percent of their electricity from solar sources. “I will be very shocked if we don’t pass significant solar legislation this year,” Ken Bradley, chair of the Solar Works for Minnesota coalition recently told Midwest Energy News.
Governor Andrew Cuomo will likely push several renewable energy measures through New York’s Democrat-controlled legislature, as the state pursues its ambitious goal of deriving 30 percent of its energy from renewable sources by 2015. That includes extending a set of generous incentives for solar-power producers. Cuomo has proposed to extend the NY-Sun solar energy expansion program through 2023, spending $150 million each year. The initiative is currently set to expire in 2015. Cuomo is also looking to form a $1 billion “Green Bank,” a quasi-independent authority that would provide capital for energy projects, aiming to leverage scattered resources and open the door to projects that might struggle to attract investment on their own. Connecticut enacted a similar program in 2011, and other states have shown interest.
See Stateline's 13th annual State of the States report, on key issues with a particular emphasis on the relationship between states and the federal government.
With Republicans controlling both legislative chambers and the governor’s office for the first time since Civil War Reconstruction, ALEC and other groups likely see North Carolina as a prime target for rolling back renewable energy incentives. Representative Mike Hager, public utilities committee chairman, says he plans to introduce legislation that would freeze the state’s modest renewable energy standard, which he says requires the state to “pick winners and losers.” A 2007 law requires North Carolina utilities to generate 3 percent of their electricity from renewable resources — a percentage that increases every three years through 2021, when it reaches 12.5 percent.
Hager’s proposal would keep the mandate at 3 percent indefinitely. “I think I’ve got some support with this effort,” he told Stateline. But Betsy McCorkle, a lobbyist with the North Carolina Sustainable Energy Association, doesn’t expect the proposal to gain much traction, even in the new political climate. “We feel like we have made our case for this,” she says.