Skip to main content

A Holisitic View

In the world of Washington politics, one man's incentive may be another man's subsidy or boondoggle. A Wednesday afternoon posting on the Wall Street Journal's Environmental Capital blog reported the Senate's rejection of an attempt to extend tax credits given to renewable energy projects. The posting describes the on-again/off-again life of renewable energy tax credits and the punishing effect their uncertainty has had on investment in wind energy projects. Each time the production tax credit has lapsed, investment in wind energy has fallen off sharply, roiling the wind industry:
The U.S. has never had long-term clean-energy subsidies in place; usually they are renewed for a year or two at a time. Lots of people in the industry blame that unpredictability for the stop-and –start pattern the clean energy industry’s developed over the last two decades. New projects generally come to a standstill the year after tax credits expire. The American Wind Energy Association, a trade group, lambasted the Senate and pointed to “116,000 jobs and nearly $19 billion in investment at risk.”
Whatever your political or economic beliefs, we think it important to look at government incentives holistically. Incentives stimulate the development of asset-intensive projects that induce economic activity for engineering, procurement and construction services early in life. Project expenditures for construction, operations and maintenance can add high paying jobs to neighboring communities and increase the amount of payroll and income taxes paid to local, state and federal government. Depending on state and local tax laws, plant operations may contribute substantial additional property, sales, inventory, or other types of tax payments to government coffers, to say nothing of the non-economic benefits resulting from creation of each new energy facility. (Studies of the economic benefits of various U.S. nuclear power plants are available on the NEI web site.)

To illustrate this point, GE Financial Services recently released a study of the net effect of the production tax credit given to wind energy projects. The study found that the net effect on the U.S. treasury from installation of 5.2 gigawatts of wind facilities supported by the production tax credit would be a return of $250 million - not a loss. The study is available at the GE Financial Services web site and worth perusing as Washington weighs policy options for stimulating the development of new energy sources.

Comments

Popular posts from this blog

Making Clouds for a Living

Donell Banks works at Southern Nuclear’s Plant Vogtle units 3 and 4 as a shift supervisor in Operations, but is in the process of transitioning to his newly appointed role as the daily work controls manager. He has been in the nuclear energy industry for about 11 years.

I love what I do because I have the unique opportunity to help shape the direction and influence the culture for the future of nuclear power in the United States. Every single day presents a new challenge, but I wouldn't have it any other way. As a shift supervisor, I was primarily responsible for managing the development of procedures and programs to support operation of the first new nuclear units in the United States in more than 30 years. As the daily work controls manager, I will be responsible for oversight of the execution and scheduling of daily work to ensure organizational readiness to operate the new units.

I envision a nuclear energy industry that leverages the technology of today to improve efficiency…

Why America Needs the MOX Facility

If Isaiah had been a nuclear engineer, he’d have loved this project. And the Trump Administration should too, despite the proposal to eliminate it in the FY 2018 budget.

The project is a massive factory near Aiken, S.C., that will take plutonium from the government’s arsenal and turn it into fuel for civilian power reactors. The plutonium, made by the United States during the Cold War in a competition with the Soviet Union, is now surplus, and the United States and the Russian Federation jointly agreed to reduce their stocks, to reduce the chance of its use in weapons. Over two thousand construction workers, technicians and engineers are at work to enable the transformation.

Carrying Isaiah’s “swords into plowshares” vision into the nuclear field did not originate with plutonium. In 1993, the United States and Russia began a 20-year program to take weapons-grade uranium out of the Russian inventory, dilute it to levels appropriate for civilian power plants, and then use it to produce…

Nuclear: Energy for All Political Seasons

The electoral college will soon confirm a surprise election result, Donald Trump. However, in the electricity world, there are fewer surprises – physics and economics will continue to apply, and Republicans and Democrats are going to find a lot to like about nuclear energy over the next four years.

In a Trump administration, the carbon conversation is going to be less prominent. But the nuclear value proposition is still there. We bring steady jobs to rural areas, including in the Rust Belt, which put Donald Trump in office. Nuclear plants keep the surrounding communities vibrant.

We hold down electricity costs for the whole economy. We provide energy diversity, reducing the risk of disruption. We are a critical part of America’s industrial infrastructure, and the importance of infrastructure is something that President-Elect Trump has stressed.

One of our infrastructure challenges is natural gas pipelines, which have gotten more congested as extremely low gas prices have pulled m…