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Renewable Energy Policy Uncertainty Stalls A Fossil Fuel-Free Future, Experts Say

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Is renewable energy's bright future being jeopardized by inconsistent policy? (AP Photo/Orlin Wagner) | AP

From his solar panel manufacturing facility in Marysville, Wash., Gary Shaver can see and hear passing coal trains.

"The tracks are maybe a block away, and this is not a Texas block," said Shaver, president of Silicon Energy, LLC.

To get to and from his factory, workers and clients have to cross those tracks, which may soon become heavily trafficked if proposed Pacific Northwest ports are given the go-ahead and begin exporting coal to China.

Meanwhile, China continues to ship solar panels to the U.S.

In his State of the Union Address on Tuesday, President Barack Obama called for the U.S. to become a world leader in harvesting renewable resources -- both to promote energy independence and to battle global warming. According to White House documents, he wants to double the country's wind, solar and geothermal energy generation by 2020.

"As long as countries like China keep going all-in on clean energy, so must we," Obama said.

But while renewable power generation from green sources has already doubled in the U.S. over the past four years, some energy experts and industry representatives suggest the supports are not yet in place for the industry to achieve its full potential or for the country to wean itself off of fossil fuels. These experts highlight the need for long-term, consistent policies that incentivize investment, manufacturing and deployment of clean technologies -- much as feed-in tariffs have done for Europe -- in conjunction with penalties for greenhouse gas emissions.

"From the Dakotas to Texas, we have this tremendous wind resource that we could build out very effectively," Dan Kammen, an energy expert at the University of California, Berkeley, told The Huffington Post. "The Southwest has tremendous solar; the Southeast has tremendous biomass. These are incredible resources, but stable policies are needed to really exploit them."

Fossil fuel supporters, on the other hand, suggest that such a push is naive and detrimental to the economy, often citing the failure of California solar panel maker Solyndra after it received a $535 million loan guarantee from the government. Overall, as former Energy Secretary Steven Chu recently pointed out, only 1 percent of government-funded companies have gone bankrupt.

"You hear stories about wind and solar being competitive, but they're only competitive because they're funded by tax money," said Jason Hayes, a spokesperson for American Coal Council. He referred to an industry-funded study that found solar projects receive government subsidies in amounts more than 1,200 times those for coal, oil and natural gas, as measured per unit of electricity generated.

But environmentalists suggest that those figures are deceiving, and cite a study that concluded government help for renewables amounts to a small fraction of the subsidies that have historically been allocated to the fossil fuel industry.

Alongside state efforts, such as California's requirement that renewables represent 33 percent of energy produced by 2020, tax credits have helped keep green developers in the energy game: Federal support for renewable energy development currently consists of a tax credit either of 30 percent upfront in the year of an investment or of a couple pennies for every unit of energy generated over the first decade that a panel or turbine is connected to the grid, amounting to about a third of costs.

But whatever the tax advantages, environmentalists point out that the production tax credit, which is crucial to the wind industry, is generally only renewed on an annual basis. That's left investors skittish.

"Almost any investor I know would trade off a conservative low price to get 20 years of stability," said Kammen, noting Europe's feed-in tariffs are usually given out in 20-year fixed contracts.

"You couldn't envision a worse way to implement a good idea," Kammen added. "There's been years when investments from Year One to Two have dropped by 90 percent."

Peter Kelley, a spokesperson for the American Wind Energy Association, highlighted the consequences of the current boom-bust cycle. "It takes 18 months to build a wind farm," he said. "Companies can't plan. You never know what next year's policy will be."

Uncertainty haunted the industry in 2012. While the investment tax credit, which mostly affects the solar industry, is on the books until the end of 2016, the production tax credit was set to expire at the end of the year. Congress finally extended it for another year as part of the final fiscal cliff deal on Jan. 1. But not before a frantic rush by wind turbine manufacturers to beat the deadline and get new turbines up -- which is largely credited as the reason that wind became the top source of new U.S. electricity-generating capacity for the first time in the last quarter of 2012.

Experts predict a significant fall-off this year.

Had the production tax credit been allowed to expire after 2012, a study prepared for the AWEA estimated that 37,000 jobs would have been lost, or almost half the jobs in the wind industry.

As it is, due to the "huge uncertainty" leading up to this last renewal, "we already saw a number of domestic wind manufacturers lay people off last year," said Todd Foley, senior vice president of policy and government relations for the American Council on Renewable Energy. He added that he is "doubtful people will be hired at same levels this year."

Obama has called on Congress to make the renewable energy production tax credit permanent and refundable as part of comprehensive tax reform. But experts aren't holding their breath, especially with a Republican-controlled House.

"Tax credits are under a lot of attack. I don't know if there's another extension out there," said Marchant Wentworth, legislative director of the Union of Concerned Scientist's Clean Energy Program, adding he has similar concerns for efforts to put a price on carbon. One such bill was introduced to the U.S. Senate on Thursday.

Foley is more hopeful that the momentum gained by green energy in recent years can be maintained, but added that incentives remain a key.

"Now is not the time to pull the plug," he said.

The president himself articulated part of his strategy as publicizing the need for green energy to create grassroots support for the issue. "Part of my job, I think, is to use the bully pulpit to help raise people's awareness, because if the public cares about it, eventually Congress acts," he said during a Google+ chat on Thursday. "If the public doesn't care about it, it's very hard to get big stuff done."

Kammen suggested that the president could direct the Department of Energy and the Federal Energy Regulatory Commission to hold hearings to cajole more states to implement renewable energy requirements.

Obama could also propel green energy in additional ways, added Foley. The military, the country's single largest user of energy, can continue to build its use of green energy, for example. New legislation and regulation could help attract more private capital and cut down on coal-fired power plant emissions. And the Department of the Interior could make public lands available for wind and solar, as they've done for oil and gas.

Meanwhile, the oil and gas industry is seeking to increase its acreage.

"Instead of wasting more taxpayer money on so-called clean energy companies like Solyndra, let's open up more federal lands for safe and responsible exploration" for oil and natural gas, said Sen. Marco Rubio (R-Fla.) during his post-SOTU rebuttal speech.

Natural gas could provide a bridge from fossil fuels to renewables, said Kammen, and help the U.S. meet climate goals for 2020. "But our climate goals aren't about 2020, they're about 2050 and beyond," he added.

Kammen emphasized the need for policies that make the transition to renewables clear and ensure a diversity of energy players. "In Denmark, wind is already 20 percent. Solar is going to be 20 percent in Germany," he said. "Coal is still 40 percent in the U.S."

In 2005, coal used to be closer to 50 percent, noted Hayes of the American Coal Council. The drop-off has left companies looking for markets elsewhere -- hence the push for export terminals to China.

Silicon Energy's Shaver lived in China for a couple of years. He recalled the air and water quality as being "very, very bad." And now there are reports that some of the pollution from Chinese power plants, burning U.S. coal, is also blowing back across the Pacific, in the same direction as their coal-made solar panel exports.

"I'm not anti-fossil fuels," said Shaver. "But let's move on to the next phase and save fossil fuels for a very bad day."

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