The week made it official: the 2012 election will be the first in American history to be driven by the nexus between innovation, clean energy, manufacturing and the role of the federal government in shaping the economy. The president followed up his State of the Union message with a thematically reinforcing budget and visits to "in-sourcing" manufacturing facilities -- staking out his territory. The Republicans responded with their refusal to extend the Production Tax Credit for the wind industry and House passage of legislation making Congress, not the Executive Branch, the permitting agency for the oil industry's pet Keystone XL Export Pipeline. It's clear that the Tea Party GOP's response is simple: "Hell, no, we won't let the federal government spark a manufacturing and economic revival by accelerating the clean energy transition."
But it's still true that nascent Republican front-runner Rick Santorum has wrapped his campaign in the need to restore American manufacturing, even if his actual voting record consistently supported outsourcing, not insourcing. Santorum's "Made in America" website doesn't actually much resemble the far-reaching manufacturing revival agenda "Make" assembled by the business and labor leaders in the Council of Competitiveness -- and there is considerable reason to doubt, based on his presidential record and current trade approach, that Obama truly "gets" what reviving manufacturing requires. But the fact that two of the three presidential front-runners have embraced the same theme is quite unusual and signals that the American people, implicitly, have come to a conclusion -- we need an economic and manufacturing revival, and clean energy needs to drive it.
Let's look first at last month's State of the Union and this week's Budget -- the markers Obama had laid down before he flew to Wisconsin to celebrate the "in sourcing" of manufacturing jobs at Master Locks. The State of the Union was billed by the White House as focused on "an America that attracts a new generation of high-tech manufacturing and high-paying jobs. A future where we're in control of our own energy, and our security and prosperity aren’t so tied to unstable parts of the world. An economy built to last, where hard work pays off, and responsibility is rewarded."
Pollsters reported that the clean energy portions of the speech, and the emphasis on an economy "built to last" (a phrase I like a lot more than its green-flavored synonym, "sustainable") got particularly strong responses from the American people. The 22 percent gain in his standing on energy was one of the two strongest results of the speech on his audience.
The 2013 Budget is a political statement, not a fiscal one -- since the Republican House clearly won't seriously consider it. Its most important moving part is a clear statement that it is time to shift government support from subsidizing the oil industry to creating a level playing field for clean energy. Forty billion dollars in oil industry tax give-aways are to be eliminated -- a quarter of this money goes to manufacturing, specifically for tax revisions that would encourage domestic job creation and a $517 million investment in Department of Commerce "insourcing" programs.
But there are also nine other important support programs for clean energy, as summarized by Center for American Progress:
1. Extends the production tax credit for wind energy. Wind projects currently receive a tax credit of 2.2 cents per kilowatt hour of electricity. Thanks to this production tax credit, enough new wind energy was built in 2011 to power more than 2 million homes. The credit is set to expire, however, at the end of this year. Without an extension, 37,000 jobs could be lost. The budget would extend the production tax credit through 2013. This is the credit the House Republicans refused to allow to be extended earlier this year, and again this week.
2. Extends the Treasury Cash Grant Program (Section 1603 of the American Recovery and Reinvestment Act) to assist small renewable companies. The budget would extend the credit for one year and then convert the program into a refundable tax credit through 2016.
3. Increases R&D funding for advanced energy technologies. The Advanced Research Projects Agency-Energy, or ARPA-E, would receive $350 million for investments in potentially game-changing energy technologies.
This funding would also boost domestic manufacturing, as investments in innovative R&D would lead to the development of clean-tech products that can be made in the United States.
4. The budget would also provide $5 billion for the "48C" clean energy manufacturing tax credit for companies that manufacture clean-tech products, including energy efficiency equipment and renewable energy equipment.
5. Invests in solar and wind energy. The Department of Energy budget provides $310 million for the SunShot Initiative, designed to make solar electricity cost-competitive with dirtier fossil fuel energy without subsidies by 2020. It also includes $95 million for wind energy, including offshore wind.
6. Invests in energy efficiency. The Washington Post reports that the "proposed budget includes an 80 percent increase in money to promote energy efficiency in commercial buildings and industries."
The budget also anticipates congressional enactment of the Home Star program to help owners retrofit their houses to become more energy efficient and lower their energy bills.
7. Increases funds for environmental enforcement. The fewer green cops on the beat, the less likely it is that some firms will comply with pollution reduction requirements.
8. Reduces global warming pollution and impacts. The administration promises to "reduce GHG [greenhouse gases] before it is too late." This includes implementing its second round of fuel economy and carbon dioxide pollution standards for cars and light trucks... (and) regulatory strategies to control GHG emissions from major stationary sources."
9. Invests in energy and money savings by the military. The proposed budget would double spending on clean energy compared to 2012 by investing $1 billion in clean energy.
10. Maintains funding for international climate finance. The budget includes at least $833 million for international climate investments.
So Obama is, in the budget, largely walking the walk of his State of the Union. The Republican response has been revealing, if predictable. House Republicans passed a bill taking permit authority over the Keystone Pipeline away from the President and giving it to Congress -- you can just imagine how President Bush would have reacted to a similar move by Congressional Democrats on his watch! And they resolutely refused to keep the American wind industry (which currently employs more people than oil) from being devastated by a huge tax increase, refusing to extend the Manufacturing Tax Credit for wind.
Never have environmental and clean energy issues been teed up for such a major role in an American presidential campaign. And it’s unfortunate that this opportunity -- to have a real debate on the role of innovation, clean energy, manufacturing and the government in reviving America’s economic future -- is occurring on the eve of what, by all predictions, will be the ugliest election in our recent history, the one most contaminated by dirty spending and dirty messages.
So the key challenge for environmentalists is to engage in this conversation early, before the flood of dirty energy mega-bucks unleashed by Citizens United drowns out any messages of hope.
A veteran leader in the environmental movement, Carl Pope is the former executive director and chairman of the Sierra Club. Mr. Pope is co-author -- along with Paul Rauber -- of Strategic Ignorance: Why the Bush Administration Is Recklessly Destroying a Century of Environmental Progress, which the New York Review of Books called "a splendidly fierce book."
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