By Brentan Alexander, PhD; Chief Science Officer & Chief Commercial Officer

 

With discussions in the U.S. Congress underway on the makeup of a ‘Phase 4’ coronavirus stimulus package, multiple reports are identifying clean and renewable energy as a key sector that Democrats hope to support. Although details are still scarce, ideas being floated include extensions of the investment tax credit (ITC) for solar power and other clean technologies, an extension of the production tax credit (PTC) for wind power, and the temporary conversion of these programs to a direct tax refund. These are good starts, but given the scale of the climate crisis and this rare opportunity to engage in direct stimulus, Congress should think bigger.

The clean energy economy is a driver for the U.S. economy and investments in its growth will pay dividends many times over. A University College London study published in late 2019 found that the U.S. “green” energy sector employed nearly 10 million people and generated over a trillion dollars in economic activity. It’s not just blue states benefiting either: Behind California, Texas supports the next largest share of clean energy jobs in the United States. Clean energy provides jobs at all rungs on the economic ladder, and investments in the sector ensure that the U.S. continues to be a leader in global technology innovation (it’s currently ranked 4th). This leadership supports global competitiveness while enhancing our energy security at home. And that doesn’t even take into account the critical importance of halting the climate crisis, which unchecked could cost the United States hundreds of billions of dollars a year by 2090.

Lawmakers don’t need to look far to see what the impact of big ideas can achieve. In the wake of the financial crisis just over 11 years ago, the American Recovery and Reinvestment Act (ARRA) provided significant support for clean energy programs. $400 million was provided as seed funding for the Advanced Research Projects Agency – Energy (ARPA-E), which invests in early-stage research and development across the clean energy landscape. Today, ARPA-E-funded companies have attracted over $3.2 billion in private sector funding and generated 385 new patents. ARRA also expanded the Department of Energy Loan Guarantee Program with Section 1705, specifically dedicated to renewable energy deployments. In two years of operations, the program awarded over $15 billion in guarantees. This funding was used to support the first five utility-scale solar projects in the United States and is credited with kickstarting the domestic utility solar industry. Guarantee funds also supported the buildout of Tesla’s first major car factory in Fremont, California, helping Tesla launch its revolutionary Model S sedan. Many billions of dollars in economic activity and hundreds of thousands of jobs across red and blue states can be directly linked to the ARRA: it had a positive return on investment many times over.

We can again have such an impact, and there is no shortage of big ideas beyond the ITC and PTC to match the scale of this moment. In March, Dan Reicher, the former Assistant Secretary of Energy for Energy Efficiency and Renewable Energy at the U.S. Department of Energy in the Clinton administration, wrote an outline for what a more ambitious clean energy stimulus looks like. A centerpiece of his approach is the Clean Energy Deployment Administration, a program idea that has percolated in Congress with bipartisan support for years and would provide a centralized resource with a full set of financial tools to help new technologies reach market and scale. The Information Technology & Innovation Foundation provided 16 steps that the U.S. could take to stimulate clean energy and manufacturing. Among their proposals is an Energy Technology Commercialization Foundation, modeled after similar foundations linked to the national parks and the National Institutes of Health, that would work closely with the U.S. Department of Energy to accelerate the deployment of clean energy technologies. Former staffers on Governor Jay Inslee’s presidential campaign have launched the Evergreen Collaborative, which offers a detailed action plan to tackle the climate crisis. Their solutions are focused on investments across the political spectrum and in sectors as divers as agriculture, buildings, and technology innovation.

Although these plans differ in key details, arguments about the best climate strategy at this stage is besides the point. What’s important now is to match the scale of the solution to the scale of the problem. ITC and PTC extensions are nice; converting to a refund structure while the tax equity market recovers will be highly impactful. But these ideas are table stakes; What’s needed are new programs to support the next generation of technologies from the lab to the marketplace. Impactful technologies, such as energy storage and sustainable aviation fuels, are on the cusp of breaking through, as solar power was when ARRA was enacted 11 years ago. With federal support for research, development, demonstration, and deployment (known in D.C. as RDD&D), the U.S. can continue to lead on climate innovation while solving one of the great global challenges of our generation.

 

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