Senate GOP Denies Cleantech Funding
Record high gas prices and a fumbling economy should have had the US administration take corrective measures. However, the US senate voted against bills that would have revoked tax benefits for oil companies. The proposed measures would have also provided the necessary shot in the arm for the renewable power sector.
This Renewable Energy and Jobs Creation Act of 2008 proposed tax incentives for development of alternative energy sources such as solar, wind and biofuels. It also had incorporated measures for tax cuts aimed at middle class working families to promote savings. The center point of this bill was to provide a tax on “Big Oil’s” windfall profits and removing the tax breaks they currently enjoy. The substantial amount so saved (an estimated $17 billion over the next 10 years) would be invested in the Energy Independence and Security Act Trust Fund. Oil companies could have avoided this tax by investing in renewable energy. In other words, it aimed to punish those who were not going “green”. Critics of this legislation (Republicans) however said that punishing oil companies would not translate into lower gas prices, and might conversely hike up prices .Surprisingly; Republicans felt such a move would trigger a decrease in domestic oil production.
Instead of promoting renewable energy, Republicans favored putting billions of dollars to expand domestic oil production capacity in regions such as Arctic National Wildlife Refuge. "Republicans are determined to lower gas prices the only way we can: increasing supply." was the common sentiment.
This reeks of political opportunism and shows a distinct favoring of the big oil companies. It is imperative to boost oil production to meet immediate energy demands. However, it is foolish to assume that it can be a long-term solution for growing energy needs. Promoting renewable energy sector by means of tax cuts is a logical method of encouraging this sector to grow. The cleantech renewable sector is in the nascent stage so tax cuts and subsidies would provide the impetus for it to progress into a strong and healthy industry. On the other hand, the oil industry has been around for an extended period, and is capable of standing on its own feet. The Organization of the Petroleum Exporting Countries (OPEC) has developed big muscle power globally, thanks to the hefty tax breaks awarded by the US. This bill also envisaged a NOPEC policy (No Oil Producing and Exporting Cartels!), and would have made OPEC accountable in the US courts. Such accountability would send out a strong signal against "price gouging" and limit speculation in oil markets. Currently a court ruling from 1979 gives OPEC members immunity in U.S. courts.
This development had the renewable power sector thoroughly disappointed. "We were disappointed that despite broad support of the American people, business, and environmental groups, Congress was not able to take up and pass an important extension of the solar tax credits today. It is difficult to understand why Senators would choose to protect an income-tax loophole for billionaire hedge-fund managers instead of creating hundreds of thousands of renewable energy jobs in the US,” says president Solar Energy Industries Association (SEIA) President. A further study by Navigant Consulting, Inc in association with for the American Wind Energy Association and the Solar Energy Research and Education predicts that removal of tax credits may lead to an investment loss of $19 billion and loss of job opportunities of nearly 116,000.with California and Texas being hit the hardest.
Interestingly, while Republicans continue to favor the oil companies, the Middle East is busy using its petrodollars to promote alternative energy. UAE based Masdar Inc has announced one of the biggest investments of $2 billion to advance thin film solar cells. Such a bold initiative by the oil rich region demonstrates oil may be going the way of the dinosaurs. However, US administration feels otherwise, and why, perhaps the same reason why it invaded Iraq – a flawed, foolish and a shortsighted decision policy.
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Comments
[...] energy resource in the world.Give these facts perhaps the republicans can have a rethink of their continued support to oil companies. [...]
[...] favored oil extraction and fossil fuels to address the energy challenge.I have highlighted that increased oil and gas resources can best buy us some more time (and even that time looks too long and costly to attain!) to develop [...]
[...] when it comes to energy policies. They created quite a bit of criticism when they voted vehemently against taxing big oil’s windfall profit, even if it meant axing tax credits and subsidies to the cleantech industry. Now Senator John [...]
Even though it is looks like a mistake, I agree that in the short run, lowering the crazy oil prices is crucial for the survival of the US economy and domination. I think that the right way is to promote private use of green energy, reducing the dependency of the small consumers and businesses in big energy firms. This will allow us to achieve a cleaner future, by means of “natural selection’ and not by government aid.
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Record high gas prices and a fumbling economy should have had the US administration take corrective measures.
June 18, 2008
On the surface it does look like Republicans are making a big mistake by not allowing this bill to pass but at the same time selectively taxing the big oils completely goes agains a free market economy and in my opinion would lead to higher fuel prices. What incentive is big oil going to have once their small profit margins are squeezed further? I’m all for taking away the tax breaks though and putting it into alternative energies. At any rate our government needs to do provide subsidies to emerging alternative energies until prices come down further and drilling wherever we can must happen now.. including ANWR. Whatever it takes to completely remove ourselves from depending on foreign oil do it now! It crazy to think we dump billions into Venezuela while we can’t even drill in our own back yard.