Tax breaks for wind costly, unnecessary
Make guaranteed renewable energy payments to producers
'Fortune is guiding our affairs better than we ourselves could have wished,' Don Quixote boasted as he tilted toward windmills.
Fortune could be our misfortune if more Oregon citizens aren't conscripted as soldiers for clean energy.
The Renewable Portfolio Standard, or RPS, is the barometer most states have implemented to set goals and measure how well they are responding to clean energy targets and energy independence.
Oregon's RPS mandates that the largest utilities produce 25 percent of their electricity from new renewable energy sources by 2025.
Oregon has chosen to stimulate the production of renewable energy primarily through the Business Energy Tax Credit, giving tax credits to fund the purchase and installation of wind, solar and other renewable energy systems.
The tax credits are used also for energy conservation and recycling projects. In 2006, renewable energy projects received only a 1 percent share of total Business Energy Tax Credit dollars. That share will drastically increase because of legislative amendments passed in 2007 and 2008.
One amendment increased credits from 35 percent of a project's cost to 50 percent for energy producing projects, while increasing the cap from $3.85 million to $11 million per project.
These tax breaks have been successful. With nearly 4,000 megawatts to be generated from pending and newly operating wind farms, Oregon will increase more than eight-fold the wind energy produced in 2006. Similarly, the Oregon Department of Energy estimates a four- to eight-fold increase in business solar systems.
So what could possibly be wrong with Business Energy Tax Credit?
The tax credits are costing the state twice as much as projected when the Legislature most recently passed the amendments just 10 months ago.
What if the current projections of $143 million for the next two years are also only half of what the real cost will be? These tax credits mean lost tax revenue. With less revenue, what will happen to human services and education budgets? Is there a cheaper way to accomplish our renewable energy goals without short changing our other essential programs?
The business energy tax credits are inaccessible to municipalities, schools, tribes or non-profits because they have no tax liability. This means they need a partner who has a tax liability - one they find themselves or is found for them by a middleman they hire.
The Energy Trust of Oregon notes that 80 percent of all Business Energy Tax Credit solar installations involve third party middlemen who reap sizeable profits from buying and selling these tax credits.
The tax credits are a boon for the huge wind farms in the Gorge and Central Oregon. A list of project developers and utility partners, which includes large multi-national corporations, can be found at this link: www.rnp.org/projects/projectlist.php .
One example: Iberdola, a Spanish company, has developed the Klondike III wind farm in Sherman County, and is claiming three separate Business Energy Tax Credits worth $33 million.
We think Iberdole would build its wind farms in Oregon anyway, because the Gorge has wind. And because the Renewable Portfolio Standards of Oregon, California and Washington all require new clean energy - wind energy is currently the cheapest - it will be built.
If the state invested that $33 million elsewhere it could provide 660 full-time jobs paying $50,000 a year; K-12 funding for 5,500 kids; or Oregon Health Plan funding for 16,500. Or, it could be invested in a different way to stimulate renewable energy, one that non-profits, schools, homeowners and farmers can easily use.
More Oregonians would invest in renewable energy if Oregon adopted Germany's 'feed-in-tariff' laws. Also known as 'renewable energy payments,' this method works by allowing all producers of qualified renewable energy access to the grid, paying them fair and guaranteed rates for 15 to 20 years. It's a method of subsidy that is logical, simple and adept at inviting many players to the renewable energy table, not just huge energy companies.
There is hope. The Governor's Renewable Energy Working Group has proposed a pilot feed-in-tariff for residential and community solar energy projects. This makes sense. If Oregon is to benefit from even heftier investments in renewable energy manufacturing sites (such as Solar World in Hillsboro), we need to drastically ramp up demand, sales and installations of solar photovoltaics.
Financial engineers and titanic energy suppliers who see the meltdown of the global economy and urgency for 'green jobs' as the perfect storm are soldiers of fortune. Germany, Spain, Denmark and growing numbers of countries are winning jousts with these giants because renewable energy payments more cheaply and quickly pay for renewable energy and more of the money remains within the local community.
Oregon should follow their lead. We don't want to be left twisting in the winds of climate change.
Kris Alman is an activist with Tax Fairness Oregon, living in Raleigh Hills. Jody Wiser is the founder of Tax Fairness Oregon. She lives in Bethany.