Energy Economy

US Clean Energy 2020: The Glass Is Half Full -- or Half Empty

Paul Ausick

The federal budget bill passed last week and signed by the president last Friday is the usual grab bag of funding for military and domestic programs, along with a generous dollop of specific programs important to senators and other congress members. Depending on where an observer stands, the budget process treated clean energy and environmental protection better or worse than the urgency of climate change mitigation demands.

A big disappointment for clean energy advocates was a failure to extend the popular tax break for buyers of electric vehicles. The $7,500 federal tax credit for new electric vehicle purchasers disappears next week for Tesla vehicles (after dropping by half last January and by half again in July) and will be cut to $3,750 for buyers of electric cars from General Motors beginning January 1. The full credit is available to purchasers of new vehicles from automakers who have sold fewer than 200,000 electric cars. Extending the tax credit for all carmakers offered an opportunity to put millions more of the vehicles on U.S. roads by 2030.

The budget bill did include a so-called clean energy extenders package that retroactively applied and extended tax credits through 2022 for biodiesel and some other types of alternative fuel extended the production tax credit for wind energy projects through 2020 before phasing the credit down to zero, retroactively applied and extended home energy efficiency credits through 2020, and retroactively applied and extended through 2020 tax credits for coal production on Native American lands.

According to the Rhodium Group, “[t]he potential increase in emissions due to the extension of the coal credit may cancel out nearly all the emission reductions associated with clean energy tax extenders in the package in 2020.”

Another loss for clean energy advocates was the failure to extend a production tax credit for solar energy, energy storage projects, and offshore wind projects.

Other wins for clean energy came in a $208 million increase to the budget of the Environmental Protection Agency and a budget hike of $415 million to fund basic research in the Department of Energy.

Overall, the portions of the budget bill that affect clean energy programs do less than nothing to cut U.S. emissions of greenhouse gases (GHGs). Without the clean energy provisions and the lack of future policy action, “the US is currently on track to achieve net-GHG reductions of 12-19% below 2005 levels in 2025, nowhere near the Paris Agreement goal of 26-28%, and far off the path to deep decarbonization,” according to the Rhodium Group.