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Published: Thursday, 5/10/2012

GUEST EDITORIAL

Keep these subsidies

The federal government has given generously to the clean-energy industry in the past few years, funneling billions of dollars in grants, loans, and tax breaks to renewable power sources such as wind and solar, biofuels, and electric vehicles. "Clean tech" has been good in return.

During the recession, it was one of the few sectors to add jobs. Costs of wind turbines and solar cells have fallen over the past five years. Electricity from renewables has more than doubled.

Construction is under way on the country's first new nuclear power plant in decades. The United States remains a player in the global clean-energy market.

Yet this productive relationship is in peril, mainly because federal funding is about to drop off a cliff. The Republican wrecking crew in the House remains generally hostile to programs that threaten the hegemony of oil and gas interests.

The clean-energy incentives provided by President Obama's 2009 stimulus bill are ending, while other subsidies are expiring. If nothing changes, clean energy funding will drop from a peak of $44.3 billion in 2009 to $16 billion this year and $11 billion in 2014 -- a 75 percent decline.

This alarming news is in a new report from experts at the Brookings Institution, the World Resources Institute, and the Breakthrough Institute. It is a timely effort to attach numbers to an increasingly politicized debate over energy subsidies.

While Mr. Obama is busily defending subsidies, Republicans have used the costly market failure of one solar panel company, Solyndra, to indict the entire federal effort to encourage nascent technologies. The GOP assault obscures real successes that would not have been possible without government help.

Wind power is a case in point. By spurring innovation and growth, a federal production tax credit for wind amounting to 2.2 cents per kilowatt-hour has brought the cost of electricity from wind power to a point where it is broadly competitive with natural gas, sustaining 75,000 jobs in manufacturing, installation, and maintenance.

But the credit is scheduled to expire this year, with potentially disastrous results: a 75 percent reduction in new investment and a big drop in jobs. That is just about what happened the last time the credit was allowed to lapse, in 2003.

This is the wrong time to step away from subsidies. But it may be the right time, the report says, to institute reforms, and to make the programs more effective and salable to budget hawks. One excellent proposal is to make the subsidies long-term, ending the present boom-or-bust cycles, but rejigger them to reward lower costs and better performance.

The idea is not to prop up clean-tech industries forever. It is to get them to a point where they can stand on their own. That old-fashioned notion might appeal even to House Republicans.

-- New York Times



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