Carbon dioxide and other greenhouse gases (GHGs) are responsible for global warming, the long-term worldwide average warming experienced since the industrial revolution. GHGs arise from human use of fossil fuels for energy. Major emitters of GHGs include both industrialized countries and, in recent decades, developing countries as well. Higher global temperatures cause the extremes of hot and cold, and wet and dry, weather of recent years. This blog examines global warming and its effects.
See the Tabbed Pages for links to video tutorials, and a linked list of post titles grouped by topic.
This blog is expressly directed to readers who do not have strong training or backgrounds in science, with the intent of helping them grasp the underpinnings of this important issue. I'm going to present an ongoing series of posts that will develop various aspects of the science of global warming, its causes and possible methods for minimizing its advance and overcoming at least partially its detrimental effects.
Each post will begin with a capsule summary. It will then proceed with captioned sections to amplify and justify the statements and conclusions of the summary. I'll present images and tables where helpful to develop a point, since "a picture is worth a thousand words".
Sunday, January 6, 2013
One-Year Extension of Tax Credits for Renewable Energy in the U. S.
American Taxpayer Relief Act of 2012 included a one-year extension of tax
credits favoring renewable energy growth in the U. S.It liberalizes the credits, expanding their
applicability to include projects whose construction will have begun during the
present year, 2013.A primary component
within renewable energy that benefits from these tax credits is generation of
power by wind.It is projected that wind
energy could provide 20% of U. S. energy by 2030.
Tax credits in the U. S. for renewable energy have a history of
being allowed to expire, then being reinstated later, each active period
enduring for only one or a few years.This is highly disruptive for the industry, as it makes long-term
planning with certainty largely impossible.The U.
needs to implement long term policies governing development of renewable energy
in order to provide such certainty.
Introduction. Renewable energy is playing an
increasingly significant role in the U. S. and around the world. Wind energy provides a large fraction of this
growth, as well as much of the total installed capacity, among the various
renewable sources. In addition to wind, these include solar energy, hydroelectric
power, biofuels, geothermal energy and ocean or tidal energy.
In the U. S., renewable energy has received subsidies in
the form of an investment tax credit (a credit favoring investment in new
facilities to promote construction) or a production tax credit (PTC; a credit based on the amount of energy
delivered once a facility is operating).Wind energy has received tax credits, much in the form of PTCs.In the recent decade the U. S. Congress
allowed credits to lapse, and then reinstated them, in an arresting pattern of
fits and starts.This is shown for wind
energy in the following graphic:
of ITCs and PTCs for wind energy in the U. S. The blue
bars show annual wind generating capacity added each year, using the scale
for gigawatts added shown on the left vertical axis.The light blue section of the bar for 2012
shows planned capacity additions at the time this report was prepared late in
2012, presumably in anticipation of the expiration of the PTC at the end of 2012.The green line
shows the total wind capacity installed in the U. S., using the values on the
right-hand vertical axis.The 1603 Grant
was a provision of the American Recovery and Reinvestment Act of 2009 (the
“stimulus” combating the recession) that made a fractional direct cash payment
for renewable energy projects.
It is quite clear
from this graphic that periodic expiration of tax credits (see the years
following expirations in 1999, 2001, 2003, and 2009) had drastic negative
impacts on installation of new generating capacity during the following
year.In addition, as noted in the
legend to the graphic, during 2012 wind industry planners were factoring in a
scheduled termination of the PTC
effective at the end of the year by accelerating new construction.
Renewable Energy Tax Credits.The so-called “fiscal cliff” in the U. S. raised the possibility of sharply higher
taxes and reduced spending as of Jan. 1, 2013.At
literally the last minute, in an effort to avoid this fiscal crisis, the U. S.
Congress passed the American Taxpayer Relief Act of 2012 (the “Act”) on Jan. 1,
2013, and President Obama signed it into law on Jan. 3.
In addition to
provisions averting many facets of the looming fiscal disaster, the Act
included provisions extending tax credits for renewable energy.
Provisions of the Act.The Actprovides extensions of tax credits with
slightly more favorable terms than in previous years.Most of the provisions are summarized here.
production tax credit or an investment tax credit for wind energy is
extended for one year ending Dec. 31, 2013, but the terms are liberalizedby requiring only that construction must have
begun by that date rather than, in earlier versions, been completed by
then.A total of $12 billion may benefit
the wind industry over the next 10 years;
for energy efficiency in existing or new homes;
credit for vehicle refueling facilities providing alternative fuels;
credit for biodiesel and renewable diesel fuel mixtures, applied to
fuels sold after Dec. 31, 2011 and by Dec. 31, 2013;
four tax credits described above, the deadline is extended to Dec.
31, 2013, but the subject
of the credit must have become available for use after Dec.
31, 2011.Thus they are retroactive for about one year,
and expire after one year;
credit for producing cellulosic biofuels after Dec. 31, 2008 and before
Jan. 1, 2014, applicable to a wide range of newer cellulosic sources and to
cultivated algae; thus this provision is retroactive for four years and remains
effective for one year.There is also a
special allowance for facilities that produce the newer cellulosic or algal
biofuels, placed in service after Dec. 31, 2012 and effective for one year;
credit for geothermal facilities whose construction begins before Jan. 1,
The New York Times
reports that electricity produced from other forms of renewable energy
sources, including tides and ocean waves, landfill methane and hydroelectric
facilities were also included in the tax credits.
Extension of Tax
Credits. The American
Taxpayer Relief Act of 2012 included several provisions extending PTCs or ITCs
for the relatively short period of 1 year, as itemized in this post.This 1-year extension contributes, albeit
only briefly, to helping wind energy and other renewable energy technologies to
provide an increased share of America’s energy demand.In a report issued in July 2008, The Office
of Energy Efficiency and Renewable Energy of the U. S. Department of Energy
modeled a scenario (EERE) in which wind energy would supply 20%
demand by 2030.To achieve this
objective, generating capacity would have to expand from about 46 gigawatts
(GW) in 2011 (see graphic above) to 305 GW in 2030 (EERE).
wrangling over whether, and how, the fiscal cliff could be averted was itself a
cliffhanger.It was not until the last
days before the fiscal cliff deadline of Jan. 1, 2013 that the outlines of the law were
assembled, and final passage required a late night session of the lower
chamber, the House of Representatives, on New Year’s Eve extending into the
early hours of the new year.Most of the
renewable energy credits were extended for only one year.Thus the Act guarantees yet another period of
uncertainty promising yet another contentious legislative struggle over further
extensions in one year’s time. Nevertheless the Act liberalized the credits
by extending them to projects whose construction will have begun before the expiration
date, replacing the earlier requirement that projects must have been completed
by the deadline date.
fits and starts is highly disruptive.Governing in this way, by awarding and
withdrawing tax benefits literally at the last minute on a schedule of once a
year to once every few years, is extremely disruptive for business activity
(see the graphic above).Corporations
and entrepreneurs seeking to develop renewable energy need multi-year periods
for planning, funding, and installing renewable energy facilities.Depending on the particular technology and
location, this can include factors such as gaining zoning and siting approval,
undergoing environmental impact analysis, assembling financing, garnering
purchase contracts for the energy ultimately produced by the renewable source,
and construction. For example, according
to the American Wind Energy Association,developing a new wind farm requires
18-24 months. Many of these factors are
interdependent.Singly or in conjunction
with one another, settling these arrangements requires extended periods of
time.It is highly counterproductive for
developers to have to contend with short-term provision and expiration of tax
credits.Effective energy policy must
create long-term stability in order to enable the justified expansion of
renewable energy technologies.
It would be far
more reasonable and effective to develop policies on subsidizing the
development of renewable energy on a long-term schedule. In this way
corporations and entrepreneurs could plan the development and implementation of
projects secure that subsidy policies were intact, available as scheduled, and
could be used as appropriate throughout the lifetime of the project.
U. S.for newly emerging energy technologies
throughout this country’s history, beginning in the nineteenth century. Federal
and/or state subsidies were consistently applied, and have been found to be
most effective when a new technology was in the early years of its development. Unfortunately, at least in the case of crude
oil, subsidies continue to be granted even now, more than 100 years after the
birth of the industry. Clearly, subsidies are no longer warranted for this
industry, given the enormous revenues and profits among the major crude oil
producers. Those expenditures could more
justifiably be applied to the current group of nascent technologies encompassed
within renewable energy.
renewable energy.Construction and development of renewable
energy projects have many positive policy features. The new facilities will
operate within the U. S., rather than abroad. In contrast, much new petroleum exploration and
developmentoccurs in more and more
remote locations and environments.Commonly
these require deep drilling and frequently involve deep sea operations including
development in the extreme conditions of Arctic oceans. These conditions are fraught with environmental
hazards that can come to fruition with disastrous consequences. Furthermore, as
drilling operations take place under increasingly challenging technical conditions,
their costs increase correspondingly.In
contrast, the costs for renewable energy are well-understood and easily
renewable energy preserves and/or creates jobs.The American Wind Energy Association
states that currently 75,000 workers are engaged in wind energy.It expects that the policies in the Act could
save as many as 37,000 of those jobs and create many more in later years.There are almost 500 manufacturing facilities
in the U.
related to wind energy, located in all 50 states.A thorough summary of job economics related
to renewable energy is presented in this post.
sources have the very important feature of not emitting greenhouse gases into
the atmosphere. Global warming due to
manmade greenhouse gases is already a very serious problem and is destined to
get worse as humanity's demand for more energy grows. New fossil fuel-based
energy- facilities put into service now, such as oil and gas pipelines,
electric generating plants, oil refineries, and the like, will continue operating
for a useful lifetime of, say, 40-50 years. These new facilities will continue spewing
greenhouse gases into the atmosphere throughout their service lifetime, adding
to those already accumulated and worsening global warming. In contrast, renewable energy facilities, once
placed in service, have close to zero lifetime emissions of greenhouse gases,
yet have the potential capacity to provide a significant portion of America’s energy demand.
Taxpayer Relief Act of 2012 laudably includes a one-year extension of tax
credits for wind energy and other forms of renewable energy.It is lamented that the extension is for only
one year.This prevents entrepreneurs
and businesses from making plans for further development of renewable energy
with the certainty of having a long-term policy in place.The expanding renewable energy industry
provides jobs for American workers, contributes to freedom from reliance on
foreign sources of energy, and relieves the burden of accumulating greenhouse
gas emissions in proportion to its installed generating capacity.All efforts should be undertaken to implement
a long-term energy policy in the U. S. that includes appropriate support for the
expansion of renewable energy.