Wednesday, August 27, 2008

Commentary: Who needs a tax credit?

Many of you already know the solar investment tax credit will expire on December 31. This tax credit was part of the Energy Policy Act of 2005. True, Congress could try to extend it for the umpteenth time but President Bush will likely veto any legislation that would diminish tax credits for the oil industry given by the same energy act.

The oil and gas industry were provided a $17 billion tax credit from 2007-2011 in the latest energy bill passed last December.* That's $3.4 billion in tax credits for each of five years. Last February, Exxon-Mobil announced $40.6 billion in net profits for 2007, the most in American corporate history, beating their own record set in 2006. By the way, $40.6 billion is $4.6 million an hour. Profits of the five biggest international oil companies have tripled since 2002.

Whether Republican or Democrat, that sort of profit begs the question: Why do they need tax breaks?

The solar industry for larger-scale projects of 100kW or more is slowing at this time. If, but more likely when, the 30% tax credit for solar installations expires at year's end it means these projects must be completed by the deadline. With design, engineering, sometimes environmental reviews, permitting, procurement, construction and commissioning, timing is crucial. Many solar customers and financiers backed out of solar projects starting in May for fear projects could not be completed in time. The 30% residential solar tax credit (capped at $2000) likely will stunt the industry's growth, too, in areas where rebates are non-existent. Further annoying to solar, the tax credits combined industry-wide are just a fraction of what oil and gas is getting.

Solar power (photovoltaics or PV) is still an emerging industry in the U.S. If PV here had the federal help that Big Oil and nuclear has gotten for generations, it would be more affordable to all and would be cleaning the air as we speak. With no real national push for solar, most panels are made outside the country--further exacerbating the trade deficit. Germany, Japan, Spain, China, Taiwan and India are now key players in PV panel manufacturing. Simply put, our non-involvement is costing us dearly.

When Germany made a commitment to go green in the late 90s, some 389,000 jobs were created in solar--in a country of about 90 million. When the Bush Administration said committing to the Kyoto Accords would cost jobs, it did. It is costing the U.S. countless jobs in renewable energy research, development, sales and installations. If some oil and gas jobs are in fact lost, let the Big Oil and Coal make the transition to solar or wind. Panels, inverters, racking hardware, trackers, monitoring systems all need to be made by Americans, installed by Americans, for Americans. Imagine a day when coal workers are relieved of their dangerous, dirty jobs and retrained to install solar power systems in the natural light of day.

A solar power explosion could be as large as the Industrial Revolution of the 19th century. When virtually every roof in the country is a potential place for a PV or a solar thermal (hot water) system or both, the scope of what could be is gargantuan. And with most of the power infrastructure already in place, this is no idle dream.

* See
"Exxon: Profit Pirate or Tax Victim?
chan=rss_topEmailedStories_ssi_5) and
"Exxon Mobil's Profit in 2007 Tops $40 Billion"


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