The US Stimulus Bill  

Greentech Media has a report on Obama's stimulus bill, noting the version the Senate is considering isn't as clean energy friendly as the one passed by the House of Reps - House Passes Stimulus Bill.

The Senate bill did contain some good renewable energy provisions, O'Brien said. Chief among them was a 30 percent manufacturing tax credit available to companies that make solar panels, wind turbines and other equipment for renewable energy projects - something he said will be key to getting manufacturers to build factories in the United States. That credit has a $2 billion cap, he said.

But the Senate bill lacked a provision contained in the House bill that would allow wind power projects to convert the production tax credits they can now get for the energy they produce into investment tax credits like those enjoyed by solar power projects, O'Brien said (see More Stimulus For Renewables?). The U.S. House of Representatives passed an $819 billion stimulus bill Wednesday that contains some key aid for the ailing renewable energy industry – but a Senate version of the same bill might not be as welcome to the industry.

Along with a host of plums for renewable energy – $8 billion in loans for renewable energy power generation and transmission projects and $2 billion for energy efficiency and renewable energy research – the House version of the stimulus bill contained a provision to convert investment tax credits that solar power developers rely on into direct payments to investors for the next two years (see Tax Credit for Solar in the Works).

Under the provision, the Department of Energy would pay grants equal to the amount of tax credits – 30 percent of qualifying costs of a project – directly to renewable power developers. The problem with using tax credits to lure investors today is that Wall Street banks and other renewable energy investors that saw big losses last year don't have taxable income to offset, and thus no appetite for them.

Adding the DOE program would be a huge boon to a renewable energy sector that's seen both debt and equity financing for projects dry up in the past few months, industry leaders say. Last year saw about $5.5 billion in tax equity deals, but without changes to the way the credit works, that could fall to $2 billion to $4 billion – and that for a solar industry expected to need more than $10 billion for projects in 2009.

As the economy spirals deeper and deeper into an economic morass, Washington's attention this week is focused on the $900 billion economic stimulus package that is making its way through the Congress.
Opinions as to the efficacy of this effort are all over the map. The President, his allies and advisors knowing they cannot just sit by hoping for better times, have put together a package that is intended to do something for nearly everybody - tax cuts for the middle class, aid to state and local governments to sustain essential services, and above all, funding for projects that it is hoped will create or at least save jobs. They firmly believe that to do anything else would be irresponsible governance.

Critics of the stimulus plan abound. Republicans, who are no longer in charge of much, but can still filibuster the Senate, are calling the stimulus a big Democratic giveaway of borrowed dollars that will bankrupt the government. They, as usual, favor more and bigger tax cuts to deal with the problem. Others, who believe the era of economic growth and prosperity is over, see the plan as a futile effort to revive an un-revivable way of life. They see this plan as a holding action that will spend what may be the last money America can borrow on trying to turn back the clock.

So where does peak oil fit into all this? Let's start with the words of our new President earlier this week. "At a time of such great challenge for America, no single issue is as fundamental to our future as energy. America's dependence on oil is one of the most serious threats that our nation has faced. It bankrolls dictators, pays for nuclear proliferation and funds both sides of our struggle against terrorism. It puts the American people at the mercy of shifting gas prices, stifles innovation, and sets back our ability to compete. These urgent dangers to our national and economic security are compounded by the long-term threat of climate change, which, if left unchecked, could result in violent conflict, terrible storms, shrinking coastlines, and irreversible catastrophe."

This would seem to leave little doubt that the President understands what could turn out to be the two biggest problems of coming decades - dependence on oil and global warming. There is much in the current stimulus plan and other administration initiatives that seem to make sense - increasing renewable fuels, $31 billion towards improving the electric grid, $37 billion to weatherize government buildings and low-income homes, $10 billion to improve public transit and railroads. All this of course is only a small fraction of the $900 billion proposal. The rest seems to be directed towards offsetting the effects of the economic down turn, helping the unemployed and hopefully stimulating what some believe will be an economic rebound. Some parts of the bill, however, such as the $31 billion for repairing and building roads seem downright wasteful given that vehicular traffic has no place to go but down.

We are back to the old conundrum of the urgent and the important. While it is clear that oil depletion will overwhelm our economies and global warming may overwhelm much more, for people who are newly unemployed, impoverished, homeless and don't have enough to eat, the President and Congress must hold out the promise of near-term help. A great irony in all this is that the Congressional Budget office is saying only about $25 billion of the $900 billion is likely to be spent in this fiscal year and only $110 billion by the end of 2010. If these numbers are close to reality, it is clear that we are going to have to endure the trials of the next two years with very little aid from the proposed stimulus. If the stimulus passes, at least Congress and the President will be given credit for having tried to do all they can.

It is unfortunate, but a fact of life that the economic downturn of the last two years sent oil prices tumbling by an unexpectedly large amount. If we have learned nothing else in the last six months, it is that prices are highly susceptible to what seem to be relatively small changes in demand.