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Clean Energy Decision Time

The House recovery bill is better for clean energy and job creation than its Senate counterpart, write Dan Weiss and Alexandra Kougentakis.

Investments in renewable energy in the recovery and reinvestment act will create jobs. (AP Photo/Lenny Ignelzi)
Investments in renewable energy in the recovery and reinvestment act will create jobs. (AP Photo/Lenny Ignelzi)

On February 10, the Senate passed the American Recovery and Reinvestment Act by a vote of 61-37. Now they must reconcile the differences between their bill and the House-passed version to pass a final recovery package by the end of this week. Both bills would make significant investments in clean energy and other priorities, but the House bill would create between 343,000 and 444,000 more jobs. The Senate bill would spend more money, but the House bill spends its funds more effectively to maximize clean energy job growth. The House bill has $72 billion in clean energy spending and another $20 billion in clean energy tax incentives. The Senate bill also contains $68 billion in spending and $31 billion in tax incentives.

Perhaps the biggest difference between the clean energy plans is the Senate’s provision to transfer $500 million in loan guarantees for renewable energy projects to the Innovative Technology Loan Guarantee Program established under the Energy Policy Act of 2005. That program disproportionately supports nuclear power plants and “coal to liquid fuel” projects. The Senate provision, sponsored by recovery package opponent Sen. Robert Bennett (R-UT), would ultimately allow the government to provide a guarantee for $50 billion in loans to eligible projects, the vast majority of which will go to nuclear and “coal to liquid” projects.

Investments in these facilities would create relatively few jobs over the coming years. It would take at least three years for nuclear reactors to receive their licenses before any construction can begin. And there is already a backlog of $122 billion in loan guarantee requests for 21 reactors from the existing program. Congress authorized $38.5 billion in loan guarantees in 2007, yet the Government Accountability Office found that the Department of Energy has not even been able to manage that amount. The Congressional Budget Office determined that the default rate for nuclear loans is 50 percent, so the taxpayer could easily risk to lose $25 billion if not the entire amount.

Coal-to-liquid projects are eligible for the loan guarantee program if they “avoid, reduce, or sequester air pollutants or anthropogenic emissions of greenhouse gases.” Since there are no plants that employ such carbon reduction or capture technologies, it could be years before any CTL plant is built, delaying any jobs that may be created by these loan guarantees.

energy spending chart

For a more detailed description of energy-related spending in the two versions of the recovery bills, download this table (.xls).

There are other important differences between the House and Senate energy provisions.

  • The House bill has $8 billion for loan guarantees for renewable energy and transmission projects, which could leverage $100 billion in private investments. The Senate bill has $8.5 billion for this purpose, which is less than the initial proposal in part because $500 million from the original amount was shifted to the nuclear loan guarantee program.
  • The House bill provides $6.2 billion to the weatherization assistance program, while the Senate bill provides less than half that amount, at a total of $2.9 billion. The weatherization assistance program provides funding for the installation of efficiency measures in low-income households.
  • The House bill has $6 billion to make federal buildings more energy efficient, which would reduce federal energy bills by $2 billion annually while employing thousands of people. The Senate program would spend only $2.5 billion for this purpose.
  • The House bill has $2.5 billion in funding for the Department of Housing and Urban Development’s energy and green retrofit program for assisted housing. The Senate has merely $118 million for this purpose. This program would create many jobs while reducing energy bills for publicly assisted homes.
  • The House bill allocates $2.4 billion for research and demonstration purposes of “carbon capture-and-storage” technology. The Senate allocation of $4.6 billion can also go toward funding plant efficiency improvements for integration with carbon capture technology. There may not be enough CCS research projects ready to go to justify the higher spending at this time. The House provision would create just as many jobs without spending the additional funds.
  • The House bill provides $500 million for energy efficient manufacturing demonstration projects, which capture the waste heat energy of industrial facilities. The Senate bill provides no funding for such programs. Also known as combined heat and power, plants employing this technology are as much as 60 percent more energy efficient than conventional power plants.
  • The House bill distributes $13.1 billion for transit, while the Senate bill distributes $17 billion to programs for public transportation and surface transportation. Some of this money may be allocated to the construction of new highways and bridges in addition to mass transit programs.
  • The House bill specifically allocates $500 million to green jobs training, out of a total of $4 billion for job training programs. The Senate bill has $250 million for job training in “high growth and emerging industry sectors,” which includes energy efficiency and renewable energy jobs.

In urging Congress to approve his economic recovery proposal, President Barack Obama reminded legislators that the American people “voted resoundingly for change.” In a press conference to address criticism of the stimulus package, the president said that he could not understand opposition to increased energy efficiency in government buildings. “And we are saving taxpayers when it comes to federal buildings potentially $2 billion. In the case of homeowners, they will see more money in their pockets. And we’re reducing our dependence on foreign oil in the Middle East. Why wouldn’t we want to make that kind of investment?”

As the two houses of Congress seek common ground on a final stimulus package, they should design it to meet both immediate economic needs and long-term goals. The final stimulus package that will be delivered to President Obama’s desk should set the foundation for a “real energy policy.” The benefits will be to create jobs, upgrade our electricity infrastructure, and to mitigate global warming while reducing U.S. dependence on foreign oil.

More on the Recovery and Reinvestment Act:

Column: Getting the Stimulus Bill Right

Background brief: Recovery and Reinvestment 101

Interactive Maps: Recovery Beyond the Beltway

Infographic: The Stimulus: Four Reasons We Can’t Afford Not to Have One

Interactive: Design Your Own Stimulus Package

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Authors

Daniel J. Weiss

Senior Fellow

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