Policy & MarketMore
Stakes high for green energy as US election goes to the wire
Deeply-divided Americans vote on Tuesday with President Barack Obama holding a razor-thin lead over his Republican opponent Mitt Romney, an election that few political analysts thought would be this close even one month ago.
The election outcome holds major significance for the US clean technology sector, and especially its troubled wind industry. Obama and Romney bring two different visions of what role the federal government should play in support of alternative and renewable energy development.
Obama believes it should aggressively support “clean and green” technologies through grants, loan guarantees, subsidies and other mechanisms, while taking the lead in helping build scale for offshore wind and utility-scale solar on public lands. He favors renewal of the investment tax credit for offshore wind that expires next month.
He also wants to make the wind production tax credit permanent. Or, if Congress rejects that idea, extend it for several more years. The PTC, which pays $22 per MWh inflation-adjusted for a project’s first decade in operation, has been the industry’s main subsidy since it was enacted in 1992.
Romney, who was much more amenable to clean energy as governor of Massachusetts last decade, now views it as uncompetitive on price at utility-scale without federal support. Propping up the wind industry with a production tax credit for 20 years, in his view, is an example of politicians picking technology “winners and losers,” something best left to free enterprise and competition to determine.
He would end the PTC. This would force the wind industry to refocus growth in regions with the best resource and available transmission lines, and in states with renewable mandates and/or high power rates that allow wind to be competitive with fossil fuels. Hundreds of other projects would likely not be built.
Romney also contends that despite federal outlays totaling tens of billions of dollars, only a fraction of five million full-time green jobs promised by Obama were created. Taxpayers can’t afford such largesse in an upcoming era of fiscal austerity and better administered government with him in the White House.
Both men would continue Energy Department investment in basic and applied research for clean fuels and technologies, although likely at lower levels in response to expected spending cutbacks in all federal agencies.
Romney’s stance against the PTC is unpopular with Republican officials in the Midwest and Plains states, where industry plants have been laying off several thousand workers in recent months amid the political uncertainty. In Iowa, where wind energy is a big employer, it may be a reason why he is trailing Obama there.
If elected, he could have problems wiping out Obama’s clean energy funding programmes in Congress, where his party is expected to retain control of the House and some Republican lawmakers there want some federal support for wind and solar to continue.
Regardless of who wins, there would appear to be little appetite in Congress for a national renewable energy standard, which Obama now favors after a failed effort in 2009-10 to win approval for a carbon cap-and-trade system.
On trade, Romney says he would be more aggressive with China in protecting US interests than Obama, but has not said if this includes clean technology. He vows his administration would label Beijing a currency manipulator, a move that Obama’s administration has avoided given concerns this could rachet tensions with the number two US trading partner.
With the race too close to call, Romney still faces a more difficult path to victory through the Electoral College, a process, not a location, by which US presidents are elected. To win, a candidate for president needs at least 270 votes from 538 total electors located in the 50 states and District of Columbia (DC).
The electors, whose distribution matches the makeup of the House of Representatives, cast ballots in December for president based on popular vote results in each state and DC. For example, all 29 in Florida would go to the winner there. This is a formality as a winner is usually known on election day.
Whenever there is a close election, the possibility exists for one candidate to win the popular vote and lose in the Electoral College. This last occurred in 2000, when former Vice President Al Gore lost to George W. Bush. In which case, the college prevails.
Such an outcome would deepen the existing bitterness between Democrats and Republicans, and complicate efforts by the winner to bring them and nation together after taking office on 20 January.