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16|12|2010 - 08h33Good Energy Subsidies, and Bad

Subsidies for renewable energy

By New York Times

Last-minute negotiations over the tax package could send America’s energy policy in exactly the wrong direction. If budget-conscious Republicans have their way, tax credits for renewable energy sources like wind and solar power would be allowed to expire, while wasteful and unnecessary tax breaks for corn ethanol — an environmentally dubious fuel supported by farm-state legislators of both parties — would be extended. 

This would be a preposterous outcome at a time when the nation desperately needs new investment in clean energy as well as the jobs that go with it.

In a rare sighting of bipartisanship and good sense, 17 senators are calling for subsidies on corn ethanol to lapse, as scheduled, at the end of the year. If they are extended, as the industry and its lobbyists want, it will cost taxpayers $31 billion across the next five years.

Corn ethanol’s environmental benefits also have been called into serious question. Some studies have found that corn ethanol, as presently produced, releases more greenhouse gases than petroleum fuels. The rush to convert food crops to fuel production also has contributed to spikes in food prices.

Meanwhile, two modest but useful tax incentives, also scheduled to expire on Dec. 31, should be renewed. Both were included in the 2008 stimulus bill. One provides tax credits — technically, grants in lieu of credits — for renewable energy projects like wind and solar. Extending this program would create thousands of new jobs. Allowing it to lapse would threaten two important industries struggling to meet foreign competition.

The second incentive is a manufacturing tax credit for companies that retool their factories to produce energy-efficient batteries and other clean-energy products. The $2.3 billion provided under this program was snapped up in a hurry, partly by rust-belt states desperate for new jobs.

Congress should keep the subsidies for renewable energy while jettisoning the subsidies for corn ethanol. That makes sense for the environment, the economy, and for American taxpayers.

 


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