Reinvestment in Clean, Renewable Energy and Energy Efficiency

Our economic security, our national security, our health, and the future of the global environment are fundamentally linked to the choices we make about energy. With greenhouse gas emissions from human activities growing and oil supplies increasingly concentrated in the Persian Gulf, the imperative has never been greater to reshape the future of our energy supply and energy use in a way that enhances our security, provides our economy with a new engine for growth and prosperity, and protects us against climate destabilization and its dangerous consequences.

Accomplishing this energy transition will require smart policies and investments from the federal government. We must establish clear priorities and we must leverage all sectors of the economy from the largest banks and corporations to individual homeowners and small businesses to support this effort.

In the past year, big oil companies have set new records as the most profitable businesses in the history of the world. However, according to an analysis produced by Friends of the Earth, oil companies are slated to receive more than $31.6 billion in handouts from taxpayers over the next five years. This figure includes tax benefits, royalty relief, research and development subsidies, and accounting gimmicks which benefit the oil industry.

Closing these loopholes and reinvesting the revenues to develop a low-carbon, efficient energy economy is essential to our nation's future.

Strategic Energy Efficiency and Renewables Reserve

In order to direct the money recovered by H.R. 6 to investments in energy efficiency and renewable energy, the legislation creates a Strategic Energy Efficiency and Renewables Reserve. Funds in the reserve can be used to offset the cost of legislation that:

  1. Accelerates the use of clean domestic renewable energy resources and alternative fuels;
  2. Promotes the utilization of energy-efficient products and practices and conservation; and
  3. Increases research, development, and deployment of clean renewable energy and efficiency technologies.

Priorities for Reinvestment

Once H.R. 6 has been passed into law, the Kick the Oil Habit coalition recommends that Congress direct money from the Strategic Reserve to the following priority areas:

  1. Extend the Production Tax Credit and Investment Tax Credit for renewable energy. Extends for five years (until January 1, 2012) the renewable electricity production tax credit (PTC) for the following facilities: wind, closed-loop biomass, open-loop biomass, geothermal, small irrigation power, landfill gas, and trash combustion. Extends the current 2-year, 30 percent investment tax credit (ITC) for solar equipment until January 1, 2016, reverting back to 10 percent after 10 years. Extends the ITC for eligible fuel cell properties until December 31, 2015. Extends the ITC for geothermal properties until January 1, 2016, and increases the credit from 10 percent to 30 percent to match the solar credit, reverting back to 10 percent after 10 years.

  2. Fully fund cellulosic ethanol and energy efficiency programs authorized in the Energy Policy Act of 2005. Important programs to advance cellulosic ethanol production and increase energy efficiency have already been authorized, but they have not been fully funded. These key programs need at least $600 million per year.

  3. Extend consumer efficiency and renewable energy tax credits. The Energy Policy Act also created tax credits for homeowners to increase the efficiency of their homes and purchase renewable energy systems but these will expire in 2007 and 2008. These programs should be extended and coupled with a strong public education campaign to dramatically increase the efficiency of homes and increase the amount of household scale renewable energy use in the United States.

  4. Establish an Advanced Research Projects Agency for Energy (ARPA-E) within the Department of Energy. Recent national and global studies have indicated that a clean energy future can be achieved for lower costs than continuing our current path. To facilitate this energy transformation, Congress should also establish an entity like DARPA within the Department of Energy for breakthrough energy research that can bridge the gap between basic research and industrial deployment and help transform the energy marketplace. A recent National Academies of Science report recommended funding such an entity at $300 million in the first year and at $1 billion per year over 5-6 years, at which point the program's effectiveness would be evaluated and any appropriate actions taken.