A Lost Chance to Bring the Green New Deal Home
During the past year, in addressing the crisis of climate change, the Democratic Presidential candidates have spoken earnestly, if evasively, about the Green New Deal. But in December, at the last hour, the Democratic leadership in the House agreed to strip a provision from a corner of the tax code—a capitulation that will prove damaging to the environment and to job opportunities. The provision was cut from the omnibus spending bill, a 1.4-trillion-dollar package that was negotiated by the White House, Senate Republicans, and House Democrats and signed by President Donald Trump. The provision, originally conceived in the Energy Policy Act of 2005, was simple: a thirty per cent household tax credit for the cost of installing a residential solar-electricity system. The act, signed by George W. Bush, capped the solar credit at two thousand dollars per project. In 2008, with the Democrats in control of both the House and the Senate and a recession underway, the cap was removed so that thirty per cent of even large-scale residential projects would be rebated at tax time. In 2015, Congress extended that credit through 2019. Now, if new legislation isn’t passed to redeem the credit, it will drop to twenty-six per cent this year, twenty-two per cent in 2021, and nothing in 2022.
Lobbyists close to the oil-and-gas industry wanted the tax credit ended; predictably, the Republican leadership and the White House joined them. The majority of House Democrats wanted to extend the credit, but the Trump Administration dug in. The Democratic leadership, it seems, feared a government shutdown before Christmas, which Republicans would blame on them, so they let the credit for residential solar power drop.
But this was a pivotal fight, and tenacity would have been both simple to explain and likely to gain bipartisan support. This past summer, more than a thousand solar companies signed a letter in support of an extension. Soon after, a group of lawmakers, led by two Democrats—Senator Catherine Cortez Masto, of Nevada, and Representative Mike Thompson, of California—and two Republicans—Representatives Paul Cook, of California, and Brian Fitzpatrick, of Pennsylvania—introduced legislation to extend the credit for five years more, not just for solar electricity but also for fibre-optic solar technology, fuel cells, small-wind technology, microturbines, combined-heat-and-power technology, and geothermal heat pumps. In October, a bipartisan group of two hundred and thirty-one mayors, from Kenosha, Wisconsin, to Fort Lauderdale, Florida, signed a letter in support of the bill.
“Charles Grassley managed a five-year extension for biodiesel” in the spending bill, Gregory Wetstone, the C.E.O. of the American Council on Renewable Energy, which lobbies for solar companies, told me. That credit expired in 2017, so its extension is retroactive to 2018 and runs through 2022. Wetstone was frustrated that Senator Grassley, Republican of Iowa, stood firm for his farming interests (in 2018, Iowa farmers harvested more than five hundred million bushels of soybeans, a key crop for biodiesel production) and prevailed, but Democrats gave in. Most frustrating, he added, is that the credit was not some new idea but one that has been “working well for over a decade.” It has appealed as readily to Rust Belt businesspeople as to Green New Dealers. “The leverage was there to get more done,” Wetstone said. Michael Brune, the executive director of the Sierra Club, was more blunt. House Democrats, he tweeted in December, “were given a mandate to fight hard” to secure victories on climate action. “They had an opportunity this week. They failed to deliver.”
Nor did they convey what was at stake. According to an analysis from the Solar Energy Industries Association and Wood Mackenzie, a consulting and equity-research company based in the United Kingdom, extending the credit through 2030 would likely have added eighty-two gigawatts of solar power “over baseline forecasts”—that is, forecasts of growth without the credit. Eighty-two gigawatts amounts to about seven per cent of total power-generation capacity in the United States. The credit would thus have offset more than three hundred and fifty million metric tons of carbon dioxide in a decade—equal to a fifth of U.S. electricity emissions in 2018.
The credit worked and rallied some bipartisan support because it wedded progressive ambitions for government to the market logic of the private sector. House Resolution 109, in which the Green New Deal is envisioned, alludes to the “Federal Government-led mobilizations” that spurred the economy during the Depression and the Second World War; it sees the government now taking a similar role, “dramatically expanding and upgrading renewable power sources” and “prioritizing high-quality job creation.” The expansion of solar energy, specifically, would mean myriad installations in towns and suburbs; dramatic expansion would come, if at all, from the federal government helping to shape market forces there: regulating carbon emissions, normalizing technical standards for regional power grids and electric vehicles, and providing targeted tax incentives.
The solar tax credit, in this context, has already been “incredibly consequential,” Abigail Ross Hopper, the C.E.O. of the Solar Energy Industries Association, told Wired last summer; it was largely responsible for getting the solar industry off the ground in this country. During the past decade, according to the S.E.I.A., solar installations grew by fifty per cent a year, on average. Since 2011, the Department of Energy reports, installations have grown “more than tenfold,” with more than a million currently in operation. “The cost of solar energy has also dropped as much as 65%.”
Solar installation, moreover, has been a godsend to the struggling construction industry. Nationwide, there are almost seven hundred thousand construction companies of all sizes, employing more than seven million people. Many residential companies have been pushed to the edge since 2008, especially in mill towns and rural areas, where manufacturing jobs have been growing scarce and new home construction has lagged. The tax credit prompted many of those firms to switch to offering residential solar-energy installation. There are now ten thousand solar businesses in the country, located in every state and employing about a quarter of a million people. The tax credit helped them by turning householders who may have been wary of the unfamiliarity—and the cost—of solar power into more or less confident buyers.
My wife and I were just such householders. Last summer, we installed a solar tracker on our home, in rural New Hampshire; it’s an array consisting of twenty solar panels, mounted on a galvanized steel frame and pylon and connected to a smart piston, which rotates and pivots throughout the day, following the sun. Our tracker was designed to produce, on average, just under ten thousand kilowatt-hours per year. That’s about what our home consumed in 2017 and 2018. The fully installed system cost more than thirty thousand dollars—a serious investment. And one might think that New Hampshire is hardly a place to invest in solar energy, given the long winters of short days. We did, until we looked more closely at the numbers.
In New Hampshire, the winter months normally see a spike in demand for natural gas for heating, which tends to drive up electricity prices. The average price of a kilowatt-hour is about twenty cents for residential customers, which is among the highest in the nation, owing in part to the cold. So our total annual cost for delivered power (ten thousand times twenty cents) is about two thousand dollars—a hundred and sixty-seven dollars a month. Our tracker, we figured, would compensate us for this sum by replacing much of the electricity that we’d normally have to buy in the winter and by allowing us to sell excess power to the utility company in the summer, albeit at a rate slightly lower than what we’d have paid for it. It would take about sixteen years to pay off the system; with the tax credit, however, it would be paid off in eleven years. After that, the power would be free.
Sixteen—or even eleven—years may seem a long time for older homeowners, like us, but the logic of the investment is even clearer if, like us, they borrow to buy the installation. In our case, the question was do we keep paying a hundred and sixty-seven dollars to the utility company, or do we install solar technology and pay monthly installments to the bank? How much would we pay the bank? If we repaid the loan at the standard five per cent, over sixteen years, the monthly payment would be slightly less than two hundred and forty dollars—seventy dollars more per month. The tax credit, however, brings the tracker’s all-in cost down to slightly more than twenty-two thousand dollars—a monthly payment of a hundred and sixty-seven dollars, or exactly the actual cost of power. (There is also an added sum for the mortgage-interest deduction.) The credit meant that we could do something for the planet, the local bank, local business, and our community and pay not a dime more.