National energy policy has emphasized the need for broadening our portfolio of sources. Over the last few decades, we have substituted for oil in our electric generation plants, but today's thinking suggests further steps to conserve natural gas and reduce the greenhouse gas output from use of coal. Solar power offers an attractive option — after all, the sun's rays are free The Big Sky: For our report on the vast potential of solar, click here. and all we need to do is perfect the technologies for conversion at large scale. But if it were that easy, wouldn't we have done it by now? There are promising technologies ranging from photoelectric conversion to the use of solar to boil water for turbine power.
     Of course, it isn't that easy. To bring on the capacity needed, there are two key ingredients needed — accommodating policies and economic support. Entrepreneurs see the opportunities in alternative energy, but they need to reduce their risks through greater certainty about market opportunities and they need to know that the alternative energy will have a reasonable chance to compete in the market place.
     Government actions are needed in both cases, and some have been taken. At the state level, legislation has been enacted requiring utilities to provide a percentage of their output using renewable sources such as wind, solar or biofuels. Congress considered a national standard earlier this year, but concerns about regional competition blocked it in the Senate.
     A standard alone is not enough. Time is the enemy of innovation, and government needs to assure the innovator that his or her product can come to market in a reasonable time frame. The nature of the Federal commitment to support innovation is put to the test by recent developments at the Interior Department’s Bureau of Land Management. As the steward of federal lands in the West, the BLM is the permitting agency for major solar installations that would seem tailor-made for location in deserts and badlands. But the BLM is required to follow set processes for these permits, including a thorough environmental review to support their permitting decisions.
     These reviews are detailed and time-consuming, given the need to achieve a level of certainty that will withstand legal challenge. Recently, the BLM concluded that pursuit of the reviews on a project-by-project basis was insufficient and called for a moratorium on new permits while they carried out a programmatic environmental impact study on the broad effects of solar power. As the political impact of this moratorium, which would have allowed BLM to continue processing of 130 applications covering more than a million acres, became evident, the agency backtracked and indicated that new applications will be taken during the study period. But even this action casts doubt on the pace of action. To the extent that agency lawyers need to balance energy and environment with the expectation that their actions will be taken to court by one side or the other, the likely outcome is delay.
     The competitive price of alternative energy is also at risk. New technologies such as solar are recognized as needing some level of subsidy to be competitive with cheap oil and coal, at least for their incubation period, and perhaps as long as coal and oil fail to pay their full environmental costs. Recognizing this need and reflecting the private sector involvement, our public policy response has been to provide tax support for the entrepreneurs, generally in the form of tax credits or low cost financing, either of which can be reflected in the price of their product. However, at the federal level, these credits for alternative energy will “sunset” at the end of September. The requirement to review so-called “tax expenditures” on a period basis is a sound public policy position, but can lead to political problems. In the current Congress, political gridlock has made it impossible to enact significant legislation of any kind, and particularly tax bills. The House and the Senate have opposite views on whether tax decreases must be “paid for” with compensating increases in other parts of the tax code. Even where there is substantial agreement on a particular set of provisions, the broader debate about the Bush tax cuts and the Alternative Minimum Tax confuses the issues. And, within the Senate, the ever-present threat of filibuster and the Republican reaction to Majority Leader Reid’s parliamentary tactics add to the gridlock. As evidence of this gridlock, the Senate found it impossible to add energy tax credits to the recent Housing bill, even though they were supported by 88 out of 100 Senators. And even though 80 Senators supported the underlying Housing bill, it too fell short of enactment before Congress left on its 4th of July recess.
     At the end of the day, some form of compromise is likely to occur, with at least temporary actions to push the issues past the election and into the next Congress and Administration. But in a broader sense, one still must ask whether we have the resolve to put forth a coherent policy and enact the measures needed to implement it.
     - Mort Downey