SNL Financial Blog: Cohn's Corner
April 4, 2011
Why All The Flak Over Oregon's Big Green Success?
SNL Financial's Blog posted an article on Monday, April 4, 2011 by energy reporter Lisa Cohn on Oregon's business energy tax credit (BETC). Read the article below, or visit SNL's website and register as a subscriber to comment on the blog post.
Monday, April 04, 2011 7:27 AM PT
Why all the flak over Oregon's big green success?
It's hard to understand all the flak over Oregon's green tax incentives, which have been a whopping success and positioned the state as a leader in renewable energy.
The Oregonian newspaper in Portland ran a three-part series in mid-March criticizing Oregon's business energy tax credit, saying it is unclear how many jobs the incentive has created. Meanwhile, a state legislative tax credit committee is asking questions about the credit.
What's most puzzling is the fact that one of the stories ran on the front page, just above an article about Japan's nuclear plant crisis. Doesn't a crisis such as Japan's point to the need for more renewable energy tax credit money, not less?
Oregon's Business Energy Tax Credit provides a 50% credit for the eligible costs of a qualifying renewable resource project, according to the Oregon Department of Energy.
In 2007, when the economy was still in good shape, the Legislature increased the size of the BETC to 50% from 33%. At the same time, the state implemented a renewable portfolio standard that requires the state's largest investor-owned utilities to ensure that 25% of their electricity supply comes from renewable energy by 2025. Some of the questions about the BETC have come since the economic downturn. Critics say too much money is being poured into renewable energy when it could be going toward "essential" services.
Last year, in response to concerns that too much taxpayer money was being funneled into this popular program, the Legislature fine-tuned the credit, capping the state's exposure, reducing the total award amount and putting a sunset on the program, said John Audley, deputy director of the Portland, Ore.-based Renewable Northwest Project, which promotes the development of renewable resources. That should have calmed the naysayers. But no, they're still targeting the BETC.
Interestingly, critics say the BETC is a waste of public money because so much of the power created from the plants goes to California. Would critics complain if an incentive helped local timber companies sell their timber out of state? This argument doesn't make sense at all.
Here are just some of the benefits of Oregon's BETC:
* The BETC cost the state $244 million in 2007 and in the first three quarters of 2008, according to a study commissioned by the Oregon Department of Energy. "It generated a net economic impact of $576 million, created 1,700 new jobs worth $42 million in wages, and generated $22 million in new state and local tax revenues," the RNP said.
The projects that receive BETC funding are a big boost to the economy of the small towns where they are. Sherman County, Ore., which is home to six of the nine wind farms that received BETC funding, has received more than $17 million since 2002 in property taxes, fees and other investments. The county's annual revenues have jumped from about $300,000 in 2002 to $10 million in 2010.
What's more, Oregon's green tax incentives have attracted some of the largest "green" manufacturers in the world, including Vestas Americas, SolarWorld, Clear Edge, Sanyo Solar and Iberdrola Renewables Inc.
The list of benefits goes on. Then there's the most obvious advantage: The projects and manufacturers that receive the BETC are producing clean, emission-free energy: They yield no carbon emissions, spill no oil into our nation's waterways and produce no nuclear waste.
Given these benefits, the criticism is indeed puzzling. How will we ever avoid costly oil spills, nuclear plant disasters and global warming when people funnel so much energy into fighting job-producing, economy-boosting, green programs like the BETC?
Visit Lisa Cohn at www.realenergywriters.com.