An In-Depth Look at the Federal Legislative Game Plan to Support Renewables
Sure. So, thanks a lot at Ed. Greg, just a mediate question about, folks are really looking to Congress these days, and what do you see as, sort of, the near-term prospect for legislation affecting renewable energy? And what will that legislation look like? Will it be a broader package related to infrastructure? Will it be more of a tax credit extension package as part of a compromise? What do you see that legislation shaping out to be?
It’s a critical question, Chris, and you know, the, the short answer is we don’t see clearly yet what the direction is going to be. All that is in play. What we have seen so far from Congress has been largely an economy-wide focus on help for state and local governments, support for research and for the medical establishment, efforts to promote testing. In an earlier bill, there was a proposal to help the smaller oil and gas companies with purchases that would go into the petroleum reserves. Our champions on the hill basically succeeded both in the House and the Senate and saying there should be nothing targeted to the fossil sector unless we get some important help for the renewable part of the economy. And we are looking at, what we’ve been advocating for, are both extensions, some flexibility and time sensitive deadlines that we face, and other sectors don’t, so the kind of delays were having as a result of shelter in place and the difficulty permitting and supply chain issues and force majeure. All those things that can lead to a delay, they have a bigger impact for us, as you know, because they make it harder to qualify for tax credits. We’re also seeking some form of refundability to make it easier, at least on a temporary basis to use, to monetize the tax credits. We have not seen those proposals yet in the major initiatives that have come forth. We’re looking now to our fifth COVID related response bill and starting to get pretty impatient that the time has come. ACORE was part of a group that yesterday released data on employment figures in the clean energy sector, that includes the entirety of the renewable sector and also energy efficiency, which employs a lot of people. The numbers are, we thought they’d be bad. They’re worse. We saw, essentially, the loss of 94,000 jobs in the renewable sector between Marchand April, with the line share of those, over 70,000in April. This is an unprecedented job loss. Across, looking across, including efficiency, 600,000 new unemployment claims. This is hard data looking at Bureau of Labor Statistics, information on unemployment claims. And we are seeing a lot of pain out there for employees. I’m sure it’s, it’s, we don’t have hard data on exactly where it is. Expectations are its smaller firms, more solar installation, but really a lot of pain across the sector. We know across this economy there’s a lot of difficulty, but we’re certainly seeing our share and then some in the renewable sector. And, we believe that renewables have the potential to be part of the economic recovery, as we were in 2009. Our sector garnered some $50 billion a year in investment, really over the last several years. We were $55 billion last year. One of the most important drivers for growth in the country. The two fastest growing job categories in the country are in our sector. Wind turbine technician and solar power installer. And we want to be able to play that kind of role again in growing the economy. And we’ve got, we’ve got to keep growing in order to realize our potential as part of the climate solutions. And that’s increasingly a priority across the political spectrum in this country. So, looking for more from Congress. I want to talk a little bit about the kind of things we’re doing to try to get there but let me give you a chance to come back what I want to draw on and what answer, Chris.
Right. No, this, there is a couple, couple topics I want to drill in a little bit closer. The last topic related to how industry is affected. I wonder if you could talk a little bit about how industry can work with ACORE to affect positive change on the legislative side, on the advocacy side, what should leading companies in the industry be thinking about right now, interacting with you and interacting with Congress and the administration?
Yeah, thanks for that, Chris. What’s really helpful is concrete examples of COVID related problems, force majeure, supply chain delays, impacts of shelter in place. The more, and we have sent out, a survey at ACORE just went out the day before yesterday. This our second survey trying to keep that data up to date. Please respond if you’re an ACORE member. If you’re not, I want to urge you to join, but, you know, be active, OE&C are good organizations. We work closely with them. It’s very important for us all to work together per the opening questions here. How do we, you know, we have different organizations active in the sector. Be engaged. Share that information. Let us know what’s really important to you. Data on tax equity, availability, difficulty financing. That’s part of the focus in our survey. That’s really important to get, very helpful. The kind of things were doing, I would say we touched on what’s happening in Congress. Happy to come back to that. I do want to mention we’ve also been reaching out to the Treasury Department because, at least in the winds factor, there is the ability to get help through administrative action, through new guidance from the Treasury Department. We joined with OWEA and the Edison Electric Institute and encouraging the Treasury Department to expand the safe harbor period for four years, five years for wind projects, at least those put in place in 2016 and 2017. Obviously, the 2016 projects are facing a 2020 deadline and we’re looking for some flexibility there. We are able to get some really key Senate allies, led by Chuck Grassley of Iowa, with Ron Wyden of Oregon, a Republican and a Democrat, together. Others, like John Fund and Lisa Murkowski, signed onto that letter through the Treasury Department, urging them to provide that kind of latitude and guidance. As most of the listeners here may be aware, treasury sent a letter back saying, we’re going to modify that safe harbor period. We don’t have that formal action yet. I’m hopeful it’s coming. I am expecting an additional year, for at least the 16 and 17 vantage wind projects, but we’ll feel much better when we see that official guidance. It should be over the next week or two, but it’s not the first time it’s taken a while to get guidance to actually emerge from Treasuries. So, nothing unique or worrisome about that, but we’ll feel better when we have it. That’s going to help, but we’re going to need, we’re going to need more. We’re going to need help on monetizing credits and there’s a lot of interest in, getting pushing back the phase updates, so that 2020 does not become a lost year for start construction.
Well, so one of the things you mentioned was a refundable credit. And, just wondering what the contours of that might look like. Does that look like the Treasury cash grant program? Does that take another form? What, what are, what are … proposing in terms of refundability?
Yeah. I think the cash grant program really spurred tremendous growth in the sector. We put it together, and I was working, doing government public affairs at OWEA at the time and my old boss, Henry Waxman, who used to chair the Energy and Commerce Committee, played a really constructive role, working with Ways and Means Committee, Charlie Rangel to put that program together. At the time, the cash grant program had attractiveness as an alternative to refundability, which had some baggage. So, we wanted a, kind of, different approach. Framing it that way made it a joint committee thing and at the time, that was really constructive. In today’s environment, I don’t know that we want the complexity of having to go through that cash grant and infrastructure, which, was again, a boon of the sector but also had complications. We’re looking for something much more simple. I want to mention that the House Ways and Means folks put a proposal on the table late in 2019 as part of what they called their Green Act, to say that the renewable tax credits would be straight up refundable from the Treasury Department, with a haircut, a 15% haircut. An approach like that, we’d rather do without the haircut, but an approach like that, that’s just straightforward refundability, makes a lot of sense. There are other refundable credits now in the tax… they’re there for low income housing. There’s a new proposal to do it for ethanol. We’d like to see the renewable credits treated that way as well.
So one, so one of the things that we’ve been monitoring very closely is the new executive order on bulk power systems. And a lot of our clients are reaching out and asking us, what does this mean? I’m looking to purchase a transformer from China in my project. Do I go ahead and do that? Do I pause? So we are, you know, actively looking at that as a law firm. But I wonder if you’ve got, inside from your conversations with the Department of Energy and others, as to how some of that additional guidance might be shaped and where, where that might be going.
Yeah. I mean, the framing of the executive order is really unfortunate because it looks like the president announced a sweet, big ban, without really much definition at all. And then included a reference to guidance to come in September, presumably, from the Department of Energy to define what it is that’s banned. That kind of uncertainty, obviously, is just terrible for business. I had a surprisingly positive and constructive follow up call late last week with senior DOE officials, and they were reassuring on multiple counts. And I would mention that, you know, they’re, they see that order as, really, providing authority for actions to protect critical infrastructure, mostly defense, but not entirely, on specific transmission corridors. And it seemed like they’re focused on some very specific equipment. They suggested that the folks who will be impacted already know what, already know who they are and what they’re supposed to do. They implied this, or suggested, straight up this is a continuation of existing policies and not something new and sweeping. That it’s not intended target renewables. In fact, they recognized the security value of renewable energy at critical infrastructure sites. Which, we at ACORE have been working with the Department of Defense for many years to make it easier for them to understand how to procure renewables. A lot of that has happened. They’ve done a couple of things that are more public that I think are important and worth mentioning. They have set up a Q&A function on the DOE website at the Office of Electricity and are posting answers to questions there. The site just went live. I don’t know if they have answers yet. There is a web link, that, or, excuse me, an email address that I can give or maybe I can provide it afterward and you guys could mail it out to your folks, to which people can ask questions. And that will be helpful. We are going to be having an ACORE webinar with Mark Menzies, the Deputy Secretary of Energy, and/or Bruce Walker, who heads the Office of Electricity Policy to speak to these issues and answer specific questions. But certainly, in the private conversations, they’ve been exceptionally reassuring that this is not, that they do not intend this to be a sweeping change and that this should not have the kind of chilling effect on transactions that you could see from the, kind of, broad sweep of the executive order. I want to mention there’s a separate process at the Commerce Department under their authority for national security. Where they’re undertaking an investigation that could lead to the imposition of tariffs. And those focusing particularly on transformers. And that effort, which is pretty new, we’re just getting our arms around what that means that, and I really can’t speak to it other than this. It’s a source of concern. It’s not a ban, it may be a tariff. And what happens there, we will see. Their timing, if they act, it will be some right before the election. So, interesting timing on that one.
So, one of the things I think we wanted to ask, you know, on the survey question that Ed passed around, just getting a little more color into ACOREs personal situation and the merger with the Wind Solar Alliance. First of all, just a question as to what was driving that merger and how that merger might affect your strategy going forward?
Yeah, thanks for that. And, you know, kudos to Ed who was a founding board member for the Wind Solar Alliance. I think I was at OWEA when we set up the predecessor to that, the Wind Energy Foundation. That that organization, you know what, it was set up the, when they pivoted from the Wind Energy Foundation to Wind Solar Alliance, the group established a mission that was to accelerate the transition to renewable energy. And at the time, I thought, well, that’s kind of irritating. That’s exactly our mission at ACORE. As time went on, the focus at the Wind Solar Alliance became more and more an RTO advocacy, in particular. At ACORE we therefore focused our great advocacy more on FERC. We coordinated well, we have a lot of companies that were involved in both with ACORE and the Wind Solar Alliance. And there was a recognition that there would be real efficiency in combining our efforts. And we, discussions had been on and off going on for the better part of the year. I’m thrilled to say that we’ve been able to integrate these two organizations. The Wind Solar Alliance is now part of ACORE. All their programs, their staff, really excellent staff are now with the ACORE staff. And with that merger, we were able to go out and secure substantial new funding for a major grid related projects, working on both regional RTO advocacy and the larger effort to promote really the vision for a macro grid that we know we’re going to need to achieve the high penetration levels that we are going to have to have for climate purposes and to meet these aggressive state programs. So, you know, we need to upgrade our grid. We need to more officially move electrons from renewable resource areas to where the people are, where the load is in the big cities. And we’re going to be working hard to build a constituency for that. We’ve got a great group of organizations working together on that. And, the result of that merger, I mean, it’s ranked ACORE significantly and also creates a great vehicle for us to work closely with our allies and other groups, including OWEA. So, we’re thrilled with that direction and our ability to put more resources into our grid advocacy.
Just before, before we wrap up. I just want to grab one question, kind of, related to … the larger organization. Do you have two game plans going forward here? ….
I’m losing some your audio, Ed. Sorry about that.
Second game plan… democrat and republican… Congress in the fall, moving forward.
Yeah. We’re, we’re very much aligned to be able to be effective across the political spectrum. We work hard on that. If you look at our membership, we have constituency that really goes beyond the traditional renewable developers and manufacturers that are so important in our sector, along with the electric utilities that are also members. We also have a number of big players from the financial sector. Almost every major investment firm active in the renewable sphere is part of ACOREs partnership for renewable energy finance. We have a number of very large corporate off-takers that are active in ACORE. Amazon, Facebook, both of them quite aware on our board. Lockheed also on our board. Google. And having that kind of constituency allows us to be effective across the political spectrum. And that’s really important now. It’s always going to be important. We have a, you know, there’s a reality that even if democrats take the senate and the White House in November, we’re still going to need Republican support to move laws through to get past a filibuster in the Senate. And, and the making during law you need bipartisan support. These efforts where one party steamrolls the other, you know, when the cycle turns, and it always does eventually, then that has the potential to get undone. So, we need a bipartisan approach. That, that said, we are working on outreach to both campaigns. We did that in 2016. We’re going to do it again in 2020 to articulate our objectives in the renewable sector. We, we will give both campaigns the same fundamental game plan, which is what we need to do under the law because we’re a nonprofit 501C3. But we are looking both ways, thinking about both. But, you know, we’re also very much preparing for what we would want. If we could have whatever policies we wanted on climate, what would be the mix of policies? And I urge listeners to check out on our website the suite of policies that we teed up in a document on the ACORE website called Advancing America’s Climate Leadership, because we think no one policy, a carbon tax alone is not going to be a sufficient. I think we need a mix that includes a clean energy standard technology neutral credit, big investments in transition, and some form of carbon price.
Great. Well, I think we are, with that, we’re out of time. But Greg, Ed, and I really want to thank you for being our guest for this week. This has been excellent. And for the audience, wanted to let you know that we are putting on another webinar next week, as always. Next week, the topic will be the bulk power order that we talked about a little bit here, but we’re going to go and do a deeper dive there. Also just to, just one more point. We’re going to send a survey out after this webinar as to topics of interest over the next several weeks. And we’d love for you to participate in that survey and let us know what you’d like to hear about because we’re here for, for you. So with that, I think we’ll sign off. And again, thanks so much, Greg. Ed and I really appreciate it.
Thanks for having me. Always great to work with you guys.
Excellent. Thank you.