We Need a Clean Energy Economic Recovery
By Senator Ron Wyden
Among the many crises President-elect Biden will inherit from Donald Trump on January 20, 2021, the economic and climate crises will be the most urgent.
Donald Trump has surrendered to COVID-19. Cases and hospitalizations are skyrocketing, which will cause the economy to further deteriorate in the coming months. While economic relief is desperately needed to ensure workers can pay rent and buy groceries, rebuilding the economy for working people demands new ideas.
At the same time, the need to combat climate change grows more urgent by the day. This year is expected to be the warmest on record, and the devastation of extreme weather events like this summer’s wildfires in Oregon is impossible to ignore.
The good news is that with a president committed to addressing these dual challenges, our country has an opportunity to build a zero-carbon economy, and revitalize American manufacturing.
Even before the pandemic, job growth in clean energy outpaced the rest of the economy. What’s more, transitioning to clean energy is extremely popular with the American people. Data for Progress polling shows that 71 percent and 67 percent of voters support using more solar and wind energy, respectively. A strong majority of voters also support massive public investments to fight climate change and create jobs.
Simply put, clean energy investment must be the foundation of our long-term economic recovery.
Achieving that goal requires investing resources to help manufacturers expand, building a robust market for their products, and creating jobs that support a middle-class life. By building on tools with records of success, we can boost manufacturing in those communities that have been left behind.
To that end, Democrats are working on new legislation that would expand production of critical clean energy technologies, and help create good-paying jobs in clean energy manufacturing. These proposals would significantly increase federal investment in both the technology needed to transition to a zero-carbon economy, and the labor needed to develop and produce that technology.
To expand production of clean energy technologies, my proposal would provide a tax credit for manufacturing critical clean energy components here at home, particularly where there are gaps in the U.S. supply chain or opportunities for growth, like solar panels and wind turbines. This should also include battery cells, which are essential to expanding the market for electric vehicles. The tax credit would be modeled on a similar credit for energy efficient appliances, which more than doubled their market share from 2005-2011.
Eligibility for the credit would be tied to increasing efficiency and capacity requirements to ensure companies that receive tax benefits continue to innovate to enhance production and decrease technology costs. An updated production credit must also require companies to adhere to labor standards to support high-quality, good-paying jobs.
To expand clean energy manufacturing and create good-paying jobs, we should also reform existing tax credits. Some of my fellow Senate Democrats have proposed expanding the availability of clean energy manufacturing credits, which are awarded by the Treasury and Energy Departments. Under these proposals, the types of eligible investments would be expanded, and projects would be required to pay prevailing wages and meet other labor standards.
To address long-standing environmental and economic inequities, credits would be boosted for projects that create jobs in hard-hit communities, including those that have borne the brunt of toxic pollution, or experienced manufacturing job losses.
Importantly, Data for Progress research shows a strong majority of voters support targeting clean energy investments toward the communities that are most likely to suffer from the effects of pollution and climate change.
Communities that have been aggressively transitioning away from fossil fuels would also be rewarded for their bold action.
In conjunction with these new policies, I will be re-introducing legislation to overhaul the federal energy tax code, which is woefully inadequate to address today’s energy challenges. It’s a hodgepodge of temporary credits, anchored by advantages for Big Oil, that don’t effectively move us toward the goals of reducing carbon emissions or lowering electricity bills for American families. The Clean Energy for America Act would consolidate the current 44 energy incentives into three emissions-based, technology-neutral provisions to encourage clean electricity, clean transportation, and energy efficiency while letting innovation flourish. These reforms make achieving climate outcomes the centerpiece of our energy tax policy, while also simplifying the tax code.
President-elect Biden and congressional Democrats have an opportunity to rebuild our economy in a way that invests in underserved communities and finally addresses the most pressing challenge we face as a society. Doing so would be incredibly popular with the American people and we must seize this opportunity.