The immediate impact of the failure to pass energy legislation will be on the wind industry, whose cash grant program expires at the end of 2010. Solar has the most secure tax subsidy - its Investment Tax Credit is guaranteed through 2016. The wind industry is already suffering from a terrible year where new installations are down 72%. The lack of clear energy policy, lower electricity demand and low natural gas prices, make wind power a tough sell to utilities now.
The death of cap-and-trade is already having negative ramifications. The eight year old Chicago Climate Exchange, where companies have been voluntarily reducing greenhouse gas emissions and trading the credits they earned, is shutting down at the end of this year. Carbon prices on the Northeast carbon exchange (RGGI) are at their lowest level in two years.
A national Renewable Portfolio Standard (RPS) is also likely out the door along with cap-and-trade. Therefore, the 29 state RPSs will continue as the backbone for renewable energy expansion (if some new Republican Governors don't ditch them). The DOE still has $25 billion to spend from the Recovery Act, and the Investment Tax Credit (ITC) stands for solar and fuel cells through 2016.
And speaking of Governors, it would be hard to replace the advocacy and enthusiasm of Michigan's former governor, Jennifer Granholm. Republican Governor-Elect Rick Snyder expresses support for renewable energy jobs in his campaign literature, but we'll see how that plays out.
In Ohio, Governor-elect John Kasich will be a stark contrast to ousted Governor Ted Strickland. Kasich has favored repealing the state's RPS because it drives up utility bills and mandates intervention, but so far he's retreated from that position. One of his first post-election statements was declaring the federally-funded rail line that would connect Ohio's three largest cities dead.
Rep. James Oberstar (D-MN), a strong supporter of high speed rail, lost his seat. His proposed transportation reauthorization bill included a large increase in public transportation funding. Obviously, a Republican will now chair that committee.
Besides cap-and-trade and RPS, other programs likely on the chopping block are:
- natural gas vehicle incentives
- clean energy Manufacturer's Tax Credit (MTC) worth $5 billion
- DOE loan guarantees worth $35 billion
- extension of tax credits for biodiesel and biomass (expires in 2010)
- critical programs for wind and geothermal: Investment Tax Credit (ITC) cash grant program expires in 2011; Production Tax Credit (PTC) expires in 2013.
Anything related to clean energy and climate that carries a price tag will be anathema. There might be a good side to that - since the central Tea Party message is reducing government spending, there's certainly a case for eliminating subsides for the oil industry, carbon capture and sequestration, and nuclear power (Good luck!) - a true waste of taxpayer money.