Normalize Renewable Energy Credits Now

Authors: Greg Pfahl, CPA, Hein & Associates, LLP and Sean Kelly, CPA, Hein & Associates, LLP 

Several renewable energy incentives are on the congressional chopping block this year, and every year, it seems. There are plenty of persuasive arguments on either side regarding whether or not to keep renewable incentives. We believe a long-term energy policy is needed at the federal level to allow the domestic renewable energy industry to grow and ultimately prosper. It will remove the guesswork surrounding what incentives may be available in any given year. 

 

First, let’s offer some perspective. The government gets involved with industry when it deems it is in the national interest of the U.S. For example, companies and investors receive tax advantages associated with domestic oil production as a way to lessen U.S. dependence on foreign oil. Earlier in our history, the government granted right-of-ways to railroads and utilities. Today, politicians use the renewable energy industry as campaign stump fodder because clean, domestic renewable energy sounds good to voters. It brings in jobs arguments as well, and Navigant Consulting, Inc. estimates that eliminating the production tax credit on wind would blow away 37,000 jobs in the U.S.

When a group submits a business plan for potential funding, it often includes projections 10 years out. How can renewable energy companies receive funding when a critical aspect of their business plans — those dealing with such issues as investment tax credits and bonus depreciation, for example — is indeterminate? The 2.2 cent per kWh tax credit program has been extended seven times during the past 10 years.  Banks and investors want to know what the potential financial landscape is with the best amount of assurance, and annual extensions of incentive programs by Congress is the last place they look.

A Change Is Coming

For many, having success in one industry might be enough. However, we know there are those out there that have found that success and are now ready to trail blaze onto a new and exciting venture. Perhaps a venture in cleantech.

As the application process for the inaugural year of the Cleantech Fellows Institute draws to a close, the gears of this program are already turning.

Just take a peek at some of the curriculum for the Institute:

• Clean Energy Generation – solar, wind, hydro, biochemicals, natural gas, biofuels
• Storage Technologies – grid storage, ultracapacitors, fuel cells, batteries
• Advanced Transportation Technologies – electric and hybrid technologies, advanced engines, materials, biofuels
• Energy Efficiency and Building Technologies – lighting and HVAC, building automation, energy management systems, demand response and green buildings
• Foundational Elements – tech transfer, commercialization, national infrastructure, cleantech financing, regulatory, public policy

For those still looking to find out more information you can contact CFI for answers, additional details and  press inquiries.

Beetle Kill and Biomass Projects

About 3 million acres of Colorado and Southern Wyoming forests have been killed by the Rocky Mountain pine beetle, which has infested the Colorado’s Lodgepole Pine population for the past 15 years. The beetle kill epidemic is visible all over the state and has turned much of Colorado’s wilderness from lush green to a dark reddish color, which is severely noticeable in most regions. 

The outbreak has become an increasingly pressing problem, as the beetle populations have sustained themselves and moved upwards in elevation due to the past few relatively warm winters, and also have developed more expansive eating habits. The Forest Service has worked to clear some of the dead forests in efforts to prevent further spread of beetle populations. The vast areas of dead trees also present growing concerns regarding forest fire danger, watershed damage, trail and road damage, and power line damage.

Growing operations to remove the dead trees throughout Colorado’s forests means an increase in timber supply, which needs a use. Using the dead trees for lumber and commodity type products is difficult, as the trees killed by beetles loose their saw log value in less than two years. The beetles also leave the trees with a blue stain caused by a fungus and this reduces the market value of the wood. 

Biomass projects have become an increasingly viable and logical option for making use of the beetle kill trees, as clearing dead forests becomes a priority for the Forest Service. Although there are concerns about the environmental impact from extracting the trees from the forest, it is imperative that measures be taken to appropriately manage Colorado’s forests in order to prevent forest fires resulting in damaged watersheds.

Colorado has passed a list of bills in the past couple years that have created incentives for biomass projects in the state.