Biomass Industry Lashes Out at Solar Subsidies

[The heav­i­ly-sub­si­dized, pol­lut­ing bio­mass ener­gy indus­try cries foul over get­ting a small­er slice of the tax­pay­er pie than smoke­stack-free solar ener­gy in Cal­i­for­nia. ‑Ed.] 

-  by Bon­ner R. Cohen, July 15, 2014, Heart­land

The Cal­i­for­nia Wind Ener­gy Asso­ci­a­tion and oth­er renew­able ener­gy groups crit­i­cized a new law extend­ing spe­cial tax breaks to the Cal­i­for­nia solar pow­er indus­try. Wind pow­er, bio­mass, and geot­her­mal pow­er groups say the spe­cial ben­e­fits for solar pow­er tilt the play­ing field against oth­er renew­able pow­er options.

Sen­ate Bill 871, signed by Gov. Jer­ry Brown on June 20, extends until 2025 an exemp­tion for solar pow­er sys­tems from state prop­er­ty tax­es. The exist­ing exemp­tion was not sched­uled to expire until 2017, but the leg­is­la­ture rushed the new exemp­tion into law at the end of the ses­sion with almost no advance notice or oppor­tu­ni­ty for debate.

Renew­able Groups Crit­i­cize Solar Deal
“There is no rea­son for the State Leg­is­la­ture and Gov­er­nor Brown to extend a prop­er­ty tax exemp­tion to large scale solar ener­gy projects at this time,” said Nan­cy Rad­er, exec­u­tive direc­tor of the Cal­i­for­nia Wind Ener­gy Asso­ci­a­tion, in a press statement.

“What is dis­turb­ing is this tax break for the solar indus­try comes at a time when exist­ing bio­mass projects are shut­ting down,” Julee Mali­nows­ki-Ball, exec­u­tive direc­tor for the Cal­i­for­nia Bio­mass Ener­gy Alliance, said in the same press state­ment. “Wind and geot­her­mal renew­able ener­gy pro­duc­ers are also fac­ing chal­lenges in get­ting util­i­ties to recon­tract for their exist­ing resources. Cal­i­for­nia needs these resources to bal­ance our ener­gy port­fo­lio and meet long-term green­house gas reduc­tion goals.”

“The orig­i­nal intent of the prop­er­ty tax exemp­tion was to help stim­u­late what was once a fledg­ling indus­try. Today, solar PV is thriv­ing and util­i­ty-scale solar is expect­ed to increase more than 1,200 per­cent between 2012 and 2020, accord­ing to Cal­i­for­nia Pub­lic Util­i­ties Com­mis­sion (CPUC) pro­jec­tions,” the three renew­able ener­gy groups not­ed in the press statement.

Unnec­es­sary Rush to Sub­si­dize 
Sec­tion 73 of the Cal­i­for­nia Rev­enue and Tax­a­tion Code allows a prop­er­ty tax exemp­tion for cer­tain types of solar ener­gy sys­tems installed between Jan­u­ary 1, 1999 and Decem­ber 31, 2016. AB 1451 amend­ed this sec­tion was amend­ed in 2008 to include the con­struc­tion of an active solar ener­gy sys­tem installed by the own­er-builder in the ini­tial con­struc­tion of a new build­ing the own­er-builder does not intend to occupy.

Estab­lished in 2002, and accel­er­at­ed by the enact­ment of two addi­tion­al laws in 2006 and 2011, California’s Renew­able Port­fo­lio Stan­dard (RPS) requires investor-owned util­i­ties, elec­tric ser­vice providers, and com­mu­ni­ty-choice aggre­ga­tors to increase pro­cure­ment from eli­gi­ble renew­able ener­gy sources to 33 per­cent of total pro­cure­ment by 2020.

Non-Solar Renew­ables Strug­gling
“It is amaz­ing how the renew­able ener­gy indus­try is strug­gling in Cal­i­for­nia even with mind-bog­gling fed­er­al, state, and local sub­si­dies,” said Jay Lehr, sci­ence direc­tor for the Heart­land Insti­tute, which pub­lish­es Envi­ron­ment & Cli­mate News. “The CPUC projects geot­her­mal and bio­mass pow­er will decline by 50 per­cent in the state by 2020 despite enor­mous subsidies.”

Wind, too, is encoun­ter­ing tur­bu­lence in try­ing to secure con­tract renewals that would enable 1,500 megawatts of old wind tur­bines to be replaced by many few­er new­er ones, accord­ing to the Cal­i­for­nia polit­i­cal news site Fox & Hounds.

“The bick­er­ing among com­pet­ing renew­able pow­er indus­tries illus­trates how they care lit­tle about the nation­al and Cal­i­for­nia envi­ron­ment and econ­o­my, but instead are mere­ly look­ing to pad their pock­et­books at tax­pay­er expense,” Lehr observed.

Wel­come to the Fold
Today’s squab­bles among the already heav­i­ly sub­si­dized renew­able ener­gy pro­duc­ers may be a sign of things to come. John Droz, a physi­cist and ener­gy ana­lyst, says it is “ludi­crous” that sub­sidy-depen­dent renew­able ener­gy indus­tries com­plain about the sub­si­dies received by oth­er renew­able ener­gy industries.

“If this isn’t a case of the pot call­ing the ket­tle black, I don’t know what is,” said Droz.

“Wind pro­duc­ers have no leg to stand on when it comes to sub­si­dies,” agreed Daniel Sim­mons, direc­tor of reg­u­la­to­ry and state affairs at the Insti­tute for Ener­gy Research.

“Wind and solar are both depen­dent on sub­si­dies for the large increase in instal­la­tions we have seen over the past few years,” Sim­mons explained. “But if this means wind pro­duc­ers no longer want sub­si­dies for any ener­gy sources, then we wel­come them into the fold.”

Look in the Mir­ror
“The wind pow­er indus­try is tak­ing hypocrisy to new lev­els in their protests against solar pow­er,” Lehr observed. “Wind pow­er needs to look in the mir­ror. Big Wind claims solar pow­er sub­si­dies were designed long ago mere­ly to help a fledg­ling indus­try get on its feet. That, how­ev­er, is the exact same mod­el the wind pow­er indus­try has been advo­cat­ing for its own tax­pay­er sub­si­dies. Now, decades lat­er, the wind pow­er indus­try con­tin­ues to push for nev­er-end­ing sub­si­dies to prop up an indus­try that will fall like a house of cards with­out nev­er-end­ing sub­si­dies and guar­an­teed mar­ket share.”

Bon­ner R. Cohen, Ph. D., (bcohen@nationalcenter.org) is a senior fel­low at the Nation­al Cen­ter for Pub­lic Pol­i­cy Research.