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Published on March 13th, 2008 | by Timothy B. Hurst

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‘Feast or Famine’ Cycles of Clean Energy Development in the US (part II)

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March 13th, 2008 by
 

The Solar Thermal Edition

carter-1979-radford.jpg

In my first post about the feast or Famine Cycles of American Clean Energy Development, I discussed renewable energy more broadly and used the example of wind to show my point. I also touched upon the up and down nature of federal funding for renewable energy deployment in the late 70s and early 80s. With that said, the following examination adds some more context with a historical-institutional perspective of what went down in the early 80′s, how, and why. And in the spirit of some of the earlier posts this week that covered the technology of solar thermal, and the practical application of solar thermal technology to entire neighborood developments, I have decided to follow suit by writing about solar thermal as well. I hope to show that the decline and slow fazing out of federal support for solar thermal research and development during the Reagan and George Bush administrations has had a substantial effect on where the industry is today.

In 1976 Congress began giving serious consideration to enacting federal solar tax credits as a subsidy to lower the cost of solar energy systems. New Mexico, followed by California, had already passed state tax credit incentives to aid the budding industry. Unfortunately, the debate over national incentives had a negative impact on the growth of the solar industry. It seems that when it appeared Congress might pass legislation, consumers stopped buying in anticipation of new federal incentives. The pause in market confidence deepened in 1977 and lasted over a year.

But after a major energy message President Carter gave in April of 1977, the federal government responded with a grant to consumers of $400/system for residential water heaters in eleven states. This federal program ultimately allocated funding for 10,000 solar water heaters to the eleven states involved.

However, in anticipation of another tax credit for solar energy systems, production actually declined in 1978. But in April of that same year, Congress did pass solar tax credits in the National Energy Act. Consumers eventually received a credit equal to 40% of the cost of their systems (the same figure in the tax credit just passed by the House).

At the time, Carter’s goal was the installation of 2.5 million active solar systems by 1987 – a figure the industry would fall well short of.

When President Ronald Reagan took office, it quickly became evident his senior energy advisers did not believe solar energy should be a priority. Add to this a President who had a strong belief that governments should not be involved with supporting the commercialization of new technologies, something that Carter was a strong supporter of.

According to LaPorta (1996), the Reagan administration “reoriented the Department of Energy away from commercialization programs and towards the support of high-risk, long-range research and development.” Reagan also tried to repeal the solar tax incentives before they would expire. By 1985, funding for both passive and active solar fell from $89 million in 1980, to 10 million by 1985. And by the the end of the eighties and the beginning of the nineties, federal support had slowed down to a trickle of $2 million or less per year (LaPorta 1996) – just a fraction of what investment numbers had been ten years earlier.

Photo: Radford University

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About the Author

is the founder of ecopolitology and the executive editor at LiveOAK Media, a media network about the politics of energy and the environment, green business, cleantech, and green living. When not reading, writing, thinking or talking about environmental politics with anyone who will listen, Tim spends his time skiing in Colorado's high country, hiking with his dog, and getting dirty in his vegetable garden.



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  • http://redgreenandblue.org Tim Hurst

    Robert-

    Thanks for jumping in on this. While I certainly recognize that the Congress has the constitutional authority to write the checks, I think you understate the role of the executive. You write, “The only recourse for the Administration would be a Presidential Veto.” This may be true in theory, but what about a threatened veto? A threatened veto can be just as powerful as a veto, as we are seeing right now with the President threatening to veto any renewable energy tax package financing by rescinding some of the tax breaks on big oil.

    You also pay no heed to the tremendous power vested in the Office of Management and Budget – an office that saw an expanding role during the Reagan administration. Even if the money is there, OMB has the power to reorganize and redirect funding within the agency to other projects more favorable to the administration’s agenda.

    Despite your assertion, I’m not laying the entire blame for cutting funds to government projects entirely on Presidents, and perhaps I could have made that point clearer. I am merely showing that the institutional dysfunctionalism of the US system (call them ‘checks and balances’ if you will) can have a crippling effect on legislating coherent policy.

  • http://redgreenandblue.org Tim Hurst

    Robert-

    Thanks for jumping in on this. While I certainly recognize that the Congress has the constitutional authority to write the checks, I think you understate the role of the executive. You write, “The only recourse for the Administration would be a Presidential Veto.” This may be true in theory, but what about a threatened veto? A threatened veto can be just as powerful as a veto, as we are seeing right now with the President threatening to veto any renewable energy tax package financing by rescinding some of the tax breaks on big oil.

    You also pay no heed to the tremendous power vested in the Office of Management and Budget – an office that saw an expanding role during the Reagan administration. Even if the money is there, OMB has the power to reorganize and redirect funding within the agency to other projects more favorable to the administration’s agenda.

    Despite your assertion, I’m not laying the entire blame for cutting funds to government projects entirely on Presidents, and perhaps I could have made that point clearer. I am merely showing that the institutional dysfunctionalism of the US system (call them ‘checks and balances’ if you will) can have a crippling effect on legislating coherent policy.

  • Robert Lankford

    If the budget for renewable energy was cut during the Reagan administration, it was Congress that did it. The Administration submits the budget but it is Congress that decides what they want in the budget and it is Congress that votes on the budget. If Congress wanted to keep or increase the level of spending on renewable energy they would have. The only recourse for the Administration would be a Presidential Veto. One must also remember that the Democrats controlled both the House and Senate during the Reagan Administration. It appears as if the Democrats in the House and Senate didn’t want to spend the money on the energy project, either. The concept of laying the blame on Presidents for cutting funds to any government project is ludicrous. Congress holds the purse strings, not the Administration.

  • Robert Lankford

    If the budget for renewable energy was cut during the Reagan administration, it was Congress that did it. The Administration submits the budget but it is Congress that decides what they want in the budget and it is Congress that votes on the budget. If Congress wanted to keep or increase the level of spending on renewable energy they would have. The only recourse for the Administration would be a Presidential Veto. One must also remember that the Democrats controlled both the House and Senate during the Reagan Administration. It appears as if the Democrats in the House and Senate didn’t want to spend the money on the energy project, either. The concept of laying the blame on Presidents for cutting funds to any government project is ludicrous. Congress holds the purse strings, not the Administration.

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