'Green' energy a tiny share of stimulus plan

For all the hope and hoopla surrounding the largest public works program since the Interstate Highway System in the 1950s, the share spent on long-term “green” investments is surprisingly small.

Most of the stimulus package goes to temporary measures, such as tax cuts, emergency aid to the states, and the extension of unemployment benefits.

Nearly a third of the $550 billion Congress is set to allocate in direct spending is called "green," including money to modernize electricity transmission and experiment with a "smart grid." But just $8 billion is destined for renewable power and electricity-related spending, according to an analysis by FBR Capital Markets. Another $16 billion in tax credits – of $275 billion of overall tax credits – is devoted directly to green-energy development.

Is that green investment of $24 billion enough to meet President Obama’s goals of creating tens of thousands of new jobs and doubling renewable-energy capacity in three years?

No, say renewable-energy advocates. They see the stimulus as only a down payment on green-energy development that will be fulfilled in a separate energy bill not yet formulated. Even the success of the stimulus’s “down payment” will depend crucially on how details of the plan are implemented, especially renewable energy tax credits, they add.

“In order to achieve President Obama’s goal of doubling energy in three years, we will have to triple utilization of these tax credits,” says Rhone Resch, president of the Solar Energy Industries Association. That’s tricky, unless the industry can find a way to let companies trade credits for cash. “Without the tax-credit market, it’s going to be difficult to achieve that.”

Renewables now at 7 percent

As of 2007, renewable energy sources supplied only a tiny sliver of US energy supplies, about 7 percent. (Petroleum supplied 40 percent, coal 22 percent.) Of that renewable sliver, energy from biomass (such as corn ethanol) accounted for 53 percent, hydroelectric 36 percent, geothermal 5 percent, wind power 5 percent, and solar energy 1 percent.

The Obama administration has set ambitious goals for the energy portion of the stimulus plan. Of the 3.7 million jobs that the plan is supposed to create or save, about 460,000 would come from energy-related expenditures. A large but undetermined portion of those jobs would be in the renewable-energy sector.

“A new energy economy is going to be part of what creates the millions of new jobs that we need,” Mr. Obama told reporters last month. “That’s why my economic recovery plan is going to be focused on how can we make a series of down payments on things we should have done 10, 20, 30 years ago.”

The money would represent a big boost to alternative-energy industries. For OptiSolar, a manufacturer of solar panels in Hayward, Calif., the stimulus package cannot come soon enough. With credit hard to get and customer demand falling, the company laid off 300 workers this month, about half its staff.

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