Ten Ideas For The US Congress: Seize The Initiative

The precipitous drops in the world’s financial markets this week—with possibly more to come—have a lot of us worrying about the economy. It’s also got national leaders talking about an economic stimulus package.

Obviously, America is facing some stiff challenges: ensuring economic security and rising to the challenge of climate change loom large.

But we also have a rare and golden opportunity to move forward, so we face a fundamental choice: We could stick our heads in the sand and accept the high risks and costs that will come from business-as-usual—or we can figure out how America will seize the initiative and lead the world in transitioning to a clean and prosperous new energy economy.

To that end, the Sierra Club and other environmental groups sent a letter to Congress this week in which we outlined ten steps Congress can take to lead. Mainly, we’re asking leaders to include federal clean-energy tax incentives and weatherization assistance in any economic stimulus package they pass.We were on the right track when Congress passed the Energy Policy Act of 2005, which included energy efficiency and renewable energy incentives. However, most of these incentives have expired or will do so at the end of this year. Congress should move quickly to extend these incentives and establish new ones to spur promising technologies. The American Wind Association, for example, believes that its industry will begin to experience a significant slow-down by late spring if the renewable production tax credit is not extended before then.

Incentives like those we’ve proposed would prompt builders and contractors to hire additional labor to install energy efficiency measures in buildings around the country. This new labor demand would also offset employment losses in construction, which fell by 49,000 last December and has fallen by 236,000 since September 2006, according to the U.S. Department of Labor.

Our letter to Congress also makes the case that incentives that promote dirty fuels and technologies—like synthetic oil produced from tar sands, oil shale, and liquid fuels derived from coal—should not be included in the package.

See what you think of our ten ideas. And hey, if you’ve got any to add, I’d love to hear them.

· Extension through 2010 of the renewable production tax credit. Thistax credit is for the production of electricity from renewable energysources such as wind and geothermal. The credit expires at the end of thisyear, and it is critical to extend it soon to avoid layoffs atmanufacturing facilities and a decrease in private capital being investedin the development of these resources.

· Extension of the tax credit for efficient new homes through 2010.This tax credit is for new homes that decrease energy consumption by 50percent relative to the national model energy code for homes. Thisincentive expires at the end of this year.

· Modification and extension through 2016 of the tax credit forresidential scale solar and fuel cell systems. This tax credit should bemodified to include small wind technologies and eliminate the cap on theamount of credit that can be obtained by an individual tax payer.

· Appropriate an additional $200 million for the WeatherizationAssistance Program for Fiscal Year 2008. This appropriation wouldweatherize an additional 75,000 low-income homes, put unemployed buildingtrade workers into training on how to do home energy efficiency retrofits,save low-income consumers money on their energy bills, and direct states toemphasize the purchase of highly efficient major household appliances.

· Extension and modification of the tax credit for energy efficientheating and cooling equipment and efficiency retrofits to existing homesthrough 2010. This tax credit provides up to $500 for homeowners topurchase efficient heating and cooling equipment and make energy efficiencyretrofits to their homes such as adding insulation. This incentive expiredat the end of 2007.

· Extension and modification of the energy efficient commercialbuildings tax deduction through 2013. This deduction is for commercialbuildings that reduce energy consumption by 50 percent relative to thenational model energy code for commercial buildings. The deduction shouldbe increased from $1.80 to $2.25 per square foot and modified toincorporate certain requirements that are needed to ensure theeffectiveness of the incentive. This incentive expires at the end of thisyear.

· Modification and extension through 2016 of the tax credit forcommercial scale solar and fuel cell systems. This tax credit should bemodified to include combined heat and power systems. The credit expires atthe end of this year.

· Renewal of the efficient appliances manufacturer tax credit. Thiscredit is for manufacturers that produce high efficiency refrigerators,clothes washers, dish washers and dehumidifiers. The credit expired at theend of 2007.

· New exemption from the heavy vehicle excise tax for the cost ofidling reduction units.

· New fringe benefit for bicycle commuters. The federal tax provisionthat excludes transportation fringe benefits from taxable income should beextended to reimbursements to employees for reasonable expenses incurred byan employee for commuting to work by bicycle.

Image credit::US Naval Historical Center, Pearl Harbor Raid Aftermath, joint session of the Senate and House of Representatives, 1941 or 1942 State of the Union Address