The Green Stimulus Package Decoded

This weekend at the AFIS gathering in California, David Anderson of Sonoma County, one of the chief lobbyists working to green Obama’s stimulus bill, presented a blow-by-blow of all the green components of the Recovery Act, as well as future green stimulus bills in the pipeline (see below).

Anderson worked closely with NACo, the National Association of Counties, one of 20 organizations hand-picked to work with key legislators on Capitol Hill. Their goal was to gear the legislation for a speedy implementation of funds where it counts — at the level of local government. The argument was made by NACo that state government, bogged down by multiple agency jurisdictions, is not well-suited to rapid deployment of the new green funding on the ground, and apparently the plea was heard.

Key Obama advisors and decision makers on the Hill agreed that best way to achieve the desired goal is to create a few successful case-study projects at the local level, which can then be replicated nationwide. So many of the provisions in the Recovery Act and other upcoming legislation will allow counties and local governments to apply directly to the Department of Energy (DOE) without having to navigate through state lawmakers.

This marks a bold shift in the role of the DOE. Previously, the DOE has acted almost completely as an R&D; arm of the government, receiving federal funds to develop technological advances in its 12 national laboratories, but not allocating any of those funds for on-the-ground implementation. Now the DOE will lend its expertise to grant and funding applicants, and be empowered to quickly decide which projects to fund.

Obama has said that he wants to start writing checks to create green jobs as soon as late February, but according to Anderson it will more likely be mid-March. Nevertheless, the excitement in the room was palpable as local government officials realized the desparately needed funding they have worked so hard to get is on its way. As the Mayor of Santa Rosa (and president-elect of NACo) said, “It’s an enormous task in front of us, but we are shovel-ready, and the funding will be there.”

I’m going to provide a high-level view of the myriad components of the Recovery Act which supports energy efficiency, renewable energy and green jobs presented this weekend. Note this is all subject to change, as the Senate is still hashing out the details, but most are optimistic that the “green components” of the stimulus bill will stay intact. If you are interested in more information, I will be working on a more detailed breakdown of all the provisions to be published later.

• The Department of Energy’s appropriation jumps dramatically upward, from a typical $2 billion annual budget for EERE (Energy Efficiency and Renewable Energy) to $14.4 billion. With this increased funding comes a dramatic shift in DOE operations. Normally, that $2 billion is used mostly to cover R&D.; No money goes out for implementation except for a few grants. Now the DOE will distribute the money to grant applicants directly, adding their decades of expertise to on-the-ground implementation.
• Finally the restrictive $2000 cap was removed from an existing law that provides a 30 percent tax rebate for building owners installing solar systems. The cap made the bill almost irrelevant, and lifting it is expected to dramatically spur adoption of solar. It also is broadened to include other systems like geothermal.
• $7 billion will go directly to upgrading and retrofitting federal buildings to higher levels of water and energy efficiency. This is geared towards rapidly creating green jobs.
• $6.5 billion will go into revamping the nation’s energy grid. Right now the U.S. is a 21^st century civilization powered by an early 20^th century electrical grid (metaphorically it’s a bit like having our freeway system paved in dirt). This appropriation will upgrade the grid to allow the expansion of intermittent power sources like solar and wind, though there are some skeptics.
• $22 billion in tax breaks spread over 10 years (not counting accelerated depreciations) will give companies an incentive to implement EERE.
• $60 billion in load guarantees will be run out of DOE backing the expansion of new energy companies. The federal government becomes 10 percent backer of the loan, providing a reduced interest rate, much like a T-bill. Some of this will go to emergent technologies like nuclear and cellulosic biomass and, yes, “clean coal.”
• $4.2 billion for block grants for EERE inside the DOE’s $14.4 billion. Half of this money, $2.1 billion, will go right to the states for community development awarded based on population and will include local and tribal government projects (casinos excluded!). The other half will be competitively awarded, with priority given to projects that incorporate energy efficiency and include broad coalitions, such as groups of cities.
• Ways & Means repaired another tax problem that prohibited taking the renewable energy tax credit if other sources of funding, like county financing, were received. Congressman Mike Thompson succeeded in spearheading he reversal of this IRS ruling.

There are some additional moneys coming down the pipeline, most notably...

• The Clean Counties Grant Program. Here NOCa was highly effective working with decision makers on the Hill to incorporate a special program inside the upcoming Energy Bill (not part of the Recovery Bill). The grant program is a huge victory in breaking down the barriers between technologies. Normally, if an applicant wanted to do both solar and water conservation, they would have to apply twice to two different entities. Now the grant will no longer be segmented by technology, but rather be fundable as an integrated whole.
• $3.2 billion for qualified environmental conservation bonds awarded at the county level based on population.
• Senator Waxman is hard at work on a Clean Air Bill that is expected to come up for a vote in the Spring. Details are not yet available, but it is widely expected that a cap & trade system will be put in place, allowing renewable energy producers to raise additional funds by selling carbon credits to manufacturers who will now be subject to a cap on their greenhouse gas emissions.

As Anderson said, the hard work put in by clean energy specialists and local government leaders has paid off. “The crescendo has reached its peak and the floodgates have opened in the stimulus bill.”