At a somber post-election press conference, President Barack Obama, ever the pragmatic, conceded that one of his major policy goals, implementing a comprehensive cap-and-trade system, was dead. “Cap-and-trade was just one way of skinning the cat; it was not the only way,” Obama said on Wednesday, a day after the Republican take-over of the House of Representatives. “It’s doubtful that you could get the votes to pass that through the House this year or next year or the year after,” he added.
Obama’s negative assesment on the future of one his of his centerpiece agenda items underscored the uncertainty for the clean energy business brought on by the new political reality in Washington. Indeed, with the Republican House majority taking over next January on a platform of less, not more, government, the public funding party is definitely over (for now) for the clean energy sector.
Tuesday’s election results “are a net negative” for the industry, said John Shelk, the head of the Electric Power Supply Association, a Washington industry group representing both conventional and renewable independent power developers. Shelk, who was a speaking at a recent webinar organized by law firm Chadbourne & Parke, said that Congress is not likely to turn its back completely on renewable energy, but the sector will no longer be the priority it was for the outgoing legislature. “It’s certainly not lost on any of us that we now have a Speaker of the House from a major coal state,” he said. And, for that matter, so is Senate Republican Leader Mitch McConnell of Kentucky.
However, while the incoming freshman House legislators might be less renewables-friendly, they are not likely to totally turn their backs on the green energy industry, points out Joseph Mikrut, a partner at Washington consultancy Capitol Tax Partners. He says “both Democrats and Republicans have been supportive of renewable energy through tax incentives,” but concedes that getting these incentives to the industry, “may not be as high on the agenda,” for the incoming legislature.
Besides tax incentives, a federal Renewable Electric Standard (RES) might be another piece of green policy that could bring Republicans and Democrats together. Senate Majority Leader Harry Reid (D-Nev.), has said that he was confident he could get Republicans to support an RES bill. If not RES, another option would be a broader CES (for Clean Electricity Standard), a mandate which might get more support since it would also include funding for Republican-supported nuclear generation and carbon sequestration projects.
But before the 112th Congress takes over in January, Democrats remain in charge, sort of, at least, through the lameduck session. That could be enough time to extend key programs like the 1603 cash grants. How? Look to the Bush tax cuts for a solution. Indeed one option being considered would be to insert the provision extending the grants into the tax extender package that if passed would extend the Bush tax cuts. Time is of the essence, as it could be much more difficult to extend the stimulus-funded grants once the new House majority and its small government ethos takes over.
VC and PE Watch
A New York-based, green-focused private equity fund is close to announcing a second investmentsupporting a U.S.-based cleantech company, G.E.R. learned.
London-based Impax Asset Management raised an additional €118 million($167 million) for its second renewable energy-focused private equity fund, Impax New Energy Investors II.
A San Francisco-based smartgrid developer reportedly scored a $7 million investment from a veteran Silicon Valley investor.
Cupertino-based AE Biofuels secured $4.5 million from Canadian lender Third Eye Capital.
Solyndra, the solar panel maker that last year attracted a $535 million federal loan guarantee for its new factory, will close an older factory and lay off workers. Company Chief Executive Officer Brian Harrison highlighted that it would scale down production to a single production line, taking production to only 300 megawatts by 2013, instead of the expected 610 megawatts Solyndra was to produce over that time period. Solyndra, once the darling of the industry, has had a tough time translating its promising technology into a bankable product. At issue are the panel’s high costs. Harrison says the company is on track to cust production costs by 50 percent over the next two years.
By. Green Energy Reporter