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Gloria Gonzalez

Gloria Gonzalez

Gloria is a writer for Environmental Finance.Environmental Finance is the leading global publication covering the ever-increasing impact of environmental issues on the lending, insurance, investment…

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Renewable Energy Projects Under Attack by Republicans

Renewable Energy Projects Under Attack by Republicans

Republicans in the US House of Representatives have proposed gutting popular government programmes that have eased financing of renewable energy projects.

House Republicans determined to curb government spending have released their proposal for a continuing resolution (CR) to fund the US federal government, which aims to cut spending by $74 billion from now until October. A CR is a type of appropriations bill used by the Congress to fund government agencies if a formal appropriations bill has not been signed into law by the end of the Congressional fiscal year. It provides funding for existing federal programmes at current or reduced levels.

One provision would cut $900 million from the Department of Energy’s (DOE’s) Office of Energy Efficiency and Renewable Energy (EERE), which provides project grants, and the remaining $1.4 billion from the DOE’s loan guarantee programme.

“It’s an effort to kill the EERE and to do away with the loan guarantee programme,” John Pierce, a partner with law firm Wilson, Sonsini, Goodrich and Rosati, told attendees of the Geothermal Energy Finance Forum in New York on Wednesday.

“If those programmes are undercut, it obviously undermines other renewables, but frankly it undermines what little the geothermal industry is getting,” he added.

There is a reserve that allows the DOE to write a certain amount of loan guarantees, but taking $1.4 billion out of the programme would force the DOE to collect credit subsidies, effectively charging premiums for writing guarantees, said Keith Martin, co-head of the project finance group of law firm Chadbourne & Parke.

“All we have are numbers at this point,” he said. But “I think that’s an issue.”

Projects with conditional commitments at risk

A major concern, if the proposal becomes law, is what this means for renewable energy projects that only have conditional commitments from the loan guarantee programme, Martin said. The DOE has issued 10 conditional commitments, including a $102 million commitment for a 22MW project by US Geothermal.

“Would they have to now pay a large premium?” he asked.

But Martin cautioned that the House changed hands to the Republicans in the 2010 midterm elections.

“The House is largely irrelevant to the process,” he said. “It was irrelevant when it was in Democratic hands. Everything is decided in the Senate where you need 60 votes. This is the first round. We’ll see what happens in the Senate.”

By. Gloria Gonzalez

Source: Environmental-Finance




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