U.S. on the cusp of a revolution

The promise of economic growth driven by clean-energy technology is unfolding in every state in the country. Iowa’s Clipper Windpower has developed technology that could help generate 20 percent of our nation’s electricity in the coming decades. In Massachusetts, A123Systems has developed a lithium-ion battery that can substantially electrify our nation’s transportation sector. And in Florida and California, the Ausra solar-thermal company is getting ready to produce electricity for several hundred thousand customers.

Across America, innovative talent ready to spark a clean-energy revolution has been waiting for a signal from the nation’s capital. Passage of the Energy Independence and Security Act (EISA) in December was a good start, establishing a Renewable Fuels Standard, increasing vehicle-efficiency standards and setting landmark energy-efficiency requirements for lighting, appliances and federal buildings.

A U.S. cap-and-trade system may not pass this year, but its serious consideration will be akin to the first shots at Concord — the beginning of a national revolution, this time in clean energy. But working toward passage of such legislation isn’t the only signal Congress can send the clean-energy sector in the latter half of 2008.

Lawmakers also should focus on passing by year’s end complementary policies that already have gained momentum during the 110th Congress. Foremost among these are extending clean energy tax credits and implementing a greenhouse gas emissions reporting system.

First, Congress needs to extend and expand tax credits for clean-energy investors and producers. Significant progress already has been made. Last month, the House approved the Renewable Energy and Job Creation Act, which included a six-year extension of the investment tax credit (ITC) for solar energy; a three-year extension of the production tax credit (PTC) for energy derived from biomass, geothermal, hydropower, landfill gas and solid waste; and, a one-year extension of the PTC for wind energy. In April, the Senate approved a short-term fix for expiring tax credits and is expected to take up a broader package soon.

Extending and expanding these tax credits is necessary to create the market certainty that will spur investment and development in the clean-energy sector. A recent study showed that allowing them to expire would lead to over 100,000 jobs being lost in the U.S. wind and solar industries in the next year and a half alone.

Next, Congress should approve a comprehensive greenhouse gas reporting system. Good data will be essential to the success of a U.S. cap-and-trade policy because we can only manage what we measure.

We learned the danger of delaying data collection from the first phase of the European Union’s Emission Trading System, when the carbon price crashed in response to a discovery that carbon allowances had been over-allocated by just a few percent.

Currently, 39 states are participating in The Climate Registry, a non-profit partnership that is designing a greenhouse gas reporting protocol. And the U.S. Environmental Protection Agency is developing a greenhouse gas reporting system for the largest emitters based on a few sentences in an appropriations bill.

But clear legislative language spelling out the specifics of a standardized, comprehensive greenhouse gas reporting system would lay critical groundwork for an economy-wide cap-and-trade program and other policies that will drive innovation and investment into low-emissions technologies. Congress should aim to move such a measure in the second half of this year and start implementing it well in advance of the policies that will depend on it for their success.

Beyond facing the hard work of advancing cap-and-trade legislation during the second half of 2008, Congress can send another signal to clean-energy companies by taking swift action to pass narrower measures. Tax extenders and an emissions-reporting system should be at the beginning of a lineup that includes other measures, like net metering and building-efficiency codes.

For example, net metering would give credit to utility customers for their excess energy generation by allowing their electricity meter to run backwards when a solar panel or wind turbine is generating more energy than the customer is using. Setting uniform standards for interconnection to the grid would assure that the technical reliability and safety codes are both transparent and business friendly.

Additionally, building codes should be advanced beyond requirements for new federal structures that were included in EISA. After all, buildings consume nearly half of our nation’s energy. Congress should approve standards that would increase the energy efficiency of all new buildings by 30 percent.

Passing these and other narrowly focused clean-energy policies this year will advance the countdown toward the launch of a U.S. clean-energy revolution as work continues on the major thrust to get it off the launch pad: a cap-and-trade program.

Inslee is a congressional expert on clean-energy technologies who serves on the House Energy and Commerce Committee and the Select Committee on Energy Independence and Global Warming. Last fall, he co-authored the book Apollo’s Fire: Igniting America’s Clean Energy Economy.