It’s hard to get any love for solar incentives in Washington these days. But might Congress be open to other ways of helping solar?
“Most of the policy that matters is made at the state level. If your main plan for change involves Congress, it’s a bad plan,” David Hochschild, California energy official and co-founder of the national advocacy group Vote Solar, told the eco-website Grist, speaking about public policy to support solar power and other renewables.
For years, I used to agree with this view. Aside from the 30% solar federal tax credit, which always seems to be either on the verge of expiring or at risk from Congressional budget cuts, most solar incentives around the country come at the state level.
After Trump’s election, at first I was worried about the future of solar incentives. But then I was reassured by all the experts who said the same thing as Hochschild, that Washington was always irrelevant for renewable energy policy anyway. Since the federal government wasn’t helping solar much before, what could Trump and a Republican Congress possibly do to hurt solar now?
So, like many others who cared about solar, I put my faith in the states. Especially Hochschild’s California — the golden state of solar.
But now, after encountering a different approach to helping clean energy on the federal level that would come straight from Congress, I’m not so sure that the states really are the best place for solar policy.
The Case for the States
Grist included Hochschild in its Grist 50 list of “fixers” on climate and energy under the provocative title “Federal clean energy efforts are too weak…David Hochschild has a state blueprint for solar.”
The article went on to give Hochschild props for his role in California’s solar boom.
Today, California has 100,000 solar jobs, by far the most of any state. You can credit David Hochschild for some of that. In 2001, Hochschild cofounded the advocacy group Vote Solar with Adam Browning, who previously ran a pollution prevention program at the Environmental Protection Agency. The duo built out the program’s finely tuned combination of policy advising, public engagement, and coalition-building.
With solar providing a massive 13% of California’s electricity, the Golden State’s solar boom is indeed impressive. I’m sure that Vote Solar deserves credit for its role.
To be fair to other states, with the Golden State’s massive population and land area, ample sunshine, huge economy and a politics that combines Silicon Valley entrepreneurialism with environmental activism that never went away after the 1960s, California probably was destined to be America’s solar leader.
But the real issue is, if you really want to spread solar across America, is it enough to try to get other states to follow California’s example?
The Case Against the States
Maybe when you’re talking about blue states like New York or Vermont, citizens will support an approach to supporting solar that’s heavy on state incentives as in California.
But telling people that they need to start doing things the way they do them in Berkeley or San Francisco is not going to play very well in Phoenix or Houston or Atlanta.
Another issue: even in states with strong support for solar, tapping into that support can be confusing. A complex collection of tax deductions, credits and exemptions along with grants, low-interest loans and renewable energy credits can be hard for potential solar buyers to understand.
Travis Kavulla, president of the national association of utility regulators and a utility regulator himself in Montana, knows how complicated incentives for renewable energy can be.
“You have renewable tax credits, renewable mandates, storage mandates, rebates for certain customer classes for various types of installations, technology carve-outs all over the place, all of them ostensibly aiming at a decarbonized energy portfolio. But they’re duplicative and confusing, and they create a…boom and bust. Live by the mandate, die by the mandate,” Kavulla told GTM Research.
Solar installers do their best to help homeowners get the maximum amount of state help because it helps those installers bring down the price for solar and make more sales. But even installers can be confused by the crazy-quilt of solar incentives in their own state.
Timing for state incentives is also complicated, as Kavulla pointed out.
At any one time, some of these incentives are probably on the verge of downgrading, phasing out or expiring. This leads to uncertainty in the market and scares away solar buyers and investors alike, depriving solar of the capital it needs to really grow.
“It would be much better for both consumer choice and for industries like this one if we replaced all of those policies with a more simple and efficient price or tax on carbon,” said Kavulla. More on how a carbon price would work below.
Meanwhile, when each state does its own thing, investors in particular looking for regional or national opportunities are also more likely to take their money elsewhere.
Finally, maybe states aren’t as safe from Washington interference as they thought they were. Recently, Energy Secretary Rick Perry has said that the federal government might try to overrule state renewable energy goals under the pretext of safeguarding the national electricity grid:
“That’s a conversation that will occur over the next few years,” Perry said. “There may be issues that are so important that the federal government can intervene.”
Of course, if the White House tries to mess with California renewable energy policies, it won’t be pretty. Trump vs. California — that sounds like the next Civil War. I can’t imagine any scenario where Trump would win. But just making the attempt could help slow down the spread of California-style solar policy to the rest of the country.
Meanwhile, California seems to be doing a good job of making its solar market more uncertain on its own and without any help from Trump.
The Case for National Action
There’s a reason why countries have national markets for things, from rules of the road to consumer products to computer operating systems. It’s easier for industries to grow big if the rules are similar across states.
And it will be easier to help solar grow big if the rules are more or less the same in Georgia as they are in California.
But good luck trying to get Georgia to accept the solar rules made by California!
So, maybe there would be some benefit to good policy for solar and other renewable energy on the national level — if it can be done in today’s political climate.
And what if a national solution had the additional benefits of being both less complicated and more long-lasting than state policies?
Enter carbon fee and dividend.
It’s a modified version of the idea for a carbon tax or carbon pricing that has been kicking around university economics departments for years. Put a price on carbon, the economists say, and clean energy will take care of itself. When fossil fuels become more expensive, people will choose solar and other renewables because they’re cheaper.
The policy is simple, it would be uniform across all states and it would be predictable for the future, with a carbon price scheduled to increase over time for years or decades to come.
Not Just Another Tax
What kept carbon pricing from gaining momentum over the years was that whole “tax” part. Politically, adding a new tax on carbon that raised prices for consumers, especially low-income families, was always dead in the water, even before Republicans took back the White House in 2016.
But recent versions of carbon pricing from groups including the Climate Leadership Council and Citizens’ Climate Lobby add a new component that will make any carbon fee more acceptable to the public and their representatives who oppose new taxes.
That component is a dividend or refund given to all Americans, making the carbon tax revenue neutral. Government analysts say that such a carbon dividend would help 70% of Americans come out ahead even after paying higher prices for fossil fuels and the products and services that fossil fuels contribute to.
In addition, the new carbon dividend proposals are doable politically, even with Trump in the White House and Republicans running Congress, because these proposals already have support from leading Republicans, including former Republican secretaries of state George P. Shultz and James A. Baker, III. And in Congress, more than 40 members of the bipartisan Climate Solutions Caucus have committed themselves to consider market-based policy like a carbon dividend.
National carbon pricing would be simple and effective in growing solar from coast to coast. And perhaps the most beautiful part is that a carbon dividend is a policy that has support not just from Democrats and the other usual eco-suspects, but also from Republicans and free-market conservatives as well.
As Bob Inglis, former Republican Congressman from South Carolina, told me, “The most powerful incentive is going to come when there are economic reasons apparent from our power meters as to why solar makes sense.”
Once America puts a price on carbon, Inglis said, “consumers will pursue their self-interest and they’ll be dialing solar installers without anybody telling them what to do. It’s going to change the way we do electricity in this county.”
— Erik Curren, the Solar Patriot