Could a Clean Energy Bank Save the US Economy and Improve its Future Prospects? Yes!
Reliable, accessible and affordable energy has been one of the primary pillars of American prosperity since the dawning of the Industrial Age. Unfortunately, many of the energy sources that we have always used have been seriously depleted or produce a dangerous build up of waste products in our common environment. As the people’s representatives, Congress wants to help change that pattern by enabling and encouraging entrepreneurs, established corporations and private investors to make the long term investments that will be required to change a pattern of energy use that has been developing for almost 200 years.
One attempt at making that possible was the Energy Policy Act of 2005, which established a program where the federal government would back loans for carefully selected projects whose payback profile did not exactly match the demands of the short term thinkers on Wall Street. Unfortunately, that bill put the burden of developing the program onto the Department of Energy, an organization that remains ill equipped for the task. Part of the reason is that the DOE is dominated by other considerations (protection of the nuclear weapons stockpile) and by the established energy industry that has no desire or incentive to make a big change in the current market.
The loan guarantee program established more than three and a half years ago has only just begun approving projects for financing. After listening to reasons for the frustrating delays associated with the program, two energy focused senators, Jeff Bingaman (D-NM) and Lisa Murkowski (R-AK) have introduced S-949, titled 21st Century Energy Technology Deployment Act.
The bill is designed to improve the ability of the US government to carry out the will of congress. It is a refined attempt to enable the deployment of clean energy projects that will assist in breaking our addiction to burning fossil fuels and releasing the waste products directly to the environment. The main mechanism for overcoming the limitations of the existing program is the establishment of the Clean Energy Deployment Administration as a self-sustaining organization that is focused on reviewing and deciding on loans – either favorably or negatively – based on the specifics of the project proposals.
The goals of the bill are difficult to dispute:
The purpose of this Act is to promote the domestic development and deployment of clean energy technologies required for the 21st century through the improvement of existing programs and the establishment of a self-sustaining Clean Energy Deployment Administration that will provide for an attractive investment environment through partnership with and support of the private capital market in order to promote access to affordable financing for accelerated and widespread deployment of—
(1) clean energy technologies;
(2) advanced or enabling energy infrastructure technologies;
(3) energy efficiency technologies in residential, commercial, and industrial applications, including end-use efficiency in buildings; and
(4) manufacturing technologies for any of the technologies or applications described in this section.
However, several anti-nuclear activist groups are up in arms and distributing action alerts to their members to get them to fight the bill because it includes provisions that they find offensive. For example, here is how the bill defines clean energy technology:
(5) CLEAN ENERGY TECHNOLOGY.—The term ‘‘clean energy technology’’ means a technology related to the production, use, transmission, storage, control, or conservation of energy—
(A) that will—
(i) reduce the need for additional energy supplies by using existing energy supplies with greater efficiency or by transmitting, distributing, or transporting energy with greater effectiveness through the infrastructure of the United States;
(ii) diversify the sources of energy supply of the United States to strengthen energy security and to increase supplies with a favorable balance of environmental effects if the entire technology system is considered; or
(iii) contribute to a stabilization of atmospheric greenhouse gas concentrations thorough reduction, avoidance, or sequestration of energy-related emissions; and
(B) for which, as determined by the Administrator, insufficient commercial lending is available to allow for widespread deployment.
As people familiar with the English language, you can see that there is nothing that that specifically excludes nuclear projects from being eligible and several words that seem to directly qualify nuclear fission technology as meeting the definition of “clean energy technology”. That is part of the reason for the opposition.
Michael Mariotte of NIRS wrote an article that includes the following direct quote:
“(3) RELATION TO OTHER LAWS.—Section 14 504(b) of the Federal Credit Reform Act of 1990 (215 U.S.C. 661c(b)) shall not apply to a loan or loan guarantee under this section.”
The problem with that quote is that the “14” and the “15” are not part of the cite, they are line numbers from the draft PDF. I made a comment to that effect on the Daily Kos discussion where his article was republished. End Aside.)
The real bone of contention from the anti-nuclear activists is the fact that the proposed bill works to separate the finances of the Clean Energy Deployment Bank from the annual appropriations cycle. It provides the Administrator of the bank with the ability to make financial decisions without regard to artificial constructs like fiscal year expiration of funds. It also will remove the ability of the people attempting to maintain the energy status quo (ie dependence on fossil fuels) to use the annual appropriations process as a way to attack projects that might threaten their market dominance. Here is the section of the bill that has the language enabling that separation:
(2) SPECIFIC APPROPRIATION OR CONTRIBUTION.—Section 1702 of the Energy Policy Act of 2005 (42 U.S.C. 16512) is amended by striking subsection (b) and inserting the following:
‘‘(b) SPECIFIC APPROPRIATION OR CONTRIBUTION.—
‘‘(B) as a payment from the borrower and the payment is deposited in the Clean Energy Investment Fund; or
‘‘(C) in any combination of balances and payments described in subparagraphs (A) and (B), respectively.
‘‘(2) LIMITATION.—The source of payments received from a borrower under paragraph (1)(B) shall not be a loan or other debt obligation that is made or guaranteed by the Federal Government.
‘‘(3) RELATION TO OTHER LAWS.—Section 504(b) of the Federal Credit Reform Act of 1990 (2 U.S.C. 661c(b)) shall not apply to a loan or loan guarantee under this section.’’
There is almost a need for a line by line translation, but what the language essentially means is that the Bank cannot make a loan unless the costs are covered by internal balances or by fee payments from borrowers. It also ensures that borrowers do not use other government funds o
r loan guarantees to pay the required fees. The practice that the section specifically ends (2 USC 661c(b)) contains the following language, which has been used effectively to hamstring the process of providing loan guarantees:
(b) Appropriations required
Notwithstanding any other provision of law, new direct loan obligations may be incurred and new loan guarantee commitments may be made for fiscal year 1992 and thereafter only to the extent that—
(2) a limitation on the use of funds otherwise available for the cost of a direct loan or loan guarantee program has been provided in advance in an appropriations Act; or
(3) authority is otherwise provided in appropriation Acts.
That section absolutely ties loan guarantees to appropriations acts and makes the provision of support for long term projects like energy infrastructure completely dependent on an annual political fight among people that do not have the time, training or inclination to understand the challenges of building legitimate projects that can pay back their loans at a minimal risk of default.
Call to action – please contact your Senators and Representatives and tell them that you have done some reading about the Clean Energy Deployment Bank and that you support its mission and design. It is not a slam dunk, but it sure seems to be pointing in the right direction of using the full faith and credit of the United States, with proper financial safeguards, to be used to enable the deployment of technology that will enhance our prosperity. It will be an investment into a future America that is not hobbled by its continued dependence on fossil fuel combustion, by the effects of unlimited emission of the waste products to our common environment and by the annual efforts of people who LIKE keeping us dependent on their products to slow down the process of breaking our addiction.