The US renewable fuels industry recently got a boost with the extension of the tax credits through 2011.
The expiration of the biodiesel tax credits at the end of 2009 nearly killed the industry in 2010. In 2010 the biodiesel industry operated at less than 10% of the available capacity. Needless to say the tax credits where necessary to support the industry. Extending the biodiesel tax credits for a year may increase biodiesel production a little in 2011 but in order to make a significant difference and attract investment the biodiesel credits would need to be extended for 3-5 years to make a notable change in production.
The blenders tax credits for ethanol are giving people in the ethanol industry a little breathing room but in all actuality the RFS mandates for ethanol are nearing the capacity of the corn ethanol industry. The essentially means that margins should improve over the next few years since the capacity and demand will be in sync. There are ethanol industry insiders which estimate that 2011 is the last year the tax credits would be needed to help the corn ethanol industry.
So what should we do in 2012 with tax incentives to spur the renewable fuels development necessary to really make a difference in our future? Clearly we should not continue business as usually another year. The incentives need to be overhauled to ensure that the industry as a whole is developing better pathways for fuel production and improving existing pathways.
The corn ethanol production is nearly reaching the mandate cap of 15 BGY set by the RFS. What other renewable fuels are going to propel the US to a more significant renewable portfolio?
Considering the rocky start of cellulosic production and biodiesel there is a long way to go. It is a critical year for the government to move to a strategic focus and provide incentives to truly move us forward.
Please make sure you elected officials know the importance of this year and let them know decisions need to be made quickly so the proper long term incentives can be in place for 2012.
Showing posts with label Energy policy. Show all posts
Showing posts with label Energy policy. Show all posts
Monday, January 10, 2011
Wednesday, July 7, 2010
Renewable Energy Support
When will we finally realize that in order for the US to develop long term renewable energy sources that the government and consumers will need to be behind it? We have watched the ebb and flow of wind and solar power investment as the production tax credits expire and get renewed. We have watched the biodiesel industry die in 2010 to less than 20% of the total production with the expiration of the tax credit.
We can't have our cake and eat it to. At least not right now. The cost of renewable electricity and fuels are higher than their "dirty" alternatives. We have to go into this with our eyes wide open knowing that it is a path we must take but it is not the least expensive today. It will be in the long run, but not today.
I urge everyone to educate themselves on these support programs and then contact your elected officials to ensure that they are supporting the programs for the long term.
Investment in the renewable energy space is drying up right before our eyes. The lack of decisive governmental support is going to set the renewable energy industry back decades if we do not make it a priority. We have banks that are too big to fail, we have auto companies which are to big to fail, we have multi billion dollar war efforts under way, and the government supports these efforts consistently.
There are billions of dollars invested in renewable energy infrastructure and projects in the US alone. Many of these investments are sitting idle due to lack of support or adequate investment. Why can we not see the importance of supporting renewable energy development? The government wants to create jobs. Ensuring that these facilities are running consistently provides thousands of full time jobs. In the coming decades as these resources become more valuable our choices to support renewable energy will make an ever increasing impact in our daily lives. We need to ensure that we making the right decisions today.
We can't have our cake and eat it to. At least not right now. The cost of renewable electricity and fuels are higher than their "dirty" alternatives. We have to go into this with our eyes wide open knowing that it is a path we must take but it is not the least expensive today. It will be in the long run, but not today.
I urge everyone to educate themselves on these support programs and then contact your elected officials to ensure that they are supporting the programs for the long term.
Investment in the renewable energy space is drying up right before our eyes. The lack of decisive governmental support is going to set the renewable energy industry back decades if we do not make it a priority. We have banks that are too big to fail, we have auto companies which are to big to fail, we have multi billion dollar war efforts under way, and the government supports these efforts consistently.
There are billions of dollars invested in renewable energy infrastructure and projects in the US alone. Many of these investments are sitting idle due to lack of support or adequate investment. Why can we not see the importance of supporting renewable energy development? The government wants to create jobs. Ensuring that these facilities are running consistently provides thousands of full time jobs. In the coming decades as these resources become more valuable our choices to support renewable energy will make an ever increasing impact in our daily lives. We need to ensure that we making the right decisions today.
Wednesday, May 5, 2010
Using Renewable Energy Policy to Build The Renewable Energy Industry
When are we really going to change our policies, mindset, expectations, and provide the appropriate support to develop the renewable energy industry? We can be operating with more renewable energy every year but it takes persistence and a unilateral commitment to the long term goal. The renewable energy industry is going to require long term bi-partisan support programs. The trillions of dollars of investment in fossil fuels did not happen overnight and the renewable energy industry simply has little or no chance of competing against it. We need to accept this fact and move on to support the industry or simply let the renewable energy industry develop ad hoc and see what happens. We have to face the facts that our energy demands are only going to increase and fossil supplies are a limited commodity.
The government must provide the support necessary to develop and sustain a strong US renewable energy industry. The infrastructure investments require solid long term support. Adequate capital will not flow into new industries where you are the underdog and existing energy players can squash your efforts with minuscule amounts of money compared to their profits. Investments must be enhanced through fair guaranteed minimum returns.
The expiration of the bio-diesel tax credit at the end of 2009 started a chain reaction which has basically shut this industry down. The bio-diesel industry had already been hurt significantly by the drop in fuel prices during the economic down turn and the loss of the tax credit has added further strain.
The entire renewable energy industry would benefit immensely by using a price based model which allows investors to know that they will be guaranteed a fair return on their investments. We can forget the tax credits, blenders credits, producers credits, production tax credits, investment tax credits, and roll them into one universal renewable energy program.
If we define base technologies which are covered and appropriate margins for each we would have a self regulating system which would spur new investment in proven technologies and eliminate the subsidies when market prices provided the necessary support for the projects.
Maybe it is as simple as new wind power projects get $0.XX per kwh which is the baseline industry standard given reasonable production and fair investor return.
Biomass and CHP systems could have their own rates which ensured a fair return based on a processing spread between the biomass cost and the energy revenues.
You could use a crush margin for ethanol. The commodity prices for corn, ethanol, and energy will fluctuate but if you can control the crush margin you can secure investor concerns. This would also work for cellulosic ethanol, biodiesel, and other advanced biofuels as their technology was approved for the program.
The program would be available for facilities using approved technologies and production methods. This would help new technology companies focus on getting their processes approved and ready for commercial application. This would hopefully move the technology risk to the venture capital markets and away from the government as is currently common. The majority of the tax payers money should go towards development of proven technologies and renewable energy supply, not betting on the next technology breakthrough. The government's exposure to this risk should be limited, a small portion of the overall programs, and limited to specific areas which need to be boosted to meet renewable energy goals.
This universal renewable energy program can provide the structure for moving the capital into these companies as new technologies are proven, added to the approved list, and taken to market.
We need to help our government officials on both sides understand that renewable energy is not a "nice to have" option. It is something we "need to have"
The government must provide the support necessary to develop and sustain a strong US renewable energy industry. The infrastructure investments require solid long term support. Adequate capital will not flow into new industries where you are the underdog and existing energy players can squash your efforts with minuscule amounts of money compared to their profits. Investments must be enhanced through fair guaranteed minimum returns.
The expiration of the bio-diesel tax credit at the end of 2009 started a chain reaction which has basically shut this industry down. The bio-diesel industry had already been hurt significantly by the drop in fuel prices during the economic down turn and the loss of the tax credit has added further strain.
The entire renewable energy industry would benefit immensely by using a price based model which allows investors to know that they will be guaranteed a fair return on their investments. We can forget the tax credits, blenders credits, producers credits, production tax credits, investment tax credits, and roll them into one universal renewable energy program.
If we define base technologies which are covered and appropriate margins for each we would have a self regulating system which would spur new investment in proven technologies and eliminate the subsidies when market prices provided the necessary support for the projects.
Maybe it is as simple as new wind power projects get $0.XX per kwh which is the baseline industry standard given reasonable production and fair investor return.
Biomass and CHP systems could have their own rates which ensured a fair return based on a processing spread between the biomass cost and the energy revenues.
You could use a crush margin for ethanol. The commodity prices for corn, ethanol, and energy will fluctuate but if you can control the crush margin you can secure investor concerns. This would also work for cellulosic ethanol, biodiesel, and other advanced biofuels as their technology was approved for the program.
The program would be available for facilities using approved technologies and production methods. This would help new technology companies focus on getting their processes approved and ready for commercial application. This would hopefully move the technology risk to the venture capital markets and away from the government as is currently common. The majority of the tax payers money should go towards development of proven technologies and renewable energy supply, not betting on the next technology breakthrough. The government's exposure to this risk should be limited, a small portion of the overall programs, and limited to specific areas which need to be boosted to meet renewable energy goals.
This universal renewable energy program can provide the structure for moving the capital into these companies as new technologies are proven, added to the approved list, and taken to market.
We need to help our government officials on both sides understand that renewable energy is not a "nice to have" option. It is something we "need to have"
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