Business Energy Tax Credit

Cleverpork Central is often a comedy site, but there are things that we believe strongly about and will bring to the forefront of conversation. Anything filed under “Serious” is not a joke, even if it seems counter to everything else on this site.

Recently, Chris Cunningham had to write a 1000 word essay on the business energy tax credit in Oregon. This essay was designed to be written like a blog post, so he felt it would be a good idea to just post it on his blog. What follows is the essay in it’s entirety.

Giving incentives to companies who want to bring green energy solutions to Oregon is a great concept. However, there are quite a few problems with the Business Energy Tax Credit (BETC) that make it very inefficient. If the costs of the BETC are unable to be controlled, then the project should be removed.

The BETC is a tax credit that companies can apply for. There is a maximum of $10 million that can be given, but companies can split up their projects and ask for $10 million for each section. The rules designating what can count for the tax credit are very loose, allowing 98% of requests to be granted so far.

The BETC is consuming an absurd amount of Oregon taxpayer dollars. In the last 2 years, $68 million has been given out to companies requesting green energy tax credits and that amount is expected to increase by more than $200 million. Worse than that, some of those companies have since folded or never produced a product. One company requested $90 million for a 64 megawatt wind farm. That sounds absurd since it is such a small amount of power and of course it wasn’t fully granted, but $40 million was still granted. Previously, 100 megawatt farms only received a little more than $3 million.

This extreme spending under the BETC is the real problem. A 64 megawatt farm would barely dent the energy use of Oregon, but $40 million would definitely start to dent the state funds. But, more than money taxpayers could save is money that could be more useful elsewhere. What good is bringing more jobs to Oregon if we can’t produce educated citizens to fill them? Our public schools, and all public schools in general, have been generally underfunded. While $40 million wouldn’t solve that problem, over $200 million, which the BETC is expected to grow to in the next few years, could help our schools.

Solving the energy crisis and global warming doesn’t need more end-level, construction, work. While ultimately that is the goal, earlier methods of intervention, through education, would work better and produce a more energy-efficient society in the future. If all of the money that is expected to go into the BETC were put into schools, with some added energy-conscious curriculum, then we could kill two birds with one stone. Our education system would develop and start producing more competitive citizens, and at the same time those same people would be more aware of their impact on the environment.

Adding extra curriculum isn’t even necessary though. Research shows that the better educated someone is the more likely they are to hold liberal beliefs. A very common liberal belief is that we need to do something to stop our constant destruction of our world. One could then connect those two statements and say that simply by raising the education bar in Oregon, we will produce more energy conscious individuals. Ultimately, more than a large increase in green energy what we need is a populous that can observe how they impact the world around them and the amount they consume.

If we as a society are set on the immediate feel-good feeling we get when we build green energy plants then we need to go in a different direction. Instead of giving tax credits to companies building wind farms, the state needs to take a stake in it and fund the construction of the wind farms themselves. Only a small tax on energy would be needed to produce the money needed to fund large scale wind farms. The money could be returned to the tax payers in the form of cheaper energy within the next 50 years or less. The land devoted to wind turbines can still be used, so farmers could make some extra money by selling power made on their land as well.

Notice that I was talking only about wind power there as well. If we continue to use the BETC plan, then we should be more conscious about what sources of energy we give credits for. Solar power is incredibly inefficient and non-scalable right now, making it not actually worthwhile to build large solar farms. A lot of other “green” energy sources, like biofuels, don’t help the environment all that much either. We need to watch what projects we support to try and maximize the return from the taxpayer investment. It doesn’t make sense to devote tax dollars to projects which won’t help anyone in the long run.

The biggest problem with giving tax credits to encourage the creation of new green energy jobs in Oregon is that green energy produces very few jobs. Wind turbines require only a couple handfulls of people to maintain once construction is complete. More long lasting jobs could be created in other fields with the same money than green energy will ever hope to produce.

Overall, the BETC as it currently exists is incredibly poorly done. It involves spending money inefficiently, giving absurd amounts of money to poorly designed projects. It uses money that could be used for more effective shifts in society, possibly leading to the same effects in the future. It is unsuccessful in truly changing the energy policies of the state. It doesn’t encourage new jobs. It is a failure.

But what should be done instead? We have three options: drop the BETC completely, revamp the BETC to make it only support successful or efficient programs or devote more money to producing the energy sources that the BETC is trying to encourage. The most likely to occur would be the second. A revamp of the rules would be able to still encourage work on producing green energy, but wouldn’t be a drain on the Oregon budget.

The one thing we shouldn’t do is let the BETC continue to drain money and produce nothing. Without any accountability, the programs the BETC funds are going out of control, taking away tons of money. Instead it is important to support things which will truly change some aspect of our energy usage, whether it is the consumers using less or the producers being cleaner.

Consulted sources:

State lowballed cost of green tax breaks
Do Oregon’s energy tax credits help or hurt the economy?
The Business Energy Tax Credit Delivers for Oregon
Business Energy Tax Credits: Sun, wind and your tax dollars
Oregon Plans to Cut Renewable Energy Tax Credits

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