President Obama unveiled a new economic stimulus plan today at the Brookings Institution in Washington, D.C. that includes tax cuts for small businesses, increased spending on infrastructure and new rebates regarding energy efficiency, proposed to be funded with $200 billion in unused money from the Troubled Asset Relief Program, or TARP, financial rescue fund. Advocates of using the $200 billion from unspent TARP funds to pay for the job creation programs state that it would be more beneficial to utilize the allotment for ultimately generating increased tax revenue, as individuals and businesses dramatically boost net income, versus paying down the national budget deficit, all of which have implications for the clean energy sector as well as other sectors of the economy.

In comparison, many states such as Arizona have lost sight of long-term economic growth strategies such as business investment incentives, for attracting new companies, and for current ones to expand, to increase tax revenues amidst overwhelming budget deficits; thus have focused solely on cutting various programs to reduce costs, which may be actually prolong the crisis.

The first element of President Obama’s plan would eliminate capital gains taxes on new investments in the stock of small businesses for one year. The details have not been fully disclosed, but the plan builds on an existing, less generous, Recovery Act tax credit. In addition, the plan would extend tax breaks for certain small business capital investments up to $250,000 through 2010. Furthermore, small businesses would be offered a tax break for expanding their workforce, while fees for Small Business Administration loans would be temporarily discontinued. What’s more, all companies would pay fewer taxes on capital expenditures for another year, extending a temporary benefit included in the Recovery Act. Part of the motivation for these incentives was derived from the fact that so many sound Recovery Act proposals from clean energy businesses were rejected by the U.S. Department of Energy due to limitations on the size and scope of the grants. It is possible that resubmission will be offered under different guidelines under this new more job-oriented stimulus plan. The nation’s lackluster jobs recovery, as the recession subsides, is connected with the inability of companies to obtain necessary bank loans, which are necessary for large-scale hiring; so the Obama program is targeting this issue. In specific, the Federal Deposit Insurance Incorporation has reported that loans for small businesses dropped by 6 percent in the third quarter.

Weatherization and energy efficient upgrades of homes are another major element of the new economic stimulus plan. The large umbrella of weatherization funding associated with the Recovery Act has already aided the renewable energy and green building sectors. Past weatherization grants have been administered by the U.S. DOE and allocated to all 50 states. In this new program, analogous to the previously proposed Recovery through Retrofit program, rebates would be offered to consumers whom retrofit their homes with more energy efficient options in the areas of: caulking, insulation, windows, roof tiles, heating and cooling systems, solid state lighting, solar-powered water heaters, and even appliances. Obama would also expand a stimulus program that enhances borrowing-power of private companies that create manufacturing jobs producing machines, such as wind turbines, solar process equipment, electric vehicles, and geothermal heat pumps, which ultimately contribute to a reduction in greenhouse gases (GHG). This element parallels congressional legislation focused on promoting manufacturing jobs entitled the Solar Manufacturing Jobs Creation Act introduced by U.S. Senator Debbie Stabenow (D-MI) and U.S. Congressman Dave Camp (R-MI).

While the Recovery Act and new proposed jobs stimulus program have aided the clean energy sector, the climate change controversy has lessened the building momentum for a legally binding commitment to reducing GHG emissions in the U.S. and globally. Just before the international COP15 U.N. Climate Change Conference in Copenhagen, Denmark opened up Monday, reports over questionable emails by climate change scientists, whom appear to have been manipulating the release of information on global warming has blown up into a major controversy. Skeptics whom were already against climate change legislation have capitalized on the issue and used this as ammunition to reject supporting GHG reductions and clean energy programs. As a result, this scrutiny may affect the outcome of the Copenhagen summit and U.S. GHG cap-and-trade legislation, which would essentially force the energy market into a significantly higher percentage of renewables such as wind, solar, hydropower and geothermal. Thus, if a cap-and-trade bill is not passed, it would lessen the economic benefit of other proposed legislation such as the U.S. Solar Technology Roadmap and Manufacturing Jobs Acts.

However, if the U.S. is unable to pass GHG emissions regulations in Congress, the Obama administration is delegating the Environmental Protection Agency (EPA) with the potential authority to carry out this task under the Clean Air Act. This may have been a political decision to turn the tide against the climate change email controversy and to show its support for an international agreement at the Copenhagen summit currently underway. It took a major step on Monday toward potentially regulating GHG, concluding that climate changing pollution threatens the public health and the environment; in other words, independent of global warming. Moreover, the Obama administration sees long-term robust economic growth from the conversion to a clean energy economy, regardless of the link to global warming. 

The EPA has stated that the scientific evidence in peer-reviewed literature, which is the crux of all science, associated with climate change clearly shows that GHG "threaten the public health and welfare of the American people" and that the pollutants, mainly carbon dioxide from burning fossil fuels should be regulated. Under a Supreme Court ruling, the so-called endangerment finding is needed before the EPA can regulate carbon dioxide and five other GHG released from automobiles, power plants, and factories under the federal Clean Air Act. The initial focus of the EPA is aimed at developing permit requirements on carbon dioxide pollution from large emitters such as utility power plants.

December 18 will be a critical date for the international community, since that is the anticipated deadline for a potential agreement on curbing GHG emissions at the Copenhagen climate change summit, which would have a major impact on clean energy businesses and the overall economic stimulus associated with building a clean energy economy in the U.S and abroad, with the potential to create millions of new jobs.

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