During a largely positive review of U.S. energy policy, the International Energy Agency scolded the federal government for failing to provide consistent long-term policy support for forms of energy that do not produce greenhouse-gas emissions, notably nuclear power (which I discuss in this post) and renewables.
The IEA's 2014 comprehensive report on U.S. energy policy praises the U.S. for growth in renewables since the last review in 2007 and it praises the Obama Administration for setting the goal of doubling renewable-energy resources by 2020 (from 2012 levels), including energy production from wind, geothermal and solar sources.
"However—there's always a 'but,' you know—there is no explicit national policy mechanism to ensure the country reaches this target," said Maria van der Hoeven, executive director of the IEA, during an appearance alongside U.S. Energy Secretary Ernest Moniz this afternoon at the Bipartisan Policy Center in Washington D.C.
Many states have adopted renewable portfolio standards in the absence of federal leadership, van der Hoeven said, while the federal government has focused on fiscal incentives and planning mandates to support renewables.
"And yet, the durability of some existing federal incentives such as its Renewable Energy Production Tax Credit (PTC) for wind remains a persistent uncertainty," van der Hoeven said. "Yet another short-term extension of the PTC undermines investor confidence and contributes to the volatile pattern of annual wind growth."
On Tuesday, Congress extended the wind tax credit, but only for two weeks, and only for windmill projects that started this year.
"This lack of long-term policy durability represents a challenge, a challenge for investment in new projects, and you know, it has to be addressed," she said.
The IEA recommends a 5-year extension of the wind tax credit that gradually reduces its level to zero, where it would remain permanently. Such a policy would provide certainty for investors and spur cost reduction over the next five years.
The growth of wind energy in the United States has closely followed the fate of the wind production tax credit, with wind-farm construction all but halting whenever Congress fails to extend the credit, which is typically implemented for two-year periods.
Moniz did not respond directly to van der Hoeven's suggestion, but emphasized the diversity of ways the U.S. can encourage the development of renewables:
"We do have a large number of states that remain with strong renewable portfolio standards. We do have policies that are not economy-wide, as the solution that Maria advocated for, but in different sectors, like CAFE (fuel-economy) standards, like the proposed EPA rules on power plants, we have a variety of mechanisms to keep pushing to a low-carbon future."
Nuclear utilities, such as Exelon, have been vocal critics of the wind production tax credit, contending that it creates an uneven playing field where it is difficult for nuclear energy to compete. The IEA sees cheap natural gas from fracking as the greater threat to the nuclear industry, and it urges the U.S. to provide long-term policy support for renewables and nuclear.
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