| May 20, 2009 |  |
Key Taxpayer Protections Must be Part of Clean Energy Bank Proposal
Senate bill lacks important taxpayer protections
Yesterday, Rep. John Dingell (D-Mich.) added an amendment to the Waxman-Markey climate and energy bill that would establish a new agency within the Department of Energy to administer federal loan guarantees for private "clean energy" projects. A "clean energy" bank bill similar to Rep. Dingell's amendment, "The 21st Century Clean Energy Deployment Act," also is pending before the Senate Energy and Natural Resources Committee. However, the Senate bill, sponsored by committee Chairman Jeff Bingaman (D-N.M.) and ranking member Lisa Murkowski (R-Alaska), lacks important taxpayer protections that are featured in the House version.
The proposed new agency, the Clean Energy Deployment Administration (CEDA), would offer a range of financing options, including direct loans, letters of credit, loan guarantees and insurance for energy production, transmission and storage projects, emphasizing "breakthrough" technologies that would reduce global warming emissions and energy consumption. Renewable energy, advanced nuclear, and coal carbon capture and storage projects all would qualify for assistance.
The Union of Concerned Scientists (UCS) today urged the Senate to include taxpayer protections that are at least as strong as those in the House CEDA proposal. "The federal government has an important role to play ensuring the availability of financing for innovative, low-carbon technologies," said Ellen Vancko, UCS's nuclear power and climate change project manager. "But while a government clean energy bank should help reduce financing risks for initially deploying innovative technologies, it should not put taxpayers at risk for future bailouts by promoting large-scale investment in technologies that have inherently higher financial risks and costs.
"Unfortunately the Senate bill does not have adequate taxpayer protections," she added, "nor does it prevent high-cost, high-risk technologies like nuclear energy and carbon capture and storage, and environmentally destructive technologies like liquid coal, from monopolizing the fund and crowding out investment in a range of innovative, clean renewable energy technologies."
Key provisions in the Dingell amendment that are missing in the Senate bill would:
-- limit the credit support any technology could receive to 30 percent of CEDA's resources to prevent any one technology from dominating.
-- require CEDA to administer loan guarantees in accordance with the Federal Credit Reporting Act. By exempting CEDA from FCRA, the Senate bill would reduce accountability by bypassing the appropriations process.
-- prioritize projects that would provide the greatest reductions in global warming emissions in the shortest amount of time per dollar invested.
"Without the protections in the House version, the potential financial risk to taxpayers would be astronomical," Vancko said. "We urge the Senate to adopt the responsible, common sense provisions in the current House version to protect taxpayers and underwrite the development of a broad range of clean, cost-effective energy technologies."
UCS also supports limiting the provision of loan guarantees, after the credit crisis is resolved, to initially deploy new technologies, and phasing out guarantees after technologies have achieved 0.5 percent of U.S. electricity sales.
The Union of Concerned Scientists puts rigorous, independent science to work to solve our planet's most pressing problems. Joining with citizens across the country, we combine technical analysis and effective advocacy to create innovative, practical solutions for a healthy, safe, and sustainable future.
